How to Master Hyper-Personalization in Banking

As part of Solutions Review’s Contributed Content Series—a collection of contributed articles written by our enterprise tech thought leader community—Bill Waid, the Chief Product and Technology Officer at FICO, explains how banking companies can utilize hyper-personalization.

In financial services, hyper-personalization is the Holy Grail of digital success. It’s the key to customer retention, satisfaction, and lifetime value (LTV) because it’s also the secret to cross-selling, up-selling, larger share-of-wallet, and longer customer journeys. Ask yourself: if a consumer will spend tens of thousands of dollars over their lifetime on financial products X, Y, and Z—and they already get X from you—can you convince them to get Y and Z from you, too? 

Defining Best-in-Class Hyper-Personalization 

Hyper-personalization is the ability to offer consistent, tailored customer experiences with the intent to become “hyper-relevant” in customers’ lives. It goes far deeper than demographics: it’s a mastery of how every customer makes decisions about products and services in an always-on, real-time manner that’s preemptively attentive to their needs. The relevance of the personalized value you offer is the tradeoff customers are willing to make in exchange for you using their data. An overabundance of having and using customers’ data without providing any value in exchange is the path for customers to begin forming ‘creepy’ and intrusive thoughts. 

Connected processes, digital engagement, predictive analytics, artificial intelligence, and machine learning allow companies to glean broader and deeper customer insights. But engagements need to evolve over time and continuously realign to customers’ changing circumstances in a manner that is.

• Relevant (“The Right Offer” ): The products and services being offered must be differentiated and competitive compared to those put forth by other companies. 
• Compelling (“The Right Customer” ): There may be millions of customers to whom strategies align, but each should feel that it is ideal for them; 
• Timely (“The Right Time” ): Timing is essential. Offers made with poor consideration of the situation they are trying to resolve for the customer have little chance of success. Customer touchpoints and offers must be delivered precisely; a relevant, compelling offer delivered too soon or too late will be as ineffective as ones that are irrelevant and uncompelling. 

Of the three, timeliness is the most elusive. Boston Consulting Group (BCG) found that it takes most financial institutions at least 14 weeks to launch a personalized digital marketing campaign, with only 15 percent of banking CMOs rating their organization’s personalization capabilities above a “basic” level, even though they had extensive funding and support from the C-suite.

Forrester Investigates the Hyper-Personalization Challenge 

If the desire, the budget, and the executive mandate are all in place, why are so many banks still coming up short? Earlier this year, Forrester Research sought to find out: they surveyed hundreds of executives responsible for personalizing customer experiences at financial services firms. They published their findings in the report “Unlocking Hyper-Personalization At Hyper-Scale.”

Forrester found that most banks struggle to make personalization part of their customer engagement and customer experience strategies simply because they still lack ready access to data and insights. Forrester’s findings and recommendations include: 

• Banks must uplevel capabilities to achieve personalization and improve outcomes. There is a lot of room for banks to enhance customer journeys. Personalization challenges of fraud, risk, and a poor understanding of customers lead to missed opportunities and costly consequences.
• Banks must strategically prioritize their personalization objectives to ensure customer-centric outcomes. To achieve these outcomes, bank leaders must ensure their organizations have stable foundations with composable building blocks, including an applied intelligence platform that facilitates personalized business services and internal collaboration.
• Personalization strategies lack critical data and insights capabilities. Only half of respondents said their organization strives for a single view of its customers through accurate and accessible data. As data, insights, actions, and outcomes capabilities for personalization are leveraged, most firms implement these capabilities myopically in select departments, which stifles their reach and impact.  
• Personalization challenges lead to costly consequences for banks. Legacy systems, a lack of skilled talent, an inability to meet customer expectations, and the need to adhere to government regulations prevent banks from realizing their personalization objectives.
• Personalization practices are maturing. Banks are actively expanding their use of data, insights, actions, and outcomes capabilities. As they advance their personalization practices, strategic shifts are underway to implement essential data and insights capabilities. 

With this in mind, the Forrester report proposes clear opportunities for banks to improve their hyper-personalization: 

1. Achieve a singular view of your customer through accurate, accessible data. To succeed with personalization at scale, banks are deploying data capabilities—feature management, external data access, dataflow, and contextual processing —to advance their journeys. 
2. Gather insights at the Individual level by applying analytics and machine learning to data. Fewer than half of respondents’ banks have feature generation and profiling to calculate and serve derived data attributes throughout their organizations and to maximize value. Even fewer have advanced analytics and ML models to understand and predict customer behavior. 
3. Turn your insights into actions so changes can be implemented. Once a bank successfully creates a singular view of customer data and gathers segmentation insights, it must take those insights from the realm of data scientists and translate them into impactful decisions and actions. 
4. Monitor, control, improve, and react to outcomes based on results. After deploying insights-based actions, banks must learn from the outcomes of those actions based on their results in the market and cycle those learnings back into the business. 

The Reward for Getting Hyper-Personalization Right 

All of this sounds like a costly, arduous effort. However, research shows that the ROI is there for those who succeed. McKinsey found that companies that excel at personalization generate 40 percent more revenue than their “average” counterparts, and their customers are 78 percent more likely to repeat purchases and recommend that company to a friend.

The consensus from industry experts is clear: with all the right parts in place, hyper-personalization is the foundation upon which customer satisfaction, loyalty, and profitable long-term relationships are built. The only question is, are you going to get there first?