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Understanding Personalization at Scale in Retail Banking

Posted on: June 10, 2020 | Posted by: Sona

For decades, banks have been at the forefront of personalization, tailoring offers to various customer groups, and gauging the results. Overall, this has had a positive impact and resonated well with customers — helping banks stand out and gain competitive advantages over each other.

But they’re not the only ones paying attention to personalization and their competitive edge is dissipating fast.

The latest World Retail Banking Report 2020 reveals that banks are facing tremendous pressure to accelerate digital transformation as new entrants — the tech-savvy non-traditional companies that are pushing on customer experience — have forged ahead with personalization initiatives. These companies have gained mind and market share, leaving banks in the dust when it comes to offering unique solutions that scale while providing that deep level of individualization that consumers crave.

Further forcing the issue today is the impact of COVID-19 that is moving consumers toward digital banking. Over half (57%) of consumers now prefer internet banking, up from 49% pre-COVID-19, and 55% prefer banking mobile apps, compared with 47% previously.

So how can banks go beyond their traditional customer outreach and marketing to recapture their competitive differentiation?

A BCG article answers the question: “Although much of the discussion about personalization in banking focuses on marketing and next-best offers, its true potential lies in transforming all of an organization’s customer interactions by using data and analytics to anticipate individual needs, target segments of one, and build deep relationships that stand the test of time.”

Relearning Personalization

The first step to achieve this next-gen personalization, the report notes, is to understand what personalization is and isn’t. So far banks are missing the mark by using personalization to sell through next-best offers and marketing. However, consumers look to banks for guidance about money management, proactive advice, and pertinent information that will make their life easier. 

Personalization in banking is “about providing service, information, and advice, often on a daily basis or even several times a day. Such interactions, as opposed to infrequent sales communications, form the crux of the customer’s banking experience,” the report said.

 The article notes that many companies have already paved the way forward in demonstrating exactly how this personalization trend can be capitalized upon. As of yet, there’s no “Netflix of Banking.’ That means there’s plenty of opportunities to be the bank that stands up and seizes the benefits while reaping the rewards. The requirements to achieve this end-to-end personalization include:

  • Strong cross-channel offering
  • Cross-enterprise collaboration
  • A single view of every customer
  • A new technology ecosystem

One of the biggest hurdles in achieving this objective is the proliferation of channels through which customers engage with their banks, as well as the multiple lines of business within the bank that interact with the same customer. The fact of the matter is that in large financial services institutions, each digital channel has its own product and engineering teams. As a result, valuable customer data is scattered across different departments with the optimization to date on each channel been done in a pretty siloed fashion for that channel itself. It does not adequately address the cross channel, cross-session needs of the consumer and makes it challenging to pull together a 360° view of the consumer at any given time on any channel — digital as well as physical, such as branches and call centers.

The Right Experience for the Right Individual in the Right Channel at the Right Time

It seems like a tall order to fill, but it’s possible. Banks have to pull together the data from disparate channels and enterprise systems and change their line of thinking from targeting customer segments to looking for ways to build deeper, more meaningful relationships with each customer. For the customer to be the true center of the bank’s personalization-at-scale, it means breaking down those stale, old-fashioned silos and coming up with a fresh, bold, and uncompromising new vision. According to the BCG report, orchestrating a new stack of tools and resources is key to achieving this vision.

This stack, the report says, has three core elements:

  • Customer DNA: A technology that pulls together a 360° view of every customer. This view is continuously updated to show the full context of the customer at any given time on any channel.
  • A Personalized Curriculum: Defined 1:1 customer offerings that encourage certain behavior and frequency of interaction with the bank.
  • An Analytics Engine and Recursive Learning: Use machine learning to detect patterns in each customer’s behavior by learning continuously as new data flows through to build on the existing insights.

Benefits of Personalization at Scale

One of the more insightful findings of BCG’s report was their estimate that “for every $100 billion in assets that a bank has, it can achieve as much as $300 million in revenue growth by personalizing its customer interactions.”

There’s also an inherent competitive advantage for those first movers. Today’s banks, large and small, are looking for innovative ways to change how they interact with customers. Personalization offers them that first-mover advantage that plants roots in the customer’s mind and gives them a sense of security and confidence that their bank is in tune with their needs.

 This is where companies such as ZineOne come into play to enable banks to deliver omnichannel personalized customer engagement at scale. The most important thing is moving from proof-of-concept to implementation. The technology is available and as the article sums up, “the time to act is now.”

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