The Power of Personalization in the Financial Services Industry
By Elena Mesropyan for LTP
‘Let’s not get personal’ is certainly not about the modern way to serve the customers’ financial needs in the best way. Financial institutions should get personal if they wish to evolve and be relevant in a highly competitive market where personalization is one of the most important ways to appeal to experientially omnivorous consumers.
As Donna Peeples, Chief Customer Officer at Pypestream, commented on the change in the financial services industry and the shift in power to the consumer, “The customer experience landscape has been described as shifting. I would say it is an earthquake. I think it’s going to continue to change, some of the things we are seeing now around personalization around digitalization – those are going to continue to move forward but the velocity of change is only going to increase.”
At the moment, however, banks seem to be lagging in embracing the opportunity with personalized financial services. A recent survey and analysis of consumers and over 300 financial institutions suggests that almost three-quarters of banks are either progressing or lagging, while only 6% are leading the way with best-in-class personalization capabilities. On a regional level, European institutions are reported to be leading the pack with the greatest percentage of best-in-class organizations, while North American banks are struggling to keep up with changing demands.
“The reason why banks are being accused of being old and stale and slow is that they are finding it very hard to adapt from product selling to mass markets through traditional media engaged via channels to offering contextual services to individuals via social media that provides digital access. This is all part of the evolution, or revolution if you prefer, of banking and the heart of this is that the FinTech startups are focusing upon putting control in the hands of one.
“<…> The market of one is all about making the individual the center of control and supporting them in controlling their lives. The market of one can only be served by apps that leverage data and personalize it, so Venmo’s secret is not deep data mining but allowing deep data sharing.”
Indeed, personalization in addition to cost-efficiency and transparency is one of the main differences between what FinTech startups offer as an alternative to bank services. Personalized services engage customers and build their loyalty, increase trust and customer retention.
A personalized approach in the financial services industry is important in both constructing the services and delivering them. It ensures the relevance and communicates the sense of customer-centric organization looking out for customers’ best interests. Professionals believe that customers will tend to stick with a provider that is willing to provide exactly what they want or need. Such an approach can only add value to the products and services delivered by allowing customers to feel comfortable with the package.
Moreover, as professionals from Adobe suggest, through personalization, financial institutions are able to build deeper relationships with each customer based on affinity and the recognition that the customer has trusted the institution with his or her money. In return, as they believe, financial institutions must recognize what individual customers need and don’t need, and what makes the most sense for them based on their current interests or major life events such as marriage or imminent retirement.
The Adobe team has listed the requirements for a successful implementation of personalized approach in the financial services industry, outlining the following:
- Gain a complete view into customers;
- Target, test, and refine;
- Orchestrate and personalize customer campaigns;
- Deliver consistent experiences across channels and devices.
“To be truly effective, personalization must span every interaction so that a consistent message is sent across all online and offline channels. In short, financial institutions must present the right communications at the right time, through the right channel, to precisely the right audience.”
First appeared at LTP