Personalised banking is nothing new. Few of us today may remember it, but at one time when anyone could walk into the bank and have a chat with their bank manager to go over their finances and impending life changes, in order to discuss investment opportunities.
Somewhere along the way we've lost that intimate connection between banks and us, their clients. Yes, we have phone, internet as well as banking apps, but for all their convenience these are faceless, impersonal and simply transactional services. In many ways they are a poor replacement for the two-thirds of bank and building society branches that have closed over the last 30 years. That's because these services rarely provide the personalised customer service and relevance that consumers have come to expect from other areas of their lives.
A new breed of challenger banks have been quick to fill this void with a range of highly personalised services, that is one of the reasons why they have were able to capture a quarter of millennial customers. It is just now that traditional banking institutions are waking up to the opportunities of hyper-personalisation.
The personalisation revolution
Banks can't say they weren't warned. Back in 2021, one estimate suggested that European banks could will lose out on EUR22bn of revenues to big technology groups offering a variety of digital-first financial services. A year later, NGDATA discovered that less than 30% of customers think their bank's offers are customised for their individual needs. Meanwhile banks market their cool product offers as ones specially tailored to customer needs, let alone their communication with said customer – so where has this perception gap originated?
We need to go back to the beginning and rethink what we truly mean by 'personalisation'. It may be something as simple as Wells Fargo's customisable ATM experience which displays the customers “favourite” services on the screen. But the best personalisation is when banks supply the most relevant interactions, services and marketing to each customer at every touchpoint and at the right time.
The benefits of personalisation are evident. McKinsey has found that full personalisation can deliver between 10 and 20 percent more efficient marketing and a 10 to 30 percent uplift in revenue and retention. Singaporean bank DBS, meanwhile, states make more than lb700 revenue each year from its digital customers, a lot more than double what it makes from traditional customers.
This is to say nothing of the increased customer loyalty that comes from delivering a fantastic customer experience. This isn't a particularly new concept. In 2021, KPMG cited personalisation as the first of its six pillars for banks seeking to unlock rapid growth.
It's no surprise traditional banks have spent the last few years upgrading their IT infrastructure to supply the ability to capture and analyse immeasureable personal data on which hyper-personalisation depends. But merely having the data isn't enough to create a winning customer experience: there are lots of other questions that banks must solve before they create hyper-personalisation a reality.
Tapping into “customer DNA”
Technology now enables banks along with other financial institutions to understand each customer's unique “customer DNA”, enabling them to tailor their communications and lending options to every individual – a process we call “hyper-personalisation”. What this means is delivering truly contextual personalised services, which enhance the user experience based on a customer's objective.
While this really is key to increasing a bank's engagement with customers, any investment should be focused on delivering true value. Personalisation for its own sake could hurt instead of help a bank retain and grow the client base – especially if they have a cavalier approach to people's data security.
Banks must therefore try to maximise the value of the data they hold, while staying onside with data protection regulations such as GDPR. They must also ensure that they strike the right balance between relevance and the “creepy factor” of seeming to know an excessive amount of about customers' financial affairs. How, then, can banks balance the need for privacy while delivering the next generation of hyper-personalised services?
The 360o customer view
There is really much data being generated by contributing to customers today that it can be nearly impossible to gain a complete view of them. And, because data is often generated and kept within business siloes, it requires a great deal of time to merge data right into a singular customer view that is still relevant and offers actionable insights.
By utilising a smart customer engagement platform that merges operational and marketing data, organisations can merge a large number of metrics into a singular, comprehensive look at enterprise customers on the individual level that is required for personalisation. With this approach to teasing out customer DNA, banks will gain maximum visibility into customer behaviour, enabling them to deploy customer experience campaigns inside a whole new way.
Only when banks obtain a holistic view of customers can they deliver the personalisation that these consumers crave: for instance, by being able to provide hyper-relevant marketing and products that increase engagement and conversions, banks are able to reduce irrelevant communications, making customers feel valued and understood.
The bank manager of old knew that point spent on face-to-face engagement with customers was never wasted, leading as it did to opportunities to sell new services, or simply to bolster loyalty with high-value customers. Because of technology, we can recreate these relationships – and, indeed, make sure they are stronger than ever before.