Imagine you are out shopping. You receive a text message from your bank reminding you that there’s an ATM or branch close by, and that you may need to transfer some funds to purchase travel insurance for your upcoming overseas trip. When you go to the ATM, the interface presents personalised comparative travel insurance options to make your purchase seamless. You buy the insurance with one click and are on your way.
While it sounds like the stuff of science fiction, at RXP Collective we’ve observed that these highly personalised customer experiences are fast becoming a reality. So what do banks need to know, and how can they prepare for a personalised world?
How personalised banking works
In the scenario above, your proximity to the bank (or, more specifically, your smartphone’s proximity to the bank) would be detected by a wireless beacon. By combining this information with other data it already has on file, such as details of recent purchases, the bank can make inferences about:
- When you’re in the mood to buy
- The products and services you are most likely to be interested in buying
- Your preferred channels (i.e. in person, online) for making the purchase
This is just one type of advanced personalisation technology. For others, read our article on brands getting hyper-personalisation right.
The time for action is now
Start-ups like Uber for taxi services and Warby Parker for try-before-you-buy eyeglasses have shifted customer expectations. Customers want the brands they interact with to offer personalised, tailored solutions for everyday problems - and banking is no different. But is it too late for banks to adapt? A recent study found that 53 percent of millennials don’t identify any point of difference between their bank and other banks. Other research has shown that 73 percent of millennials would prefer to get financial services from a tech giant such as Google, Amazon, Apple or PayPal than from their traditional bank. One-third believe that they won't even need a bank five years from now.
It’s up to banks to turn this perception around, and fast. How? Through enhanced customisation and omni-channel personalisation. Think intuitive digital technologies, online and mobile interfaces that anticipate customer needs, powerful CRM solutions and clever chatbots. Banks need to keep offering a full range of personalised services to compete. Otherwise, they risk losing the direct interface with customers and becoming a no-name product provider with big tech firms providing the brand.
The ‘good old days’ are back - with a digital difference
Identifying what customers value is the key to banks implementing effective digital personalisation initiatives. According to a recent digital banking report, customers still look first to their bank for financial solutions and advice because of an already strong and established relationship.
Remember when the bank teller knew you as an individual, understood your savings targets and lifestyle and shared news of major life events as you made deposits and withdrawals? Customers want the digital version of this experience, which may be blended across physical and digital channels.
They want their bank to know in some detail where they are on their life journey. For example, if a customer has just taken out a fixed term mortgage, they won’t be interested in new mortgage products. But they might like to know about home improvement loans. As business guru Peter Drucker rightly observed, the aim of marketing is “to know and understand the customer so well the product or service fits him and sells itself.”
What advantages do banks already have?
It’s evident that personalisation across all stages of the customer journey will be a crucial differentiator for banks. The point of difference that banks already have is a huge amount of data and knowledge about their customers, including personal, historical and contextual data. They can use this to gain a significant advantage over their competitors.
How can data analytics help with personalisation?
Data can be leveraged for real-time customer engagement. When a customer launches a bank mobile app, for example, relevant options can be tailored to his or her location, the time of day and account balance. When they contact the bank by phone, the agent can instantly see recent interactions and products purchased on their screen and make the ensuing conversation relevant and targeted, offering a bespoke customer experience. Loyalty incentives could be individually tailored, offering something the person actually wants and needs in place of a generic offering.
A global survey of banking leaders revealed that only 37 percent of organisations have a formal plan in place to make personalisation happen. To remain strongly competitive, banks must invest now to utilise data analytics, personalise the customer journey and reinforce their commitment to meeting the needs of today’s consumer. A partner like RXP Collective can help you on this path and enhancing the customer experience through digital transformation.
For more information on how personalisation will impact banking, refer to our white paper: Digital Platform Trends 2017: Banking on a Digital Future.