Personalisation in banking

Personalisation fuels engagement and loyalty. According to Salesforce, 84% of individuals want to be treated as a person, not a number.

Personalisation in banking fuels engagement and loyalty

Despite the necessity of driving individualised experiences, the banking industry is struggling to keep up with retailers, media and tech companies in delivering these highly tailored interactions and product offerings to their customers. And considering that millennials and Gen Z will comprise a significant faction of future bankers, it is pivotal that banks appeal to them with emotion, branding and lasting connections.

The issues with using segmentation for personalisation

While some banks may provide personal customer experiences, the vast majority cannot meet the high expectations of their customers. The problem is that many banks position their customer journey and marketing efforts around common life moments or experiences.

For example, when a client transitions from high school to college, the bank will bombard that person with student-centered messaging. Later, when the consumer turns 21, the bank will send them marketing material related to purchasing their first house or a new car.

This approach isn’t personalisation – it’s just lifecycle and lifestyle marketing. Just because the consumer turned 25, it doesn’t mean they automatically want to have a mortgage or get married. By making broad assumptions about someone based on their age, consumers – especially millennials – will start to feel distant from their bank. The reality is that banks are not doing the hard work of truly understanding their customers’ needs, and, as a result, their customer journeys feel too generic. Rather than marketing based on life moment segmentation, banks should instead work to target customers through contextualisation.

Personalisation through contextualisation

Financial companies should deploy a contextual journey, incorporating products seamlessly into the shopping experience. However, banks must analyse their data closely to support such a journey. Consumers want to buy at the right moment – not when the bank thinks they should buy, but when they’re ready to buy, which could potentially be anywhere in the larger customer journey. Banks must tailor financial offerings to the present needs of their customers, and predictive data can help them look forward rather than backward, allowing them to anticipate customer desires and goals more effectively.

A contextual approach recognises that the customer journey is never perfect and must be refined through data. This forward-thinking use of data allows banks to tailor the various touchpoints of the customer journey timely and contextually, including conversations with customer service representatives or assistance applying for financial products. By providing these individualised interactions throughout the consumer journey, clients will be satisfied and engaged as they’ll feel that their bank truly cares for their unique needs.

A closer look at the next generation

Banks are interested in attracting millennials, and although they differ from their parents, they still have many similar requirements. However, one key difference is they desire a bank that can connect with them individually and solve their problems. Beyond leveraging a contextual journey to reach these younger demographics, banks must take the time to define their desires, challenges and hang-ups with older methods and approaches.

Millennials occupy a wide range of life stages, meaning they can’t be so easily thrown together into one giant pot. And whichever life stage they’re at, they want banks to support their current needs. These consumers are likewise open and willing to pay for personalised financial advice. Moreover, according to MoneyWise, 60% of Gen Z and millennial customers would consider changing banks for better digital capabilities, such as mobile apps.

Similarly, this block of consumers wants to use the services of organisations that share their values. In other words, millennials want a sense of community. Traditionally, community and geography were tied together, but the contemporary idea is shifting toward other connections like belief systems, hobbies and passions. To target the specific needs of niche audiences within the millennial/Gen Z category, banks should look to fintechs. By empowering these small but exciting start-ups, big banks can service an even larger number of constituents without being too bland. Regional and local banks are also great partners, allowing one to tap into established markets.

Leverage a partner to support personalisation

Banks can deliver personalisation through a more contextual customer journey and by addressing the unique needs/challenges of the younger generations. However, banks must also manage their data scientists and portfolios efficiently. Research from McKinsey shows only 16% of data-science teams follow a standard protocol when developing AI tools, limiting the creation of individualised initiatives. Additionally, only 8% of banks can utilise predictive insights from machine learning models, which is pivotal to contextual marketing. To overcome these challenges, banks should consider leveraging a third-party digital product designer and consultant to provide value and unify disjointed teams.

About the author

Alex Jimenez is managing principal, financial service consulting at EPAM Systems, Inc.

He has more than 25 years of experience in banking and has previously worked for Fleet Bank, Bank of America, Rockland Trust and Zions Bancorp, where he held roles in managing operations, project management and marketing. Prior to joining EPAM, he worked at Finalytics.ai, a fintech AI personalisation platform.