The importance of a strong digital banking platform, and the emergence of payments as a core service for consumers of all demographic segments, is providing a competitive advantage to neobanks and fintechs. Further, as existing customers of legacy banks ‘test the waters’ at neobanks, and as existing neobank customers become more tenured, the potential for expanded relationships at these nonbank financial providers increases.
Customer engagement has increased in importance and has become harder to achieve for financial services organizations of all types. More than ever, it is important to create a data-driven value exchange that leverages personalization and illustrates a customer-centric focus. The good news is that consumers are willing to share data to get contextual benefits from financial institutions – online and in-branch – which creates real-time opportunities for relationship growth and increased lifetime value.
Personalization as the Foundation of Trust
While consumers want their most trusted financial providers to provide integrated experiences, trust is increasingly associated with the ability to use learned insights to create intuitive engagements and experiences. As a result, banks and credit unions will need to build the data infrastructure and analytics capabilities that can leverage the value of internal data and external data across the entire customer journey.
“The willingness of consumers to share data in exchange for value should serve as a wake-up call for organizations to build more engaging marketing and data collection strategies,” states Jason Grunberg, GM of Sailthru, a leader in personalized email solutions. “If firms elevate their efforts to meet consumers’ expectations for custom content and experiences, and treat personalization as a strategic priority, they will see immediate benefits that deliver long-term effects.”
Data + Transparency = Value:
Transparency creates trust, respect, security and privacy, even when customers are sharing greater amounts of personal information.
Personalization must go beyond the functional or channel level however. More than ever, hyper-personalization and transparency is expected based on personal needs, channel use, timing and offers. “Help customers understand what you’re going to use data for, why they’re seeing a specific ad, and why they’re getting a particular offer,” states Bruce Temkin, experience management visionary. “Give them a transparent view into what data you’re using and why you’re using it that way.”
- Increased Digital Banking Interactions Require Greater Personalization
- Now is the Time for Intelligent Digital Banking Experiences
- Digital Transformation Requires More Than Technology Upgrades
Personalization Powers Super Apps
Firms like Amazon, Google, Apple and other digital giants like PayPal and Block (formerly Square), have expanded their capabilities and range of offerings with a mission to capture more of a consumer’s time and attention. Each expansion of functionality – including the addition of financial services – has been done to increase the engagement potential of the platform. Instead of using multiple apps, consumers want to be able to message friends, make payments, transfer money, get credit, and invest all with a single app. Expansion of services well beyond this is also possible.
Using transaction and behavioral insights as the foundation, super apps have the ability to seamlessly integrate processes and personalize experiences more than was possible in the past. The key is to provide added value to the consumer while making banking, shopping, and communicating easier.
Beyond simplicity, the promise of a well-designed super app is to be the ‘GPS of financial services’, providing real-time offers and recommendations to help the customer reach their financial destination without leaving the app’s ecosystem. Becoming an aggregator of financial and non-financial services under one roof, however, requires data, analytics, and the creation of value that differentiates the solution compared to the competition.
There is a correlation between the potential of super-apps and the concept of open banking. Both depend on using customer insights from multiple sources to determine customer needs and deliver financial solutions. The scope of expansion provides both promise and challenges.
Implications for Financial Institutions
Financial institutions can deliver personalization to customers in the following ways:
- Creating consistent experiences across delivery channels and marketing communication media
- Offering products, services and content that lead to improved financial wellbeing for the customer in close to real-time
- Providing personalized offers and promotional strategies that reward consumers’ loyalty
- Utilizing new data insights to drive future digital and human engagements
Customers must come away from every interaction thinking “My bank knows me, understands me, and is willing to reward me with unique offers and opportunities.”
In the future, financial institutions must support a business plan for customer-centricity as opposed to product-centricity. This includes, but is not limited to rethinking and automating back-office operations, prioritizing technology, data and analytics upgrades, aligning digital and human interactions with customers supported by real-time insights, and prioritizing speed and scale of customer interactions.
Banks and credit unions must recognize customer expectations for custom content and engagement, treating personalization as a strategic priority. They must also make the best use of personal data in order to create a differentiated value exchange with the customer.