The 21st century has seen a foray of technological advancements and different attributes as the major trophy, which banks and credit unions have focussed on obtaining. However, customer personalization has toppled the rest of the competition. This arises from the fact that each customer aims at feeling unique and different. Even though personalization cluster customers into various taste groups based on their preferences, analytics has helped banks and other industries in general to obtain larger amounts of data. This data through intensive forecasting analysis allows the bank to understand more about the customer and to sync with the customer’s taste buds.
For many years, banks have been successful in tailoring customized and personalized solutions for customers. However, is that personalization enough? The e-commerce industry with mega giants like Amazon, Flipkart and many more have shown excellent, powerful recommendation engines, which cater to a customer’s needs and desires. During this time, they have also managed to enter into the payments industry and customer retention at banks has slightly eroded away. That is what needs to change.
According to a survey by a global bank, 37% of their customers want banks to have a more personalized approach similar to Amazon while the remaining 63% are also not satisfied with the personalization that banks use to reach out to them.
In Dale Carnegie’s book, “How to win Friends and influence People”, he says, “Remember that a person’s name is, to that person, the sweetest and most important sound in any language.” This is what banks need to remember the most: Putting Customer Personalization at the centre of their business model goals and customer acquisition, retention and other profiting attributes as secondary goals of their business model.
Personalization? Do you have your data?
According to experts, only 7% of banks have obtained a holistic picture of their customer. In other words, 93% of banks do not have all their data.
Since customer personalization should be at the centre of the business model, what should personalization revolve around? There should not be any surprise as data is the only major factor that can help banks to feed their machine learning models to understand more about their customer. Hence, intensive analysis of data paves way for in-depth understanding of the customer and personalization.
“A data driven bank can engage audiences, attract members and drive a bigger growth”
The Data Map – Connecting Data, Customers and the Solution
Being data driven today is the single most important aspect of any industry, existence without which is the biggest injustice meted out to your customer.
Banks can achieve accurate and powerful AI and ML business models. However, accuracy is not possible without a clear data strategy. Data Strategy is the single most important factor in achieving customer personalization. Across varied customer touchpoints and diverse platforms along which the customer feeds information about him, there is a wide range of data that when collected and leveraged, can prove to be the biggest difference between banks and their competitors. Social Media activity, payments, bills, relationships and frequency of banking activities are just some of the several touchpoints, which banks can use.
Single View of the Customer – the 720° View
89% of customers will be competing on the sole factor of customer experience and personalization. So, just collection of data is not enough.
Once a bank achieves all of its data, what is the next step? Earlier we had stated that only 7% of banks had collected all of their data. However, even amongst that small cluster of banks, is there efficient data governance? A clear diagnosis of the problem reveals that banks are not able to leverage the data to provide the best solution and the accuracy varies. Since the data is messy, scattered and in an unstructured form, most of the data remains useless for the bank. Hence, the time taken for data collection proves to be wasted time. Banks should focus on increasing initiatives on data governance and cleansing of data.
This ensures that banks can obtain a 720° view of their customer, which would enable them to handle their data proactively and efficiently, and at the same time, banks would be able to provide better solutions for their customers.
A Journey to Remember
Banks can truly make it the journey to remember by 2030. Taking a leaf out of Netflix, the major entertainment giant, globally, banks can aim to provide customer personalization and recommendations on financial products and services as accurately. Netflix through their data strategy collects data about their customers’ every movement on the platform such as fast forwarding and rewinding moments and even when they left the platform for another application. By doing so, they were able to segment their customers into several taste groups and were able to provide intimate and personal services for each group. Banks can do the same and at a time where there are so many non-financial entities in the financial space, the time to act on the customers’ data is NOW.