Building and fostering customer trust and loyalty is increasingly critical for success in today’s hyper-competitive market. Organizations need to understand and connect with their customers on an individual level to create meaningful, personalized experiences that set them apart from the competition. Traditionally, personalization has not been banks’ strong suit, with banks ranking second to last (out of five major industries)according to FICO’s 2023 Global Trends report. Of those surveyed, only 14% of banking customers say their financial institution is “extremely effective” at delivering contextually relevant experiences and product offers. Going forward, success means embracing hyper-personalization as an enterprise-wide strategy by delivering tailored customer experiences at scale and in real-time.
Why Banks Need to Prioritize Hyper-Personalization
In today’s digital-first economy, banks that want to succeed must meet customers’ increased demand for tailored experiences by adopting a thorough hyper-personalization strategy.
At its most fundamental level, hyper-personalization uses context to engage each customer and drive value at every touchpoint throughout the individual journey. Nurturing customer relationships by focusing more on customer needs (e.g., valuable experiences) than business needs (e.g., product sales) will give way to broader opportunities.
To achieve this, there are core-building blocks that organizations need to create the foundation necessary for delivering highly tailored experiences, such as breaking down silos, centralizing data, and bringing teams together across the organization. A successful hyper-personalization strategy involves a high degree of complexity and leverages advanced analytics, AI, and machine learning to maximize data value.
Developing a holistic understanding of customers and each person’s journey requires collaboration across all teams. True personalization means more than simply presenting someone with an array of offers, but rather guiding them toward the optimal next step based on your understanding of the customer and their unique preferences.
When customers continually receive greater value from their hyper-personalized engagements, they become more loyal and more likely to convert on offers presented.
Meeting Customers’ Increased Expectations
As customer expectations continue to skyrocket and shift at an increased speed, hyper-personalized experiences will soon become table stakes for organizations. To mitigate customer attrition and grow their customer base, banks need to create contextual, individualized experiences at scale.
To achieve hyper-personalization at scale, it is critical to learn as much about customers as possible. Leveraging a platform solution enables organizations to gather insights in real-time, measure progress on customers’ specific journeys and how to best help guide them, as well as fuel automation that delivers hyper-personalized experiences millions of times over. A composable platform can help organizations gather data, run simulations, and generate a continuous learning loop to create analytics rules that inform decisions across various strategies.
The latest platform technology can also empower business users to test, monitor, and adjust strategies in a low-code/no-code environment without needing IT assistance. Building holistic views of the risks and trade-offs associated with each customerallows teams to understand what’s best for each customer while also balancing the bank’s business goals by sharing information and working together across the same platform.
There are opportunities to gain and provide value every time a customer interacts with your organization, whether it’s via website, mobile app, or bank branch. You must be engaging customers at all different levels and phases of their lifecycle journey.
Putting Hyper-Personalization into Practice
Let’s imagine the journey a specific customer might go on:
Jane is your customer and she’s saving to buy a house. How do you know this? By using data from across your organization (as well as third party data) to inform you.
Recently, Jane has been looking at home loans on your bank’s website. Based on her customer data, you can see she’s been making monthly rent payments for several years and growing her savings account. You also know her credit score, age, occupation, where she lives, and the current real estate market.
You’re constantly evaluating Jane’s financial activity – including credit card payments, transaction history, mobile app engagement, etc. – to gain insights and deliver contextual, meaningful experiences that add value to her day. Consequently, you’re developing a holistic view of Jane by building a foundation based on data and analytics, which enables you to guide her through a more optimal and profitable journey.
You also subscribe to a third-party service that alerts you when your customers have credit inquiries with other lenders. Suddenly, an alert trigger informs you that Jane has just received an inquiry on her credit from a competing mortgage lender. Based on everything you know about Jane – including her deposit and wealth management holdings, Direct Deposit information from her employer, and last credit report (from a marketing-driven soft pull of her bureau) – you immediately run eligibility and credit policy checks. Moments later, you push a tailored pre-qualification offer to her mobile app with competitive terms that fit her specific profile.
Every interaction is a powerful learning opportunity that you can use to gain deeper insight and deliver greater value. Customer expectations are rapidly transforming day-by-day and hyper-personalization is fueling the digital-first economy. For organizations to stay competitive, they need to embrace hyper-personalization at scale and deliver tailored customer experiences that drive growth.
Darryl Knopp rejoined FICO in June 2017 as a Senior Director and led the FICO Advisors Digital Practice before being named to run portfolio marketing for FICO’s applications. Before joining FICO, Darryl held many key roles at financial institutions through North America and Asia, including Chief Risk Officer of Grow Financial, a Canadian Fintech specializing in online lending and building software for financial institutions. Darryl is a frequent speaker at industry events including FICO World and CSRSA conferences.