Lately, the banking industry has been hyping the personalized customer experience. Still, customers report significant gaps between their needs and banks’ ability to build a personal relationship with them. That is why it makes sense to clarify what customers expect from personalized banking and how banks can provide such experiences for their customers.
From the ideal image of personalized banking …
Let’s start with some examples to illustrate the concept of the personalized banking experience. Imagine Mary, a 30-year-old office manager in a small consulting firm in San Francisco, who mostly uses digital banking services. She spends around $20 each month on ATM fees because she withdraws money near her favorite lunchtime restaurant. What if her bank notifies her, before she makes a withdrawal, that there’s a free ATM located just a 10-minute walk from her office?
Taking that logic one step further, let’s say the bank’s AI software detects Mary has increased child-related spending. In this case, her bank could offer her a loan on a larger home or a 529 college savings account for her child. Imagine how Mary’s attitude about her financial institution might change after she received such relevant, personalized messages.
… to a harsh reality
While the digitization of banking services has opened numerous possibilities for personalized customer experience, it has complicated the task at the same time. As banks moved from branch-based banking to online and mobile banking software, they focused on making their products and services work for the digital environment. Unfortunately, not all banks understood how to replicate the “personal touch” of branch-based banking in their digital channels. As a result, banks lost the “human” part that has to do with the needs, sentiments, and preferences of individual customers.
The meaning of personalization in banking
Becoming a bank with a “personal touch” is not about the frequency or quantity of contacts with customers nor about the launch of a new banking app: it is about the quality and personal relevance of customer communications. Banks must put customers’ wants and needs at the heart of all banking activities rather than push what they believe their customers want. That is why banks need to shift their focus from simply selling products and services towards providing relevant and contextual financial advice. In other words, a bank should demonstrate a true interest in customers’ financial well-being.
Customers don’t want to be treated as “one of the crowd.” On the contrary, with digitization, they expect more personalization than ever before. Customer-oriented companies, such as Walmart, Amazon, and Google, set the bar for quality of personalized customer experience. It’s not surprising that customers expect the same level of service quality from a bank. And they may be disillusioned to find out that different banking systems don’t talk to each other, or that different channels don’t offer the same functionality, or that a bank still doesn’t offer online account opening.
Building personalized customer experience with technology
To personalize customer relationships, banks should build a customer-centric IT architecture model based on a single view of the customer. For this purpose, they should consolidate customer information from all banking software systems, including core banking, loan, and mortgage solutions, banking CRM, online and mobile banking software, etc. By applying predictive analytics to this summary, a bank can do the following customer-centric activities:
- Quickly identify an individual financial journey of each customer;
- Anticipate a customer’s needs that correspond to a particular stage of life;
- Proactively offer value-added financial products and services targeted to that stage.
Banks can communicate these offers using numerous channels, still focusing on those that seem the most convenient for a particular customer (such as tracking how frequently a customer uses each channel). This personalized banking communication can be further extended with channel integration to make the dialogue even more convenient for customers. For example, a bank can combine online banking with call centers or messengers with a mobile banking app. By linking these channels, banks can establish a long-lasting dialogue with customers, which helps gather customers’ sentiments about the quality of banking services, as well as understand how they can further personalize customer communication.
On a final note
Digitization offers great opportunities to personalize services for thousands of customers and offer them only relevant financial products. Using the right software solutions and tools, banks can uncover new ways to serve their customers.
Learn more about Influencing Customers Through Infinite Personalization.