Why personalized services, experiences and products can delight existing customers – and bring in new ones
The bad old days when banks sent out “dear valued customer” letters are receding into memory. Today, personalization means much more than just writing an email that addresses a customer by their name.
Evidence clearly demonstrates that personalization helps to serve existing customers by offering them customized, relevant end-to-end experiences built on a foundation of rich data insights. It can also be an effective way of driving new customer acquisition.
The rewards for doing personalization the right away can be significant, with Boston Consulting Group calculating that “conservatively speaking”, it can lead to annual revenue uplifts of 10% for banks.
“Ultimately, if done well, personalization at scale can provide a direct route to lower rates of customer churn and higher sales,” BCG wrote. “In many ways, personalization at scale is a 21st-century approach to delivering what the banking industry lost many years ago: the ability to truly know customers, anticipate their needs, engage in a rich dialogue about their financial lives, and, as a consequence, foster loyalty that can last a lifetime.”
The analyst house went on to liken personalization to the approach taken by a “skilful sommelier who changes a wine recommendation on the basis of a customer’s tastes, mood, and resources”. With widening access to data, financial institutions are now able to generate insights that can be used to offer services, products and pricing which respond exactly to individual customers’ needs and the context of their request.
In November 2020, Deloitte said that personalization should be an “imperative for banks, enabling them to respond to customers’ manifest and latent needs”. In other words, personalizing services enables financial institutions to give customers what they’re looking for right now, as well as serving their future needs.
Surveys have shown that digital customers now expect personalization from the companies they engage with. An Accenture report found that 83% of respondents were willing to share their data to enable a personalized experience “as long as businesses are transparent about how they are going to use it and that customers have control over it”. Forrester also found that 89% of digital businesses were investing in personalization, while Salesforce reported that 66% of customers “expect companies to understand their needs and expectations”.
“Historically, customers have expected basics like quality service and fair pricing — but modern customers have much higher expectations, such as proactive service, personalized interactions, and connected experiences across digital channels,” Salesforce wrote.
Banks are starting to look and act a lot more like tech companies by placing the customer at the center of their business. We’re seeing the evolution of experiences which are dedicated to consumers and fit around their lifestyles. Financial services are now interacting with customers at their time of need, offering heavily personalised services that respond to data points ranging from location to the time of day.
“In the future customers will increasingly be able to expect a highly-personalized service determined by their individual requirements, instead of based around a set of savings, borrowing and investment products, each with their own sales and servicing characteristics,” Andrew Eldon, HSBC head of Digital, Retail Banking and Wealth Management, Hong Kong, wrote in 2019.
“By mastering new data sources and analytical technologies, banks will be able to build up a deeper understanding of customers’ needs.”
Building services to meet the demand for personalization was once a challenge to incumbents. But creating the tailored, bespoke services once exclusively offered by fintechs and challengers is now easier than ever.
Changemakers at big banks can use FintechOS technology to prototype and roll out high-productivity financial infrastructure that is delivered in weeks, not months or even years. Our low-code services and platform empower citizen developers and other team members to create their own applications or easily modify existing services to ensure they respond exactly to the needs of the wider business and its customers.
Financial institutions that partner with FintechOS can also benefit from joining a community of communities, with the FintechOS Marketplace offering plug-and-play access to scalable, highly-connected pre-built applications and solutions.
The Marketplace is stocked with digital customer journeys built by FintechOS, our customers or partners, as well as ecosystem connectors which allow services to talk to each other, becoming more connected and user-friendly. Advanced analytics and evolutive data models offer valuable insights into customer behaviour and valuable insights showing how services are performing. Automation opens up new ways of building customer-centric experiences and journeys that are seamless, frictionless and highly personalized.
Banks, insurers and financial institutions are moving towards a personalized future. FintechOS can help them get there, offering a personalized way of building personalized products.
Find out what it takes to be customer-centric.
