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RECREATING THE BANK MANAGER RELATIONSHIP? IT’S ALL IN THE CUSTOMER DNA

29/09/2019

– Doug Gross, CEO of NGDATA

 

Personalised banking is nothing new. Few of us today may remember it, but there was a time when anyone could walk into the bank and have a chat with their bank manager to discuss their finances and impending life changes, or to discuss investment opportunities.

 

Somewhere along the way we’ve lost that intimate connection between banks and us, their customers. Yes, we have phone, internet and even banking apps, but for all their convenience these are faceless, impersonal and merely transactional services. In many ways they are a poor replacement for the two-thirds of bank and building society branches that have closed over the last 30 years. That’s because these services rarely provide the personalised customer service and relevance that consumers have come to expect from other areas of their lives.

 

A new breed of challenger banks have been quick to fill this void with a range of highly personalised services, which is one of the reasons why they have managed to capture a quarter of millennial customers. It’s only now that traditional banking institutions are waking up to the opportunities of hyper-personalisation.

 

Doug Gross

The personalisation revolution

Banks can’t say they weren’t warned. Back in 2015, one estimate suggested that European banks could lose out on €22bn of revenues to big technology groups offering a range of digital-first financial services. A year later, NGDATA found that less than 30% of customers think their bank’s offers are customised for their individual needs. Meanwhile banks market their new product offers as ones specially tailored to customer needs, let alone their communication with said customer – so where has this perception gap originated?

 

We need to go back to the beginning and rethink what we truly mean by ‘personalisation’. It could be something as simple as Wells Fargo’s customisable ATM experience which displays the customers “favourite” services on the screen. But the most effective personalisation is when banks provide the most relevant interactions, services and marketing to each customer at every touchpoint and at the right time.

 

The benefits of personalisation are clear. McKinsey has found that full personalisation can deliver between 10 and 20 per cent more efficient marketing and a 10 to 30 per cent uplift in revenue and retention. Singaporean bank DBS, meanwhile, claims to make more than £700 revenue each year from its digital customers, more than double what it makes from traditional customers.

 

This is to say nothing of the increased customer loyalty that comes from delivering a fantastic customer experience. This is not a particularly new concept. In 2016, KPMG cited personalisation as the first of its six pillars for banks looking to unlock rapid growth.

 

It’s no wonder traditional banks have spent the last few years upgrading their IT infrastructure to provide the ability to capture and analyse huge amounts of personal data on which hyper-personalisation depends. But merely having the data isn’t enough to create a winning customer experience: there are many other questions that banks must solve before they make hyper-personalisation a reality.

 

Tapping into “customer DNA”

 

Technology now enables banks and other financial institutions to understand each customer’s unique “customer DNA”, enabling them to tailor their communications and financial products to every individual – a process we call “hyper-personalisation”. This means delivering truly contextual personalised services, which improve the user experience based on a customer’s objective.

 

While this is key to increasing a bank’s engagement with customers, any investment must be focused on delivering true value. Personalisation for its own sake could hurt rather than help a bank retain and grow the customer base – especially if they take a cavalier approach to people’s data security.

 

Banks must therefore find a way to maximise the value of the data they hold, while staying onside with data protection regulations such as GDPR. They must also ensure that they strike the right balance between relevance and the “creepy factor” of seeming to know too much about customers’ financial affairs. How, then, can banks balance the need for privacy while delivering the next generation of hyper-personalised services?

 

The 360o customer view

 

There is so much data being generated by and about customers today that it can be nearly impossible to gain a complete view of them. And, because data is often generated and kept within business siloes, it takes a great deal of time to merge data into a singular customer view that is still relevant and offers actionable insights.

 

By utilising an intelligent customer engagement platform that merges operational and marketing data, organisations can merge thousands of metrics into a singular, comprehensive view of enterprise customers on the individual level that is required for personalisation. With this approach to teasing out customer DNA, banks will gain maximum visibility into customer behaviour, enabling them to deploy customer experience campaigns in a whole new way.

 

Only when banks gain a holistic view of customers can they deliver the personalisation that these consumers crave: for example, by being able to provide hyper-relevant marketing and products that increase engagement and conversion rates, banks are able to reduce irrelevant communications, making customers feel valued and understood.

 

The bank manager of old knew that time spent on face-to-face engagement with customers was never wasted, leading as it did to opportunities to sell new services, or simply to strengthen loyalty with high-value customers. Thanks to technology, we can recreate these relationships – and, indeed, make them stronger than ever before.

 

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Finance Derivative is a global financial and business analysis magazine, published by FM.Publishing. It is a yearly print and online magazine providing broad coverage and analysis of the financial industry, international business and the global economy.

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