Personalization in financial services: An imperative to stay relevant
POSTED : February 25, 2021
BY : Jodi Rausch

With the blurring lines between the retail, fintech, and banking industries, customers are left wondering why personalization in financial services, for lack of a better word, sucks. Banks are being quickly left behind by retail and tech giants who are investing heavily in their customer experience. These investments are focused on engaging customers through their preferred channels, tailoring recommendations and offerings based on their historical activity, creating strong membership programs that reward loyalty, and building solutions that meet the needs of their target audiences. Banks can no longer assume that their target audience will adjust its needs to meet pre-existing solutions.

Competing with digital natives

Given a lack of personalized experiences with traditional banking institutions, many customers are being drawn to fintech and non-financial institutions, such as Facebook, Amazon, and Snapcash, for their banking needs.

Consider the case of Venmo. Originally intended to help its users split payments, it is treated by Gen Z and Millennials as a replacement for cash wallets, checks, and credit cards, as well as a source to crowdfund. The company’s meteoric rise in the “virtual wallet” space is not just driven by its creative use of emojis but by crafting a solution and experience that caters to the needs of younger generations. Having grown up in a digital-first world, Venmo’s success is directly attributable to a variety of reasons: functional and easy to use UI and UX, a strict focus on a P2P app experience, no transaction fees, the immediacy of sending & receiving funds, and an ability to make something as routine as sending money fun.

Unless banks start creating the digital experiences customers are drawn to, the next generation will take their money elsewhere.

Personalization in banking

Personalization in banking is not primarily about sales. It’s about addressing the myriad customer needs such as information, service, and expert advice. A personalized experience delivers the right individual experience at the right time.

Great personalization efforts start and end with getting a deep understanding of the customer. Investments in personalization can yield far more than just more data:

  • It helps foster coherence across product groups (checking/savings/credit card accounts, personal/housing/car loans, etc.), providing a consistent and frictionless experience.
  • It enables progressive profiling of customers to craft compelling offerings and targeted opportunities based on demographics, psychographics, and behavioral triggers.
  • It improves brand appeal through digital engagement tools such as a financial wellness app, catering services, and information to generations that prefer digital channels over physical.
  • It identifies new solutions that can appeal to unmet needs and drive incremental growth.

Financial corporations need to think outside the box when it comes to their loyalty strategies. Relying solely on traditional rewards such as cashback programs, special promos or offers at certain retailers, or points per purchase for retention tied solely to credit cards is not a sustainable winning strategy, particularly when faced with more nimble disruptors. Customers expect all banks to be able to provide traditional rewards and are attracted to banks that can successfully generate additional value. Banks should ask themselves what additional value they can provide their customers to win and maintain their loyalty. Consider a non-digital native customer who is forced to leverage digital services for the first time during this pandemic. Ensuring they have a great onboarding experience, as well as a frictionless transition from self-driven, digital usage to 1:1 guided usage, helps deliver a great experience.

Financial institutions would benefit by emulating retailers and tech companies blazing ahead in their efforts in personalized customer experiences. As customers enter different life stages, their needs rapidly evolve but the one thing that remains constant is their affinity for companies that make their lives easier.

Companies that prioritize delivering a personalized experience to their unique customers will build the foundation for ongoing loyalty. Before implementing and rolling out a personalization strategy, banks should pause and ask themselves if they truly know the answer to two key questions:

  • Do I really understand my customers? As mentioned earlier, a winning personalization strategy begins and ends with the customer. While many board rooms and C-suite members talk about who their consumers are and how they do things, many of them don’t fully understand why they do these things. Building rigorous, end-to-end knowledge of the customer journey will help define all the existing and potentially new touchpoints you can leverage.
  • Where do I fit in? While your customers might have many needs, not all needs are created equal. Focus on and providing value in key, emotionally charged, moments that matter. This will build lasting, meaningful relationships. Expand your understanding of the customer journey to identify areas where you can deliver additional value and areas where you can establish strategic partnerships.

While building and implementing a personalized user experience is difficult, banks that successfully do so will position themselves to compete with the growing list of competitors. Current investments in creating best-in-breed customer personalization strategies create delightful customer experiences that ensure your customers stick around.

Learn how to collect the right data to build your personalization strategy.


About the Author

Jodi RauschJodi Rausch serves as Director of Integrated Loyalty Solutions at PK. She has deep experience developing, transforming and managing differentiated loyalty programs, customer marketing activities and customer experiences driven by data, customer insights and financial rigor. She enjoys building and growing relationships with internal teams, clients and end customers to best understand their needs and exceed expectations.

Amish BrahmbhattAmish is a strategy consultant at PK and an MBA graduate from the University of Illinois – Chicago. He is a data-driven, customer-centric strategist helping clients better understand and create delightful experiences for their customers. His experience involves designing and implementing marketing strategies, UX design, sales enablement strategies, future customer experiences, data strategies, and change management processes. Prior to PK, Amish primarily worked in the retail industry in an analytics & business strategy capacity.

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