Traditionally, personalization in banking meant tailoring products and services to individual consumers. Banks focused on next-best sales offers, targeted marketing, and in-person interactions at branches. But today, advanced personalization focuses on the customer rather than the offering: How can you meet each consumer’s needs and wants?
Data is an important aspect of personalization. Without seamless, secure access to data everywhere, banks can’t perform the advanced analytics needed to understand consumers. Also, personalization needs to focus on digital interactions because banks reach consumers primarily through the internet, especially in light of the COVID-19 pandemic.1 Banking institutions have moved to the cloud and embraced digital transformation. But to deploy advanced personalization for customers, they need to implement a digital-first strategy.
We’re seeing three personalization trends in the banking sector that point to the importance of a digital-first strategy:
1. Omniaccess: Banks have historically prioritized physical interactions with customers, believing that is the best way to provide a tailored, trustworthy experience. But today, consumers increasingly interact digitally. According to MX, 70% of consumers say they would like their banking experience to be similar to other industries such as Netflix and Amazon.2 To create this type of customer-centric digital banking experience, modern banks need to create easy, secure access to a common data core so they can provide seamless customer service across physical and digital channels. Banking industry expert Chris Skinner calls this omniaccess. “The core of 21st century banking is data and a consistent experience across devices and access,” said Skinner. “Omniaccess starts with a rationalized and consolidated core of customer data that can be analyzed and accessed with intelligence—artificial and human.”
2. Financial wellness coaching: In a study by the Aite Group, more than 75% of 22- to 49-year-old consumers indicated they were interested in using a virtual financial wellness coach.3 Such a coach could see where a customer is spending money, offer spending and savings recommendations, set up a budget and savings goal, and monitor progress toward those goals. The virtual coach would need to access the customer’s information, as well as data about similar customers, so it could provide knowledgeable, customized information and advice on how to improve the customer’s financial health. For example, data on the customer’s age, location, career, and family situation could illuminate future spending needs and savings targets.
3. Transparency and social community: Banks have traditionally been conservative in sharing data for the sake of customer privacy. But younger investors have different concepts about privacy and sharing, thanks to the internet and social networking. They prioritize being “heard, understood and valued,” according to Deloitte.
“Leading banks around the world are already responding to this trend by evolving into social banks, ones that embrace transparency and two-way interaction through social media to meet and exceed customer expectations. A social bank pursues mission-appropriate engagement with its customers, aligning its social efforts with its core business strategy and brand image. It builds the organizational capabilities needed to process customer insights and adopts change management strategies that let it react to this input in meaningful ways.”4
Such organizational capabilities include a social analytics platform that can mine and aggregate data, both internally and externally, across social platforms, channels, and geographic locations to report on social efforts.
It’s clear these personalization efforts can help banks gain a competitive advantage. But data silos from fragmented databases and legacy IT systems create barriers to implementation. Digital transformation projects are an important fix, but an organization-wide transformation of customer strategy from physical-first to digital-first is what’s really needed. “The reason why a lot of banks can’t deliver [personalization across the organization] is their data is highly fragmented into lines of the business that are product focused, not customer focused,” said Skinner. “There hasn’t been a rationalization and consolidation of data.”
Banks that have undergone digital transformation drive sales growth by creating a 360-degree view of the customer based on internal data. But to enable personalization that focuses on the consumer, banks need to go further and create a customer DNA. This involves combining consolidated internal data on the customer with external data, and leveraging data and analytics. Customer DNA allows banks to anticipate individuals’ needs, better understand their demographic, and build deep, long-lasting relationships. True personalization is grounded in developing a deep understanding of each customer’s unique needs and orchestrating a set of tailored experiences for them across both digital and human channels.
To learn more about personalization in the banking industry, and how the Snowflake Data Cloud allows you to achieve a unique customer DNA for each of your customers, watch our webcast, Banking—How to Power Personalized Experiences with Snowflake.