There’s been so much talk about the benefits of personalisation lately that it has essentially become the kale of the banking industry. A miracle cure for all ills that incumbents may have, from sharpening competition to rising customer expectations. Its champions have been busy pointing to Amazon, which reportedly makes 35% of its sales through customised recommendations. The e-commerce giant’s net sales totalled $232 billion in 2018, making for a pretty compelling argument. Others look to neobanks, predicted to grow with a CAGR slightly over 50% between 2016 and 2020, whose upswing has largely been fuelled by the seamless customer experience they offer. Yet, banks shouldn’t hop on the personalisation bandwagon just because it’s en vogue. Here are three ways to get it right and turn the battle for customers into a win-win.
1. Channel your inner Netflix
Or Amazon, Facebook or what have you. Tech giants have long realised that the way to customers’ hearts is through smooth, tailored experiences and spared no effort to laser-target their services. Case in point: Spotify’s much-anticipated Discover Weekly, a custom playlist of 30 songs to make Mondays, commutes, workouts and life in general a bit more bearable for each of its 100 million users. Or Spotify Wrapped, the year-end recap of listeners’ streaming habits, which most of them apparently see as an awakening of sorts. Browse 2019’s best reactions here.
Just like our taste in music, finances are deeply personal. And people are no less grateful for some data-driven TLC in this area of their lives, either. “Banking customers definitely appreciate personal attention from financial institutions. For example, when they get a reminder to pay an installment on time or an alert that they have used up two out of their three free cash withdrawals for the month,” József Nyíri, W.UP’s vice president of business development says. “These little nudges can make a huge difference in retail banks’ Net Promoter Scores.”
2. One tip a day…
“British households spent around £900 more on average than they received in income during 2017, pushing their finances into deficit for the first time since the credit boom of the 1980s,”
The Guardian reported in 2018. Just a year after Standard & Poor’s had warned the UK government that the country’s bulging consumer debts were becoming unsustainable, should they continue growing at current rates. And if the financial toll of indebtedness wasn’t enough, it also wreaks emotional havoc on debtors’ psyche, studies have shown.
No wonder that financial fitness is quickly becoming the new mantra – for banks and banking customers alike. “Banks have all the necessary know-how and data to help customers get their finances in shape. Based on their spending history and behaviour, they can give them tips and expert guidance on how to pay back loans or save up for the future, step by step,” József explains. Other experts seem to share this sentiment. “Holistic, long-term financial well-being is driven largely by everyday behavior and decisions,” EY’s Jan Bellens writes.
3. Know more, sell better
If customers could use banks’ help with everyday financial decisions, milestone money moments are where banks can truly shine. József points out: “Key money moments can affect consumers’ lives for the next 20-30 years. For example, if they take out a mortgage to pay for their first home or buy a life insurance policy when they become parents. Or get a new job and suddenly have more money to manage. Using advanced data analytics and algorithms, financial service providers can easily detect or even predict these life events.”
And once they’ve spotted them, they can target customers with contextual offers. “Contextual offers are personalised product or service recommendations sent at the exact time customers need them. Let’s say, letting a customer know about investment opportunities or offering to set up regular deposits into their savings account when a bank notices a sudden bump in their salary,” József explains. He adds: “Hyper-personalised offers can be real game-changers in banking. Not only do they help banks sell more but they also help them sell better.”