We are truly in the era of the customer. Gone are the days when standard products sets and a one size fits all approach was possible, as technology and intelligence propels us into an ever increasingly digital economy. Taking an outside in mind-set, it is imperative for financial service providers to reassess their purpose and direction to keep the customer at the core of the here and now – as well as medium and long-term strategies. With this in mind could hyper-personalization be the key to unlocking next level growth for the industry?
Hyper-personalization can be defined as, “harnessing real-time data to generate insights by using behavioral science and data science to deliver services, products and pricing that are context-specific and relevant to customers’ manifest and latent needs[i].” There is certainly lots of talk in the industry about offering such personalized services, but is the required investment really being put in place to action the hype?
In recent years the financial services industry has been steeped in managing increasingly complex regulatory and compliance requirements. Although time consuming and multifaceted, this has also resulted in many service providers becoming more agile and more efficient. Is now therefore the time to reinvest such efficiency savings back into the customer experience? Building competences beyond traditional banking and offering these in a truly personalized way is the future of mobilizing deeper relationship levels.
Creating a mind-set for change
It could be that the status quo is holding us back. Embracing hyper-personalization takes time, investment and a meaningful shift in strategy, which creates the risk of in-action. Or in other words waiting for it to become a problem before acting on it. However, we are seeing some industry innovators taking leaps ahead in this space and reaping the rewards. For example, after enhancing its personalization efforts, Canadian Bank, CIBC, saw a 65% jump in customer acquisition rates[ii].
Taking a hyper-personalization step forward may also require taking a step back. In order to be truly meaningful to customers, getting the basics right is a fundamental requirement. Stepping back to re-evaluate and re-design customer journeys will ensure the right services are offered and the right journeys are in place. Forgetting what needs to be done from a process point of view and looking at what needs to be achieved from a customer point of view - without being inhibited by ‘what we’ve always done’ – will create differentiation and ultimately foster customer loyalty. After all, anything built on weak foundations will not last.
Is the time now?
Taking a balanced view, we could question whether the rapid evolution of customer experience and the drive to create more comprehensive customer profiles is happening too quickly? What if when you next walked into a bank branch instead of a generic, “how can I help you?” you were greeted with an advisor who had access to AI based data and knew exactly what you’d come in for – enabling them to ask if you wanted help completing such a transaction or offer advice accordingly? Some consumers may find this intrusive and have concerns over data privacy, whilst others would appreciate a more tailored service.
There is a general expectation that when consumers provide access to their data, that in return they will be offered a more meaningful service. We are also seeing how other sectors are creating heightened customer experience expectations and how this is filtering through to the banking sector. Therefore, it really is all about knowing your customer and understanding their appetite for, and expectations around data usage and personalization. Creating customer profiles and developing multi-layered segmentation can help support this.
Ultimately hyper-personalization will boost customer experience, enable providers to be more financially inclusive and reliably deliver more contextualized and relevant services. The industry has made massive gains in digital banking and now is the time to connect the dots on personalization. A shifted focus on becoming a part of a consumer’s daily life and offering meaningful and personalized services that meet both day-to-day needs, as well as those bigger financial decisions, will embed financial service organizations into the hearts and minds of their customers for the future.
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[i] Deloitte, The Future of Banking, The Hyper-Personalisation Imperative, November 2020
[ii] Capgemini, World Retail Banking Report 2022
First appeared in Finextra