“Technology is rapidly advancing and is changing almost every aspect of our lives. Whether that is getting from ‘a’ to ‘b’, how we stay in touch with our friends and family, do our shopping, or relax and be entertained. Technology is also becoming smarter as companies harness the power of data to personalize the products and services they offer.” – Josh Bottomley, Global Head of Digital, Data & Development – HSBC
Changing customer demographics and preferences and increased competition from nontraditional banking companies are driving personalization as a critical factor behind digital strategies for financial institutions. The following are some key statistics underscoring this point:
- 84% of Gen Z feel technology has a direct impact on how they approach financial management
- 57% of young banking customers report it is incredibly important to them that their bank or credit union helps them improve their financial wellness
- 67% of millennials and 90% of Gen Z are willing to turn to big tech and nonbanks for better banking tech and faster banking services
- 58% of millennials want their bank to offer them the most personalized advice and solutions that help them succeed financially
And the most telling – 83% of Gen Z and 78% of millennials are frustrated with traditional banking processes. These traditional banks have several challenges in staying competitive with younger customers that nontraditional competitors are not faced with today.
To have an advantage in today’s marketplace, traditional banks must embrace technology that allows them to create personalization and automate processes at scale while adhering to regulations that protect their consumer’s data.
Although the sheer size of these banks can be limiting in terms of agility and speed to market given regulatory scrutiny – the size of banks like Wells Fargo or Bank of America also gives them an advantage that smaller competitors do not have – access to vast amounts of first-party data. Unlocking this data will be essential for these traditional institutions in reaching those demographics.
That is easier said than done, as personalization requires a solid data management and analysis foundation and leveraging customer intelligence platforms to collect, protect, and connect vast amounts of data. These institutions are faced with three key challenges they need to overcome:
- The volume of unstructured data
- Data being everywhere and anywhere and growing at an astronomical level
- User demands self-service
But for organizations that can build that data management foundation – using customer intelligence platforms to understand customer preferences, relevant offerings, and ideal customer profiles opens a world of better customer experiences and increased return on investment.
There are a lot of examples and use cases out there for ways to leverage your first party to reach your customers or differentiate your business. One example from a fintech client comes to mind: This company is leveraging its data capabilities to tap into traditionally underserved customers – which account for around 19% of all US households. Using their data capabilities to personalize and create financial wellness journeys, they are serving their customers throughout the banking and card process and using data to determine credit worthiness by other measures in otherwise underserved populations.
Lisa Frazier, the Head of Innovation at Wells Fargo, said, “The future of banking is going to be very personalized – one to one. Banks need to become more relevant in the moment for a consumer who has a particular problem. The power of data and artificial intelligence can help us do that.”
At Infinitive – our approach to consumer intelligence is composed of three crucial areas that help large financial institutions get the value out of their 1st party data.
- Collect – prepare a 1st party strategy and vision, capture and enhance 3rd party data, enable data analytics and AI/ML modeling
- Protect – enact 1st party privacy policies, security and access management, cloud governance procedures and controls, CCPA/State privacy implementations and services
- Connect – 1st party ‘connect’ plan and ROI, provide ‘cleanrooms’, increase engagement with cross-channel analytics and journeys, and reduce attrition.
Let’s start a conversation about how we can help you achieve greater personalization and create a better customer experience for your financial institution today.