From Netflix’s personalised recommendations and imagery to Starbucks’ special offers on the app, all of us enjoy hyper-personalised experiences powered by AI and data analytics every day. But while industries like food, retail and travel have been quick to create experiences tailored to individual consumers, financial services has been slower off the mark. 

In many ways it’s not surprising. Heavily regulated and with many centuries-old financial institutions – and decades-old back-end systems – it was always going to take time for the industry to get to grips with what new technologies could mean for its customers and its business. But now banks and other traditional financial services brands need to move fast in order to keep up with consumer expectations, or risk those consumers decamping for the fintechs who can offer them the experiences they’ve come to expect in other areas of their lives. 

With millions of customers and access to high volumes of data, large banks are well suited to hyper-personalisation, but it’s not going to be easy to compete with the new players. A 2020 report by CapGemini and Efma found that digital banks are 1.8 times more easily able to innovate and develop proof of concepts and to offer personalised, differentiated products and services than traditional banks. But what the established bricks-and-mortar banks do have to their advantage is a trusted brand, a large existing customer base and a lot of data at their fingertips. If they can combine these resources with hyper-personalisation there is much to gain. 

Hyper-personalisation in financial services represents a huge opportunity. The last available figures, from The Digital Banking Report in 2018 report that only 6% of financial institutions say they are deploying advanced personalisation technology.  But according to Salesforce, 76% of consumers expect companies to understand their need and expectations, 84% of customers say being treated like a person, not a number, is crucial to winning their business and customers are 2.1x more likely to view personalised offers as important.

Unless there’s been a seismic shift since those figures were published it shows just how much of a gap there is between expectation and reality. In retail banking those customers who do receive personalised services place high value on them: 90% say they are highly satisfied with the advice provided by their financial institution and say they “definitely will” use their bank or credit union again for another product. And there’s a lot at stake. In 2019 Boston Consulting Group estimated that banks could earn up to $300 million in revenue growth for every $100 billion held in assets by personalising the consumer experience. 

Better experiences, happier customers

For customers hyper-personalisation means higher engagement, more satisfying experiences, better financial decision-making and reduced risk.

For example: HSBC has been using AI to give customers personalised rewards, predicting whether they might like to redeem credit card points in one of four categories: travel, merchandise, gift cards and cash. 70% of customers redeemed their points in the suggested category and email open rates increased by 40%. Using hyper-personalisation increased both the efficiency of the scheme and customer satisfaction.

Hyper-personalisation also allows customers more visibility of their financial affairs and empowers them to take control of their money. One example is San Francisco-based start-up Trim. Trim’s mission is to ‘solve your financial problems so you can live the life you want’. The company states it has saved customers over $40 million by automatically taking care of their day-to-day finances. It does this through automated features like a cancellation service for monthly subscriptions, so that customers can see and choose to cancel payments for things they may have forgotten about and no longer need. These may be small savings, but they add up over time. And better money management has wider implications in people’s lives, not just improving their finances but also positively impacting on their mental health. 

As a business gets to know its customers it can provide ever-better experiences, and what that builds in turn is trust. Centuries ago, a wealthy individual or even several generations of a monied family might have a decades-long first-hand relationship with a trusted advisor. Hyper-personalisation means that a 21st-century version of this trusted relationship can be provided at scale to a large and diverse customer base in a way that feels intuitive and human. Rather than being a purely transactional relationship it becomes one with immense value, an emotional connection that’s worth holding on to for the long-term – loyalty in other words, that most precious of commodities in today’s fast-changing fragmented and fickle world. 

There’s no doubt that hyper-personalisation is an enormous challenge for traditional financial service providers. Building the 360° customer views needed to create contextual in-the-moment responses requires significant investment in tools and infrastructure. And the fintechs currently have the advantage, unfettered as they are by legacy systems and traditional ways of working. But in the next five years traditional financial institutions who are able to provide hyper-personalised experiences stand to reap the biggest rewards – not just short-term uplifts in revenue, but lifelong relationships with happy customers who appreciate and value their services.

The BIO Agency work with leading financial services providers to create outstanding customer experiences. If you’d like to talk to us about how we could help your business, contact us here

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