Finance and Personalization – Benefits and Challenges

Almost every customer facing industry on the planet is getting hip to the idea of personalization.

Research has been telling us for some time now that customers are more likely to gravitate towards a company which is able to offer some level of personalized service and will tend to rapidly lose interest in those which fail to. Not only this, but brands which offer a personalized experience can get away with charging more as customers are willing to pay a little extra if the offering is tailored to them.

When it comes to personalization, the financial industry really has much to gain. After all the financial situation of customers varies greatly from person to person with so many distinct factors feeding into their current situation – see our recent articles on multigenerational marketing and financial health and wellness for more details – meaning the service they require from a financial services provider can vary just as much.

Financial Personalization

When developing a personalization strategy for the financial industry, it is important to put a firm focus on customer value. We can often get caught up in modern technology and other innovations, but each new development must only be implemented after asking yourself the question, "How does this improve the life of our customers?”

"Personalization can help banks deliver superior customer experiences and build trust and loyalty,” writes Forrester. "By personalizing interactions across the customer lifecycle and across the full spectrum of physical and digital channels, banks can demonstrate to customers that they know them well, understand their needs, and care.”

And this is what it boils down to. Customers want to believe the company they’ve entrusted with one of their most precious resources genuinely cares about their wellbeing and is working to make sure the service they provide in exchange for that trust is at least partially tailored to their personal circumstances and is not simply a one size fits all solution which gets shoveled out to every customer regardless of their actual situation.

"Personalization will help banks differentiate and compete with forward-looking competitors, while at the same time driving sustainable growth by helping customers apply for financial products tailored to their financial needs at the point in time when they need them,” continues Forrester.

Other benefits of implementing intelligent personalization include:

• Fostering customer loyalty and retention by providing an enhanced customer experience that is targeted to their needs and behavior.
• Increasing engagement and conversion rates, resulting in a greater share of wallet/ higher customer lifetime value.
• Stronger marketing ROI through targeted marketing campaigns and consistent messaging across channels.

However, implementing personalization is not without its challenges.

Challenges of Personalization

In order to effectively implement personalization, financial institutions need to ensure the infrastructure within their companies is up to the task.

Legacy technologies are a huge part of this puzzle and will likely form the greatest stumbling block to successful personalization implementation. Many financial brands are still working from outdated hardware and software which simply does not have the processing power or data analytic capabilities necessary to create customer profiles and process the vast amount of information necessary to achieve true personalization.

Another factor partly driven by outdated infrastructure is the siloing of data which often comes with it. Running several different platforms for different task means the data generated by those tasks is kept within them and cannot be collated to extract meaningful insights. There are now so many single view CRM type platforms out there that there’s really no excuse for not making the most of them to eliminate siloes and create a single view of the customer.

The current regulatory environment also poses challenges for personalization. Several high-profile data breaches have led to a situation where customers are more protective of their information than ever before, and governing bodies are stepping in to protect their interests. With personalization requiring data to be effective, financial brands need to be persuasive when it comes to asking permission to gather data on their customers.

"Banks need a customer-led strategy to govern cross-functional personalization efforts and to determine the right technology investments,” concludes Forrester. "Focusing on customer value can create alignment across teams and help ensure that their respective technology investments are based on customer needs versus internal operational functions.”

Final Thoughts

Personalization comes with a considerable number of benefits and challenges when it comes to implementation. However, those financial institutions able to mitigate the challenges, whilst leveraging maximum value from the benefits will see more customers flocking to their brand and entrusting them with their money.

Personalization is certain to be part of the conversation at Future Digital Finance 2023, being held in March at the Hyatt Regency Austin, TX.

Download the agenda today for more information and insights.