Digital banking consumers are looking for more personalized experiences when they bank online. A recent study found that 50% of digital banking consumers expect their bank to provide a highly personalized experience. And here’s how hyper-personalization helps banks to provide this experience.
What is hyper-personalization in banking?
Hyper personalization in banking is the process of tailoring banking products and services to meet each customer’s specific needs. It involves understanding the customer’s unique circumstances and preferences and then configuring products and services accordingly. This can be done by using data analytics to identify customer trends or providing a dedicated relationship manager who understands the customer’s specific needs. Banks can better serve their customers and improve loyalty and satisfaction levels by taking this personalized approach.
How are banks using customer data for personalized experiences?
Banks use customer data to personalize the user experience by understanding their needs and wants. Banks can collect a lot of data on their customers, including what products they use, how much money they have deposited, and what transactions they make.
By analyzing this data, banks can better understand what products and services their customers might be interested in. They can then use this information to provide targeted recommendations and offers tailored specifically for them. This helps to create a more personalized experience for the customer, which is likely to be more appealing than generic offers. It also allows the bank to understand better what products and services its customers are likely to be interested in, which can help inform future product development.
Banks may use several different types of customer data to personalize their experience: Including basic information you provide when you open an account (e.g., name, address, date of birth), Account activity data (e.g., deposits, withdrawals, payments), Contact information (e.g., email address, phone number), Marketing preferences (e.g., whether you want to receive promotional emails or text messages from the bank). Some banks may also use third-party data sources to supplement the information they have about their customers. For example, they may purchase data about your demographics (e.g., age, gender) or web browsing history from companies that collect and sell this type of information.
Why must bank adopt hyper-personalization?
Banks cannot just get away with one-size-fits-all experiences in this digital age. As customers increasingly turn their attention away from face-to-face interactions and toward technology as an app or through social media platforms where they can customize what information is given out when chatting with someone new. This way, hyper-personalized customer service becomes necessary and even more apparent. Increased competition in the banking sector has made it difficult for banks to differentiate themselves from one another. Banks need to find ways to distinguish themselves and provide a unique customer experience to attract and retain customers.
Customer behavior has changed in recent years, with customers increasingly expecting a personalized experience when interacting with businesses. Advances in technology have made it possible for banks to collect and analyze customer data more efficiently and effectively than ever before, enabling them to provide a more personalized experience. There is a growing demand among customers for personalized banking products and services. Personalization can help banks improve their customer retention rates, increase revenue, and reduce costs.
Six best examples of hyper-personalization in digital banking
1. Product recommendations
Banks are using data to understand their customers’ needs better and recommend products that they may be interested in. For example, a bank might recommend a higher-yield savings account to a customer who frequently saves money or a credit card with cashback rewards to a customer who often shops online.
2. Customized dashboards
Banks are providing customized dashboards that show customers their account balances, recent transactions, and other important information at a glance. This allows customers to quickly and easily see the most relevant information to them.
3. Predict customer needs
One of the best examples of hyper-personalization in digital banking is how banks predict customer needs. For example, if you have a checking account with a given bank, they may recommend a savings account or a credit card tailored to your specific needs. By analyzing your past transactions and using machine learning algorithms to predict your future behavior, banks can provide you with products and services that are more likely to meet your needs. This saves you time and hassle, but it also helps you make better financial decisions.
4. Personalized loan offers
By mapping a customer’s spending patterns and understanding their financial goals, banks can offer loans that are specifically tailored to each individual. This makes the process of taking out a loan much simpler and more efficient, but it also helps ensure that customers get the best possible terms and rates.
5. Targeted marketing campaigns
Another great example of hyper-personalization in digital banking is how some institutions now send out targeted marketing campaigns based on customers’ spending habits. For example, if a customer typically spends a lot of money on dining out, the bank might send them a restaurant gift card as a special offer.
This type of personalization goes beyond just generic offers and instead provides customers with specially tailored deals that are more likely to appeal to them.
6. Providing financial management
In providing financial management services, bankers can use data collected on customers’ spending habits, repayment behavior, and other interactions to develop unique profiles. This information can then be used to deliver targeted content and products that better suit the needs of each customer.
Banks are starting to see the importance of personalization, but it’s not enough. To keep up with consumer demand for hyper-personalized experiences, banks need to embrace new technologies and strategies that will allow them to provide more customized services.
Deliver personalized at scale
The success that neobanks – banks that exist purely online – have achieved since their inception can be distilled down to one core principle: establishing an emotional connection with their customers. The competition for wallet share is getting tougher, and Chief Marketing Officers are playing a more integral role in the development of the bank’s consumer strategy.
Much like consumer brands, neobanks have placed significant emphasis on gamification of their customer service offerings. Through sociology, psychology and cognitive sciences, FinTechs are able to drive behavioral changes and can evoke feelings of accomplishment. Today’s customers are seeking services that are always available and easy to navigate, and that is drawing them to the neobanks. Three in four customers have indicated that they are drawn to FinTech competitors that provide these services.
What’s needed is a service that is customizable, omnichannel-based and tailored at its core. Consumer insights will be the key to unlock this level of adaptability and can be delivered through a cloud-and-platform-based contact center. Through these, banks can work to break down silos, remove legacy systems and become truly frictionless enterprises.
The value of data, analytics, and AI
To challenge FinTechs and bridge the customer experience gap, incumbents need to truly harness data. They will need to allocate resources effectively and leverage artificial intelligence (AI) and cloud elasticity as part of a wider data and analytics strategy. Fortunately, incumbents have all the necessary ingredients to implement this change. Owing to years of customer service, they possess swathes of consumer financial, social, media, lifestyle and behavioral data.
However, having all the necessary components is only half of the battle. For many incumbents, there are institutional bottlenecks that stand in the way of their data informing a wider customer experience strategy. We know that nearly three quarters of all executives stated that they struggle to turn their data into useful insights. In a survey, around 80% cited data reliability as a concern, with 70% stating that they lack the necessary resources to analyze the data. Recent partnerships in the industry have shown the value of a collaborative approach. By partnering strategically, incumbents can leverage cross-industry data ecosystems to produce the hyper-personalized experiences that customers have become familiar with through their FinTech interactions. Thankfully, regulatory requirements, and technologies such as the cloud, AI, as well as data and analytics are helping to foster increased cross-industry collaboration.
Consumers’ expectation
Today’s consumers expect their banking experiences to be hyper-personalized and available at the touch of a button, while constantly staying on top of trends and providing up to date information. In recent times, financial institutions have had their infrastructures stress tested. However, consumers still require stability. Banks need to leverage the cloud-enabled contact center, open finance and third-party strategic collaborations, making regulatory compliance a core operative pillar to achieve innovation at scale and retain the modern-day consumer.