Power of Digital Insights Determines Fate of Today’s Banking Providers

Banks and credit unions urgently need digital tools that ingest and distill consumer data. By deploying proactive recommendations based on real-time needs and behaviors, financial institutions will be able to personalize experiences at scale, generating loyalty, trust and sales. The fate of retail banks and credit unions will be determined by how quickly such tools are seamlessly integrated into the experience.

Is your institution prepared for a world where you can use your customer’s digital identity and relationship insights to build products, services and communication based on every aspect of their lives and their surroundings? Are you working on data and analytics capabilities that will allow you to customize individual engagement with little or no friction or involvement from your customers? This is the future we are moving towards … quickly.

Here’s a simple example of what’s now possible.

I just received a new razor from Gillette that I customized myself. This was made possible because of a partnership between Gillette and 3D printing startup Formlabs. This wasn’t just getting a current razor design offered by Gillette in red (my favorite color), but a personalized razor with a unique handle, created from thousands of color and unique design options. I even have my name embossed into the razor handle.

I created my custom razor through the company’s website, which captures design preferences and provides the details for physically printing and assembling the razor, at scale, prior to being shipped directly to the customer’s address. Rather than stopping there, Gillette asks a couple additional questions to enable more personalized communication and offers going forward.

We are approaching a time where the majority of enterprises in all industries will be able to customize experiences in real-time. This provides an amazing opportunity for those institutions prepared to meet the consumers’ increasing expectations. Digital technology, combined with advanced analytics, internet of things, new marketing integration, etc. allows companies to understand customers with an amazing degree of granularity. There are more channels, more digital ecosystems and more potential partners than ever to build new levels of contextual engagement going forward.

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Amazon and Google Use Insights to Personalize Search

When was the last time you looked for a product on Amazon or did a search on Google that required you to advance to the ‘next page’? Both organizations realize that loyalty in the future is determined by being able to get to your destination as quickly as possible … usually using a mobile device. The longer your search takes, the more likely you will disengage.

When Amazon was still a young company, they would use product selection as a way to offer the ‘next best product’. This is similar to what most banks and credit unions do today when they want to build engagement and cross sales. The logic goes, “If you bought this, then you probably want that.” The problem with this logic is that every customer purchases a product for their own individual reasons.

As Amazon’s use of data capture and analytics has matured, they have moved from a product-centric company to a customer-centric organization, leveraging previous purchases, demographic information and advanced analytics to determine what you may be looking for initially, and what other products you may be interested in after your purchase. For instance, do you prefer higher-priced brand names or value-priced products? Is there a color preference you trend towards? Do you usually buy for yourself or someone else? How often do you visit Amazon and how important is quick delivery?

With this insight, they personalize what you see first when you do a product search. Amazon knows I tend to prefer quality, and am willing to pay for this option. They know I like red products, and that I almost always want delivery as quickly as possible. I will even put more in my shopping cart to get free shipping with next day delivery. As you might expect, if my 21 year-old son does the exact same search, his product listing differs significantly from mine. Amazon realizes that if a person needs to go beyond the first screen, the potential for cart abandonment increases significantly.

The experience is similar with a Google search. It used to require advancing several pages to find what most people wanted to know. Today, once you get through the promoted posts, you can almost always find your answer quickly. And, similar to Amazon, two people could search the same terms and get an entirely different search result.

Both Amazon and Google have used technology-driven personalization to get more granular with consumers. Both organizations have used insights to provide value by being able to respond instantaneously no matter how personal or custom the request. More and more, they are understanding consumers at a holistic level and recognizing that their behaviors and needs may change at any time. They even are using geolocation data to better understand what may have prompted a search.

Consumer Insights Allow Breakdown of Industry Barriers

With the power of data, analytics and advanced technologies, many companies are moving beyond traditional industry categories to provide a wider scope of customer-centric solutions. According to Accenture, “Industry lines are no longer a boundary to growth, and the disruption that came in waves as technology matured in the digital era is now ever-present. Any company can compete with any other or carve out a new market.” This expansion is grounded in the application of insights to provide a wider array of solutions that the consumer desires.

Two of the best examples of this are Alibaba and Amazon. Both have B2C digital retail functionality at their core, but have expanded significantly into financial services. From payments, to insurance and lending, Amazon is currently (or may soon be) competing in increasingly more traditional financial service categories. According to CB Insights, “It’s hard to claim that Amazon is building the next-generation bank. But it’s clear that the company remains very focused on building financial services products that support its core strategic goal – increasing participation in the Amazon ecosystem.”

Leveraging consumer insights, Amazon’s strategy is relatively clear:

  1. Use data and insights around needs and behaviors to increase the number of Amazon (Prime) customers.
  2. Use data and insights to define appropriate partner solutions offered to (Prime) customers.
  3. Reduce friction, increase engagement and collect insights at every interaction.

Customer Insights, Value Transfer and Privacy Regulations

As organizations capture more insights and reach further into consumers’ lives, it is imperative to address the privacy, security, ethics, trust and compliance issues that may arise. As opposed to being a restriction to growth, these regulations should be guides for use of data and an opportunity to differentiate in the marketplace. As consumers become more aware of the value of their identity, they will demand value in return for sharing insights. Those firms that provide the greatest value in return will benefit the most. These firms will also be the least likely to be hampered by privacy regulations that allow consumers to block use of their data.

A great example of the value exchange potential is again provided by Amazon. Today, consumers pay more than $100 a year for the ‘privilege’ of buying from Amazon. And even though free delivery has become commonplace with all large retailers, Amazon Prime members never wavered in their loyalty to Amazon even when the company raised annual membership fees by 20%. This is because consumers believe they are getting a value from their Prime membership.

Tailoring offerings and experiences for the individual means figuring out just how much tailoring to do in the first place. Individual lines will range from “all personalization is creepy to me” through to “personalization is incredibly useful and I don’t find it creepy at all,” plus everything in between — and the line will vary for each consumer and every offering. The good news is that the same technologies that make individualized experiences possible will also help organizations determine consumers’ preferences for how tailored those experiences should be.

From Transactions to Experiences

With greater availability of insights and advanced digital technology, companies are moving away from transactional engagement to personalized products and individualized experiences. The one-to-one relationships discussed in 1993 by Don Peppers and Martha Rogers are finally coming to fruition, with technology playing an increasing role. With new digital technologies, organizations have direct touchpoints with customers, with the ability to collect real-time information and deploy immediate recommendations.

These ‘snapshots’ occur 24/7/365, providing the opportunity to deliver personalized products and services, and allow for a value exchange that consumers will appreciate. As mentioned by Accenture, “The goal is to become each individual customer’s ongoing, trusted partner. Companies will achieve this by understanding the technology people use and how they use it, creating the insights needed to integrate seamlessly into the person’s life.”

Those organizations that successfully grasp technology identities will achieve a living, individualized view of each consumer — one that’s needed to deliver rich, continuous, experience-based relationships in the post-digital age.

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