May 21, 2019
By Christian Klacko, Cofounder and COO, Micronotes
May 17, 2019
I’m always interested in articles that discuss how businesses—particularly financial institutions—can use technology to deliver a more personalized experience to their customers.
Recently, I read an article from The Financial Brand titled “Personalization in Banking Can’t be Disguised as Cross-Selling.” Written by Executive Editor Steve Cocheo, the piece featured excellent insights on the subject from Alyson Clarke, principal analyst at Forrester Research, where she covers banking.
The banks and credit unions we do business with know a lot about us, at least when it comes to our finances. And, when you think about it, that gives them a great deal of knowledge about our lives. This knowledge provides financial institutions with a tremendous opportunity to deliver personalized service and build deeper relationships with their customers and members. But are bankers taking advantage of that information to build strong customer relationships? And isn’t that especially critical when it comes to digital banking users, people who rarely if ever visit a branch?
Clarke told a story about receiving a “Happy Birthday” email from her bank. A nice gesture, but that’s all it was—a gesture. There was nothing really personal about it, and nothing that provided her with any tangible benefit. Contrast that to the actions of a retailer Clarke patronizes. They sent her birthday greetings, too, but they included a discount on a product she had purchased previously and was likely to buy again. The article accurately states: “her bank knows much more about her than the [retailer] does, but the birthday message from the store meant much more than the bank’s.”
The article also cites a Harvard Business Review report on the value of personalization: “When executed effectively, strategic personalization initiatives, can drive significant revenue impact… fostering greater customer loyalty and retention.” That’s a message that any business serving consumers should take to heart, especially financial institutions.
But, that’s not happening—at least not to the extent it should be. “While most banks and credit unions recognize the value of personalization, however, they lag in building the capability,” The Financial Brand wrote. “Less than 10 percent of the industry has actually deployed advanced personalization technology, according to the Digital Banking Report. The truth is that simply stamping a consumer’s name at the top of a message means very little, no more than would sewing one’s name in an off-the-rack garment make it ‘tailored.’
As Clarke defines it, ‘Personalization is an experience that uses customer data and understanding to frame, guide, extend, and enhance interactions based on that person’s history, preferences, context, and intent.’” As she put it: “personalization means adding value. If you’re not doing that, you aren’t really personalizing.”
And that’s a lesson all banks and credit unions must remember and act on. They have the information required to deliver highly personalized service to digital banking users. They just need to use it effectively and, well, personally. The upside of doing this is huge. The downside is a huge problem.