It is clear that successful financial services institutions in the future (legacy banking organizations or Fintech start-ups) will differentiate themselves by the ability to deliver on the "personalization promise" and be in the best position to integrate solutions with a consumer’s daily life.
There is extensive discussion in the report on the role of analytics. Why are banks still so challenged by analytical data on customers?
Unfortunately, despite the vast amount of data available, the early start the industry has enjoyed and formidable resources, most banks are far from realizing big data’s full potential. One of the reasons for this slower-than-expected use of advanced analytics to drive contextual personalization is the number of competing priorities most organizations face, such as increasing compliance and regulations, reducing operational costs, improving digital capabilities, etc.
On top of competing priorities, banks rarely use the full breadth and depth of data at their disposal because of multi-layered systems and siloed data. This has been an issue in the industry for more than 30 years, despite advances in data capture and reduction in costs of advanced analytics.
Finally, we are observing a time when the knowledge of the need for advanced analytics is not met with an increased prioritization and investment in moving data from internal report generation to customer-facing solutions. This results in sub-optimal allocation of human and technical resources, and limited interaction and exchange of ideas.
The risk of falling behind in leveraging consumer insights has never been greater since consumer expectations are rising rapidly. The majority of these expectations are being set by non-financial competitors, who have the vision and focus on providing contextual and personalized solutions through digital channels.
Fintechs, Fintechs, Fintechs. What are they doing differently with personalization and what can banks learn from them?
The vast majority of Fintech firms have been established to provide consumers an improved digital experience based on contextual insight and simplified delivery of financial services. By leveraging advanced analytics of consumer data and digital technology, smaller start-ups have been able to build solutions that are superior to those from legacy financial institutions.
Because the consumer does the vast majority of their shopping for a new financial institution using digital channels, it is no longer adequate to wait until the customer or member walks into a branch or decides to purchase a new product online or via smartphone. Instead, banks and credit unions must engage customers at every stage of their purchase journey, not just because of the immediate opportunities to convert interest to sales, but because two-thirds of the decisions customers make are informed by the quality of their experiences all along their journey.
Digital channels are at the center of this transformation, no longer just representing a cheaper way to interact with customers, but also being critical for executing promotions, stimulating sales and increasing market share. In order to effectively remove friction along this journey, customer insights need to be leveraged. These insights go far beyond simple demographics, to include channel preferences, life-stage insights and even geo-locational information.
As we found in our report, Top 10 Retail Banking Trends and Predictions for 2016, having access to data and the ability to process this insight is not enough. Consumers expect their primary financial institution to be able to provide real-time recommendations based on changes in their financial profile. This includes improving the ability to save money, achieve specific financial goals, increase financial knowledge, better budget spending, etc.
Aside from being transparent with customers, what other advice do you have for banks on data privacy?
As consumers increasingly engage digitally, providing personal transaction data, social data and geo-locational data using mobile and online channels, they are providing the banking industry massive insight for segmenting and targeting. For the most part, this is insight into consumer behavior that, prior to the internet, was nearly impossible to obtain. Today, banks and credit unions can understand the entire customer journey from early research to post-purchase, with the consumer digital footprint being one of the most valuable tools in personalizing marketing messages and content.
With this insight comes a “personalization privacy paradox,” as marketers try to find the sweet spot between individualized and invasive communications with consumers. While consumers know they are providing their financial institution with unprecedented amounts of insight into their behavior, attitudes and sentiment, they want to have the option to limit this access, and want their financial partner(s) to provide personalized solutions in return. The consumer also wants to be part of the data validation process, and to be involved in how the data will be used.
There is a lot of very interesting data in this research from both banks and consumers. In your opinion, what were the some of the most important statistics and surprising findings?