You are dining at your favorite restaurant when the sound of your phone notifies you of an incoming text message. There is a message from your bank that assures you 5% cash back if you use your credit card. Hey, you wonder, how did my bank know this was where I’d be dining?
Well, it’s most likely that your bank has developed a 360-degree customer profile that reveals your credit card habits among other things. Your card usage shows usage at a certain restaurant every Friday at 11.30 pm. What the bank did was to send you an automated push-sell notification with “cash back bait”, a couple of hours before the touch point time to make sure you use their credit card.
This is just one of the myriad areas where banks are getting personal and up-close. In banking terminology, however, this is part of their personalized services.
As data finds business relevance in a customer-centric landscape, it is evident that data is driving the way in which banks market and influence customer behavior. Data-driven technologies are also emerging as the ultimate differentiator in a highly competitive marketplace.
Banks are faced with the challenge of making sense of the huge customer data generated in real-time. Data is created each time a customer makes a banking transaction, uses his cards for a purchase, makes an investment or takes a loan. What the banks want to do is leverage this wealth of big data for marketing campaigns, credit scoring, and business growth.
Why the personalization?
Higher customer expectations, ever-changing consumer preferences, fast-changing payment technology, and intense competition from FinTech companies, are constant challenges to banks and financial service firms. Traditional banks with legacy marketing systems can no longer thrive in the always-connected ecosystem, where customers are always online and powered by information on-the-go. To remain ahead of the competition, banks need to do more than procuring new customers. They need to engage with their existing customers more deeply for longer customer lifecycle value. This not only enhances the value each customer brings but also boosts the bank's image which is the mainstay of investor confidence.
As banks move forward, they are increasingly concerned about delivering a more personalized digital experience. “customer is king” has never been as true before as optimal customer experience is the ultimate banking mantra.
The personalized recommendation engines of banks are finding favor with customers. According to “The Power of Personalization in Banking” report, 57% of customers surveyed see their primary financial institution as a ‘necessary utility’. Unlike other consumer-facing businesses, where push-sell recommendations are considered an irritant, banks are considered partners for secure management of finances. Hyper-personalization with proactive delivery of the right offers and services are seen favorably by clients.
Data analytics analyze customer transactions
Banks are collecting consumer data related to everything from customer transactions to behaviors and motivation. The data is generated across various channels of transactions for a single view of the customer. The more the granularity of consumer information obtained, the better the service delivery is. Marketing strategies are constantly improvised based on the insights available in real-time to improve customer satisfaction, provide a competitive advantage, boost revenue and facilitate profit growth.
Banks are using the power of data to engage with their customers more than ever before. Deeper consumer insights and granular segmentation are making possible increased engagement through more touch points, and smarter marketing mix modeling. The trend is to act on insights uncovered by smart analytics, and using smart algorithms and digital enablers to engage more with the customer.
The challenges of banking are both in its products and services. While its image is critical to the success of its products, it is customer experience that decides the success of its services. By integrating sophisticated technologies and cutting-edge tools into the banking processes, banks are able to offer deeper personalization for higher revenue.
Banks leverage technology for personalized services
With the focus shifting to an end-to-end digitized personalization, technology has taken center-stage. The unprecedented advances in the always-connected Internet of Things (IoT) network, is driving technological implementation in customer services. While mobile and internet banking revolutionized the way financial services are offered, the increase in technological integration has given shape to a great many opportunities for customer service.
Machine Learning learns iteratively from customer activities
Machine learning (ML) algorithms analyze customer activity and determine what the customer may like to buy. These ML-driven customer recommendations are getting smarter, learning from customer transactions, credit card behavior and investment habits. This forms the premise behind marketing personalization. Banks are now emulating e-commerce companies to personalize customer emails, direct mailings, and coupons. Products are recommended via mobile texts and browser push-alerts. ML learns more and more about customer habits and leads marketing personalization campaigns for more sales.
AI-powered chatbots drive customer engagement
Banks are examining new ways of interacting with customers with better banking IoT. Innovations are driving this space, as banks act as trusted personal infomediaries. Artificial Intelligence (AI) powered chatbots are the recent human-facing automated customer engagement channels that simulate human chats. Chatbots make use of natural language processing (NLP) to identify contextual texts and emotions within the text chat for effective customer engagement. Chatbots also act as recommendation engines. For instance, the Bank of America has launched an AI-powered virtual assistant “Erica” , to make suggestions over mobile phones for improving financial affairs.
Another NLP and AI implementation is Voice Assisted Banking which adds the personal touch to banking services. Barclays is currently developing a voice-activated system using iPhone’s Siri to enable users to carry out money transfers by engaging with a robot computer system.
Robo-advisory services offer bespoke wealth management advice
The banking sector is witnessing a considerable investment in AI to best serve the bank’s high-net-worth clients and offer personalized, tax-optimized investments.
AI is also powering automated financial advisories or robo-advisories, for personalized financial services. Robo-advisors monitor events, stock and bond price trends against the user’s financial goals and personal portfolio, to offer customized recommendations on what stocks and bonds to buy or sell. Barclays, Royal Bank of Scotland, Lloyds and Santander UK are using robo-advisors to offer customized investment advice for all their customers.
Banks are increasingly adopting leading technologies to ensure smooth and intuitive customer experiences. From push-sell notifications through phone texts and emails, banks have transformed to be a more dynamic technological interface with robo-advisory, voice-assisted banking and banking IoT. Bespoke deliveries form the underpinning of banking services.
As AI and automation gain traction, banks are leveraging innovative technologies and tools to ensure that the customer journeys are smooth and intuitive. Analytics, ML, and AI are taking center stage to get more intuitive, and personal with customers. Personalization is here to stay.