Key Takeaways:
- Advances in technology enhance the ability to deliver personalized banking experiences to customers.
- Personalization results in measurable results of customers satisfaction and revenue opportunities.
- The banking industry lags other sectors in delivering modern personalized digital experiences to customers.
Ongoing digital transformation within the financial services industry continues to create a tale of two experiences. On one hand, banks and credit unions often vie for consumer attention while offering similar, sometimes indistinguishable products and services. Moving those offerings online only tightens the competition for share of wallet since consumers are just one click away from a competitor.
At the same time, as consumer reliance on digital banking services grows, savvy financial institutions, digital banks and FinTechs recognize delivering exceptional digital experiences (DX) to customers can be a significant differentiator.
Personalization has emerged as a key driver of customer satisfaction and loyalty, making it a mission-critical strategy for today’s financial providers.
What is personalization in digital experiences?
Digital personalization is the strategy of analyzing customer data and using those insights to provide tailored online experiences. Every interaction is curated to meet the behaviors, needs and preferences of the individual — whether they’re a new prospect visiting your website or a long-time customer.
Recent advances in technology have made the data analytics needed to provide a personalized experience much easier. Examples include using generative AI-powered chat bots and recommendation engines. By analyzing past behavior, personal data and other inputs, the organization can present tailored insights, recommendations and product offers to enrich the customer experience.
Delivering personalized experiences can be applied to digital marketing and advertising efforts, as well as delivering a consistent brand experience across an organization’s various digital channels, such as its website, ecommerce platform or social media channels.
Examples of personalization results in other industries
While the banking industry often lags other sectors when it comes to implementing new technologies, the effectiveness of personalization in other industries has helped spur greater adoption. Some examples of personalization in other industries include:
- Online retailers: Several ecommerce sites set the standard for personalization with curated shopping lists, sophisticated recommendation engines and personalized email campaigns. They present highly relevant products that are more appealing and drive more sales.
- Entertainment: Streaming platforms may have revolutionized the entertainment landscape, but features like customized playlists and recommended viewing are redefining media consumption, providing tailored experiences that engage consumers and keep them coming back.
- Medical care: Healthcare organizations use personalization in the custom treatment plans and health monitoring apps they offer. Delivering care tailored to an individual’s specific needs helps improve patient outcomes.
The impact of the strategy is measurable. One survey revealed 28% of businesses saw a positive impact on customer loyalty by using generative AI to provide a hyper-personalized customer experience (CX). Another 39% reported a positive impact on company profits.
Given the effective results enjoyed in other industries, financial services providers should clearly consider implementing more personalization into their CX strategies.
Advantages of offering personalized financial services
Few aspects of an individual’s life are as personal as their finances, so incorporating personalization is a natural fit for banks, credit unions and FinTechs. Plus, with today’s consumers expecting personalized experiences in all their digital interactions — and organizations in other industries having raised the bar — the need within financial services has basically become a necessity.
Personalization can also be a differentiator, giving your institution a competitive advantage. Tailored services and the ability to connect customers to products when they’re most inclined to act not only builds deeper customer relationships, it can also position your organization as a valuable partner.
Examples of personalized banking services
Financial services providers can deliver more personalized digital experiences through current channels in several ways.
Just as online retailers and streaming services leverage customer data to offer personalized recommendations, banks can make customized loan offers or provide targeted investment advice tailored to customers’ unique situations and financial goals.
Similarly, banks can provide personalized support based on an individual’s behavior and needs, which can enhance the customer experience. AI-enabled chatbots can now provide personalized responses to customer inquiries, while credit and identity monitoring services can provide proactive fraud alerts to help protect against potential threats.
Financial services providers can also empower customers by making personalized financial education easily accessible online. Enriching the digital customer experience with customized budgeting tips, interactive credit score simulators and personalized financial planning resources can equip people to make better-informed decisions regarding their financial goals.
How to implement personalized banking services?
The first steps toward building an effective personalization strategy starts with collecting and analyzing customer data. AI-powered tools and data analytics help banks gain insights into their customers’ behaviors and preferences — which in turn enables them to customize banking services.
Those insights can then be used to power recommendation engines, ensuring customers are shown the right offers at the right times based on their specific situations. They can also help inform your financial literacy and financial inclusion initiatives.
Consider empowering customers with personalized credit monitoring services and interactive credit education tools. In addition to helping customers better understand their credit reports and scores, these services demonstrate your organization’s commitment to customer financial well-being — fostering trust and loyalty.
Similarly, offering personalized identity protection, such as a monitoring service that alerts customers to suspicious activity and provides action steps to protect their data, can boost customer confidence in security and deepen their banking relationships.
For banks, personalization results in organizational gains
When financial institutions incorporate personalization into CX and DX strategies, they tend to build stronger connections with customers — resulting in less churn, more loyalty and increased potential for lifetime value. After all, customers are less likely to jump to a competitor if they feel their banks genuinely understand and can meet their individual needs.
Basing offers and recommendations using insights into customers’ specific situations typically generates higher conversion rates and creates more opportunities for targeted cross-selling and upselling efforts.
Considering the customer data financial services providers collects, as well as consumers’ tendencies to focus on their finances and financial well-being, banks are in unique position to take personalization to the next level. Delivering tailored digital experiences that help customers move closer to their financial goals can have significant, positive impacts on the individual and organization alike.
Want to deliver digital customer experiences that enhance engagement, loyalty and creditworthiness — creating profitable, new opportunities? Read our eBook — Five Keys to Nurturing Creditworthy Consumers for Greater ROI in Digital Channels.
