Some financial services companies are lagging behind in their transition to the new digital landscape. Here’s why and how they should accelerate their evolution.
Hyper-personalization is key for established financial services firms if they want to retain customers while competing with startups, many of which operate solely digitally, said Philip Bush, head of Amazon Connect – Capgemini North America recently.
In an article in the Global Banking & Finance Review, Bush explained that some established companies are slow to adapt. These companies are currently considered more legitimate than some of the startup challengers, but older, more established banks often lack digital agility.
“That said, the tone is set and customers are increasingly expecting these hyper-personalized experiences from traditional banks as well. This drives incumbents to create agile, personalized experiences to stay competitive,” Bush said.
Below are four ways experts recommend harnessing and improving these hyper-personalized experiences.
1. Have an agile tech stack
Hyper-personalization requires a few things, said Kathy Stares, Provenir’s executive vice president, Americas.
“First, financial services need an agile technology stack with seamless integrations to see everything about their business in real time. Second, they need innovative products that have a broad reach. This is why BNPL (buy now, pay later) is so successful, as it reaches an underserved population. With BNPL, hyper-personalization is about financial services that align with the best merchants that feed that customer base and have a broad reach.
The technology stack should include access to lifestyle and contextual data, such as social media, to provide financial services firms with a more complete picture of prospects so offers can be tailored to specific needs, added stars.
“It’s a paradigm shift – consumers drive product development, not companies,” Stares explained. “It is therefore more important than ever for financial services to implement hyper-personalization strategies that meet the needs of their users.”
2. Use AI and machine learning
For lending, which is how most banks and credit unions make the bulk of their revenue, AI and machine learning are key to “meeting customers where they are,” according to Stares. .
Having contextual and lifestyle data enables financial services to use AI-driven marketing models, Stares explained. “Think of Amazon. The company might not know me, but they know I was looking for light bulbs, so they asked me if I needed a lamp. In a loan scenario, a consumer can get a mortgage online and get the best rates.A few years later, that consumer might get a personalized message asking if they need a home improvement loan.
With the extended scope and reach of enterprise data, every click, every transaction, every letter typed can be effectively analyzed to produce moments that matter to bank customers, added Ray Barata, Senior Director of TTEC Digital, Advisor into solutions. “This enables real-time or near-real-time agility to respond to customer behaviors and needs. It’s the “secret sauce” of hyper-personalization. Analyzing customer data is table stakes in theory, but pivoting as the situation or customer preferences change, on demand, is at the heart of a hyper-personalization strategy.
Barata recommended that financial services firms use data aggregation and consolidation to drive customer journey strategy, product development, and future investments in customer journey orchestration tools, customer and employee data and data lakes.
3. Focus on transparency
By thinking about how best to interact with customers and obtain their personal data through insights, financial services firms can better understand the reason for customer behavior and build a long-term beneficial relationship, Bill said. Ryze, Certified Chartered Financial Consultant and Board Member. adviser at Fiona.
However, there has been a lot of mistrust when companies acquire users’ personal data with long, hard-to-decipher terms and conditions, Ryze explained. Moving forward, financial services companies need to be transparent about what information they want to collect and how it benefits the customer.
Customers are always ready to trade their data when they know they’re benefiting from it, Ryze added. Financial services companies need to answer these questions:
If you were to think of data as true currency, how could you connect data and the real-time value you can return to customers?
Do you have a way to identify the moments that really matter when collecting data?
“If done well, data helps with personalization and thus improves the user experience,” Ryze said. Today, customers are often willing to be part of the process and exchange data in exchange for better customer service, he added.
4. Leverage IoT
Financial services firms and other businesses must be able to accept data and act using the Internet of Things (IoT) ecosystem, Barata said. “Smart devices like refrigerators can remind customers to buy milk, that sounds good, but in the banking world, I interpret that as allowing customers to use whatever channel they want to interact with their bank, when they want it.”
Phone, chat, website, mobile app — customers in an “on-demand” world communicate with their banks as needed and in multiple ways, Barata added. This is where banks and fintech can differentiate themselves from insurance companies, in that they are reachable by their customers and this can be extended to all products, to all members of the “family ” for any reason.
“This pervasiveness of communication presence combined with a cadence and frequency that shows predictive and preemptive problem solving is a key way for banks to achieve a hyper-personalized world,” Barata said.
The Takeaway: Embark on Hyper-Personalization
As Bush points out in his article, hyper-personalization is a process that many financial services companies are still in the very early stages of, but strategy is essential if they are to compete effectively with digital-only businesses. which have much lower costs. because they don’t have the physical branch fees.
Using the above four strategies will help financial services firms accelerate their hyper-personalization process.