Data-driven personalization: a must invest for banks

Banks need differentiation and data-driven personalization could be the answer

Written by Aly Abji on

Competition in the financial services sector has skyrocketed over the last decade. New entrants to the market launch at a continual pace - from startups with innovative approaches to tech titans expanding their reach into a sector that shows great opportunity for growth. Google introduced Google Plex, a hub for customers to manage their financial activities, and Apple launched their own credit card, Apple Card. Alipay expanded its offering to loans and insurance. Digital banks like Revolut are delivering convenient, highly relevant solutions to their customers globally.

As we move forward, my opinion, along with many others in the industry, is that traditional banks that don’t find ways to differentiate will become invisible in a crowded space. According to Gartner, 80% of traditional financial services firms will be made irrelevant by 2030 after being digitally eclipsed.

We are seeing banking leaders turn to one of their greatest assets to achieve differentiation - customer data. When speaking with our banking clients at imimobile, the majority want to prioritize the use of data to better understand the needs of every customer to deliver personalized, contextually relevant experiences. With 70% of consumers saying connected processes, such as contextual engagement, are very important to winning their business - banks that fail to invest in their personalization strategy risk reduced customer retention and relevancy.

What is data-driven personalization?

Data-driven personalization analyzes customer data in real-time, applying machine learning and AI algorithms to extract insight and determine actions that deliver personalized engagement, insights, and advice to customers over a range of touchpoints.

For banks, we believe that data-driven personalization is about helping to give customers control over their finances - from suggesting tweaks to spending behavior to identifying savings opportunities and recommending services. By helping customers improve their financial well-being, banks will strengthen existing relationships and demonstrate to potential customers why they should trust them with their finances.

We recommend that banks use personalization to add value in four key ways:

  • Provide information that will help people to make decisions
  • Find ways to guide and simplify
  • Advise on things that may be needed
  • Show that they care about their customers' financial wellbeing.

By delivering personalized experiences based on the four core tenants above will help banks to establish an emotional connection with their customers, something that they have previously scored worse on when compared to the ease and effectiveness of their services.

From our experience, there are opportunities across the customer lifecycle, from discovery to loyalty, to orchestrate personalized interactions that enrich the experience a bank offers to its customers. Here are some examples of personalization that I recommend banks deploy to inform, guide, advise, and care for customers:

  • Sending an alert if a customer can’t cover an upcoming expense
  • Customizing offers of financial products that a customer is eligible for based on their financial situation
  • Financial insights to save and make a customers money go further based on spending pattern
  • Matching customers to call center agents based on needs, personalities, and other factors
  • Sending personal recommendations based on a customer’s financial situation.

Siloed systems and process bottlenecks slow innovation

The opportunity to differentiate through data-driven personalization is one that banks need to capitalize on - so what’s standing in the way?

In our experience, one of the biggest blockers is that the data from which to draw insights from and personalize engagement and services lies locked away in various systems. The result of long-time adherence to strict regulations, ingrained culture, and size of the business - banks have long faced challenges with silos and legacy infrastructure. Not only are banks typically organized by product domain and customer segment, but different departments own different channels, software, and systems - the website belongs to marketing, IT owns mobile banking, and retail operations own online banking.

With systems and processes across departments siloed and not built with the customer journey in mind, banks are unable to build a comprehensive, 360-degree view of customers. This not only negatively affects the quality of the insights from which to personalize and contextualize experiences, but stops the customer journeys that orchestrate these experiences from being automated. This fragmented approach is causing banks to not be able to serve customers effectively, in their time of need, with useful information or assistance.

Banks are turning to enterprise CPaaS as a solution Get started with data-driven personalization

To solve the challenges described above, some banks will build internally - mainly national banks with large technology budgets. However, this approach can be time-consuming and costly. From personal experience, I have seen one financial services provider take seven years to consolidate their customer data into one accessible place.

However, we are seeing banks turn to third-party solution providers to move quickly. Currently, as high as 83% of financial services firms are seeking help from outside their organization. These banks typically combine third-party capabilities with internal analytics and models to deliver solutions quickly and at scale. To help solve the challenge of making data accessible and orchestrating personalized experiences, we believe many will look towards enterprise Communications Platform as a Service (CPaaS).

CPaaS offers businesses a cloud-based middleware from which they can develop, run and distribute communications software. A Cloud-hosted CPaaS provides developers with APIs, software development kits (SDKs), integrated development environment, and documentation to facilitate simplified access to an array of communications tools for voice, SMS, rich messaging, and video.

However, some CPaaS providers are able to offer a centralized way to manage various touchpoints across the customer lifecycle. The unique ability to integrate existing backend systems and applications to read and write data makes the contents of each disparate system interoperable. This allows for data-driven triggers and business rules to be applied to power numerous workflows for different use cases across every stage of the customer lifecycle. With additional NLP and AI capabilities, they can determine customer intent, enable self-service, and deliver two-way conversational interactions.

With systems integrated and workflows set up, banks can deliver personalized and contextual experiences to customers across the channels they prefer to use, from their branded app to digital messaging apps such as Apple Business Chat. 

Get started with data-driven personalization

While banks continue to struggle with disparate systems and silos across their organization, with the help of enterprise CPaaS, data-driven personalization will become a core part of their CX offering. The result will be intelligent interactions tailored to customer needs, enabling banks to differentiate their services.

With imiconnect, our low-code central communications hub, we enable financial brands such as Barclays, Santander, HSBC, and RBS to fully take advantage of the opportunity that data-driven personalization represents. Through a single unified platform, financial service providers can stitch together their existing systems and technology investments to enable automated, two-way customer interactions. Customer journeys are created in minutes through an intuitive drag-and-drop editor, with interactions spanning across 10+ channels, including SMS, voice, email, in-app, webchat, and social. With imiconnect, banks, insurance companies, and other providers have the opportunity to deliver personalized services and experiences at all stages of the customer lifecycle.

To learn more about imiconnect, you can download the product sheet or reach out to me on LinkedIn to organize a call.