How Banks and Credit Unions Can Solve the Personalization Riddle

Financial institution marketers understand the need to meet raised consumer expectations, but they face a tough challenge because of privacy, compliance and data-silo issues. By implementing three best practices, institutions can move from transactional to relationship-based engagement.

The personalization engines of retail giants, including Amazon, have established a new standard for customer experience. As a result, consumers now have the same expectations outside of retail environments. They want their banking provider to understand them, provide recommendations and anticipate their needs — when and where they prefer — just like leading e-commerce brands.

However, banks and credit unions are struggling to meet this expectation. Research indicates that 57% of consumers view their bank as a “necessary utility,” while only 37% see it as a “trusted partner.” To change this consumer mindset, financial institutions must shift from a transactional approach to relationship-based engagements — where personalization takes center stage.

For effective personalization, an institution needs to know all that is knowable about its customers. Fortunately, banking providers typically have a wealth of consumer data on file from past transactions and activities, which can be used to customize each future engagement. However, this data is not always accessible. Additionally, due to the stringent regulatory requirements, financial institutions are often hesitant to leverage this information.

While it is crucial to respect consumer privacy and adhere to compliance guidelines, there is still a major opportunity to improve customer experience with personalization. There are a several best practices banks and credit unions can incorporate to foster more personalized consumer relationships, while ensuring both trust and transparency. Here are three of the most important ones.

1. Giving Consumers Control Creates Trust

In retail scenarios, consumers have the option to take control of their experience — and they often prefer it. Survey findings indicate that 66% of shoppers prefer self-service. This may be engaging with a chatbot to answer a service-related question or using self check-out in a physical location.

While financial institutions should offer various channels for consumers to interact based on their preferences (in-branch, online, web, social, etc.), there needs to be a convenient option for customers to manage the experience in a way that suits them individually. For example, customers should have the ability to pay bills through a banking website or through a mobile app. This feeling of control and flexibility in how they bank creates a sense of trust among consumers. They’re also more likely to opt-in to share their data if they are benefiting from an enhanced, convenient experience.

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2. Strive to Create a Customer ‘Golden Record’

Because of all the various channels that exist today, customers communicate with their banks and credit unions across multiple touchpoints — whether that be face-to-face at a local branch, on the phone with a wealth management agent, at an ATM, or through a mobile app. An omnichannel approach is key for a positive experience, but providing it faces two main challenges:

• Financial institutions have fragmented data, because information is trapped in each of these siloed channels. As a result, they can only see partial customer views, preventing personalization. If tellers only know what the customer has done in a physical branch and not on the website or app, they cannot provide a proper recommendation based on the user’s overall activity and profile.

“When website and social teams don’t share information, loyal customers often go unrecognized,
or worse, receive conflicting information.”

• Customers receive inconsistent, disjointed experiences. Due to privacy and compliance regulations, many institutions still run separate and distinct teams and departments for each touchpoint. For example, the website team and social teams are not sharing information. This means that, unfortunately, loyal customers often go unrecognized when they interact at a new touchpoint — or, even worse, receive conflicting information and offers depending on where they show up.

To overcome these challenges and break down data silos, banks and credit unions should work to implement technology for a single point of control for customer data, connecting functional silos with all types and sources of customer data in real time. With a unified customer view — or “golden record” — bank employees can easily view the latest information about a customer’s behavior or interaction, regardless of where it occurred.

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3. Reach Out With Recommendations Based on Preferences

To provide additional value to customers, banking providers should not only be reactive — i.e. answer questions or address problems as they arise. Instead, banks and credit unions can anticipate customer needs based on their past activity and the preferences they have noted. Again, data is the key to fuel these recommendations, such as letting a customer know about a new cash-back deal via SMS text message, if that is their preferred channel.

Tapping machine learning, financial institutions can further personalize communications, testing different messages for each individual customer — not segments of customers — to determine what resonates best. They can capitalize on specific moments of interaction too. If a customer is using the mobile app and enables location data to be shared, for example, there is an opportunity to serve up a notification about the closest ATMs.

Now, rather than being an “necessary utility,” banks and credit unions can become a seamless, added value to a consumer’s day — without inconvenience or interruption.

Financial marketers clearly understand the need to focus on their customers. A PwC survey confirms this, finding that 61% of banking executives say that a customer-centric model is very important. However, just 17% report feeling very prepared.

It’s time to close the customer experience gap in banking and match what consumers have come to expect from leading retail brands.

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