Personalizing Banking: The Next Frontier for the Industry
By Arthur Mansourian
With consumers still reeling from the Wells Fargo account fraud scandal, it is evident that banking practices need to be adjusted, and management teams have taken notice. Banks are starting to realize that cash is no longer king – it is data that sits on the throne. Tech companies like Google, Amazon, and Facebook have been leveraging their immense amount of data to target customers on a personal level, and turn their data into millions of dollars. In terms of consumer service, banking still has a long way to go to catch up to the customized experiences and interactions provided by tech companies. Banks are finally understanding the importance of customization, and realizing the golden information they have in their customers’ data. Banks need to focus on going beyond the blanket offer made to all customers and truly understand their audience before marketing to them.
Consumers have become used to having a very customized experience, whether it is their computer, phone, car, or other smart device. If bank executives properly leverage their data and provide useful customer interaction, the growth in revenue should outweigh the cost and time to implement such programs. We see this paradigm in banking as the real personalization in retail banking.
One key aspect that the banking industry needs to address is the overly aggressively selling tactics seen at many banks. To truly gain the customer’s interest and trust, banks must leverage their data and inhouse analytics to anticipate each customer’s needs, identify target segments, and forge strong bonds that will lead to more business from the customer and their family and friends. Banks need to make the customer the top priority, and this may require the stripping away of bureaucracy, change in the management team or other employees, and building out new infrastructure platforms. Banks must make it clear to their personalized banking teams that overtly selling is not the main goal, and instead they need to focus on providing outstanding service, detailed and clear information, and sensible advice as often as a customer wants.
Implementing this kind of personalization at a large corporate level will require several factors that serve as interactions that change a customer’s behavior. These factors include analyzing each customer through machine learning and data collection to form a personalized approach to each customer. Of course, implementing such a strategy is not easy as it does require an entire revamp of the technological ecosystem of the company, strong cross-channel offerings, and cross-enterprise collaboration. Major issues that banks face are that their databases are fragmented, they use old marketing strategies that do not provide individualized service, and their complex bureaucratic systems make it hard to streamline new processes.