Personalization drives customer loyalty. But to scale it, financial institutions need to do three things.
Customers decide very quickly—in a matter of seconds—whether they like your service offering. Provide something relevant and you will get a satisfied customer. Miss the mark, and they’ll be gone.
The issue of relevance in today’s era of instant gratification is remarkably pronounced as consumers are swamped with messages, most of which are off target. Across sectors, including the financial landscape, personalization—or reaching customers with tailored offerings at the right time—promises to address this issue.
While financial institutions (FIs) have been able to personalize a few product lines, most still struggle to scale the ways they engage with customers. The real challenge lies in transforming the organization’s processes and practices to harness the full potential of personalization.
Done right, personalization enhances customer experiences and increases engagement and loyalty through offerings that anticipate what customers really want and are tuned accordingly. Research shows that personalization also unlocks significant near-term value for businesses such as a 10 to 30 percent uplift in revenue and retention. What’s more, while immediate results can be achieved within a few months, adopting personalization as a practice will result in a long-term positive effect on the customer journey.
There are three steps that lead to successful financial personalization at scale:
#1 Embed Technology for Transformation
The financial services industry has been comparatively slow to embrace technology-driven personalization. A recent report suggests that 94% of FIs are unable to live up to the personalization promise. With mobile-only banking on the rise, banks must become customer-driven and utilize advanced technologies like artificial intelligence (AI) to achieve personalization at scale.
Arguably, the most promising deployment of banking AI is through customer-facing, cognitive messaging applications. There are several reasons to use these chatbots in banking:
They deliver significant cost savings
A recent study released by Juniper Research suggests that cost savings earned by leveraging chatbots in banking are expected to reach $7.3 billion by 2023 up from $209 million in 2019.
They augment operational efficiencies while boosting engagement rates with both customers and prospects
Currently, Bank of America is the US leader when it comes to implementing AI in banking across channels. Erica, its chatbot, is renowned for sending customized financial recommendations to customers from the bank’s mobile app.
However, these platforms are now moving beyond being mere chatbots to developing cognitive AI functionality. Emerging platforms are interacting with customers in a personalized and data-driven manner, with a deep understanding of the underlying banking context. This is what the industry refers to as ‘conversational banking.’
A robust conversational banking platform understands an individual’s financial situation by analyzing their personal banking information and responds with suggestions on complex questions, such as whether to consolidate personal loans, how best to transfer money to a close one, and what results in queries that would require a visit to the bank.
For instance, Kasisto, creators of KAI Banking, the leading conversational AI platform has introduced Stacy, its virtual assistant, for Standard Chartered Bank, Hong Kong. Stacy is trained to converse with the bank’s customers in English and Cantonese on the bank's website and mobile app. With KAI's ability to power human-like conversations, Stacy is as quick and responsive as a human. It supports hundreds of unique banking questions, engages with customers about banking offers, branches, ATM locations along with dining and retail offers, and provides customer support instantaneously. Stacy is beyond convenient and personal – and the more it interacts with customers, the faster it learns.
#2 Unlock Doors to Open Banking
That personalization depends on data about the needs and goals of customers as well as the outcomes is known to financial leaders. Larger firms generally have decade-old data on core systems, customer profiles, pricing engines, financial planning tools, and so on. Despite having access to the right data, they don’t always have the technology or infrastructure needed to analyze it accurately. That’s where partnering with other firms comes in, particularly with those that leverage an AI platform to analyze customer data through information-sharing via APIs. Such strategic collaborations help larger firms reach more target customers and provide them with better and more attractive offerings.
Salesforce has offered these options to its clients via its Financial Services Cloud API suite. The smart solution leverages its Einstein analytics platform to learn more about customers and offer personalized financial services. This enables banks to take advantage of the data, which they already have access to, but fail to analyze.
In other words, open banking is all about finding ways to unlock data to facilitate financial planning, decision-making and drive more personalized customer experiences.
#3 Market to Customers, Not the Channel
On polling a room full of individuals about their visit to a physical bank during the past month, you are likely to get only a small show of hands. The reason behind this is that in 18 of 22 countries surveyed, more than 50% of their banking interactions take place through digital channels. Thus, while customers may not be visiting physical banks, they are still engaging with their banking providers and expecting meaningful interactions. However, 43% of customers believe their primary bank does not understand their needs.
To meet these evolving expectations, FIs need to think beyond channels. Most of these enterprises are marketing to customers based on rules and decisions targeting a specific channel. If the FIs’ technologies are disconnected across channels, they will inevitably lose sight of a customer as soon as they switch from one channel to another. A single customer view is, therefore, imperative for impactful personalization.
The combination of disconnected data and lack of automated decision-making from a central source is preventing FIs from achieving their objectives. Financial enterprises must have access to real-time behavioral customer data from web browsing sessions, purchases, and in-person interactions and engagements via kiosks, mobile applications, and websites. By aggregating behavioral and transactional data into a single view of the customer, the financial services industry can become truly customer-centric, maximizing cross-selling by managing the communication stream across channels.