Hyper-personalization is the key for established financial services firms if they want to hold on to their customers while competing against startups, many of which operate solely digitally, Amazon Connect–Capgemini North America Lead Philip Bush said recently.

In a Global Banking & Finance Review article, Bush explained that some established businesses are slow to adapt. These businesses are currently considered more legitimate than some of the startup challengers, but the older, more established banks often lack digital agility.

“That said, the tone has been set, and customers are increasingly expecting these hyper-personalized experiences from traditional banks as well. This is pushing the incumbents to create agile and tailored experiences to remain competitive,” Bush said.

Below are four ways experts recommend tapping into and improving those hyper-personalized experiences.

1. Have an Agile Tech Stack

Hyper-personalization requires a few things, said Kathy Stares, Provenir executive vice president, Americas. 

“First, financial services need an agile tech stack with seamless integrations to see everything about their business in real time. Second, they need innovative products that have a broad reach. That is why buy now pay later (BNPL) is so successful because it reaches an underserved population. With BNPL, hyper-personalization is about financial services aligning themselves with the best merchants that drive that customer base and have a broad reach.”

The tech stack should include access to lifestyle and contextual data, such as social media to provide financial services firms with a more complete picture of prospects so that offers can be tailored for specific needs, Stares added. 

“It's a paradigm shift — consumers drive product development, not companies,” Stares explained. “So it's more important than ever for financial services to implement hyper-personalization strategies that meet the needs of their users.”

2. Use AI and Machine Learning

For lending, which is how most banks and credit unions make the bulk of their revenue, AI and machine learning are essential to “meet customers where they are,” according to Stares. 

Having contextual and lifestyle data enables financial services to use marketing models driven by AI, Stares explained. “Think about Amazon. The company does not necessarily know me, but it does know I was searching for light bulbs, which is why it asked me if I needed a lamp. In a lending scenario, a consumer can secure a mortgage online and crowdsource the best rates. A few years later, that consumer might receive a personalized message asking if he needs lending for home improvements.”

With the expansive reach and scope of enterprise data, every click, every transaction, every letter typed can be efficiently analyzed to produce moments that matter for banks’ customers, added Ray Barata, TTEC Digital senior principal, solutions adviser. “This allows for real time or near real-time agility to be responsive to customers’ behaviors and needs. This is the ‘secret sauce’ to hyper-personalization. Analysis of customer data is conceivably table stakes, but pivoting as customer circumstances or customer preferences change, on demand, is the heart of a hyper-personalization strategy.”

Barata recommended financial services firms use data aggregation and consolidation to drive strategy for customer journeys, product development and future investment in customer journey orchestration tools, customer and employee data platforms and data lakes.

3. Emphasize Transparency

By considering how to best engage with customers, and get their personal data with their knowledge, financial service companies can better understand the reason behind customer behavior and build a beneficial long-term relationship, said Bill Ryze, a certified chartered financial consultant and a board adviser at Fiona

Learning Opportunities

However, there has been a lot of mistrust when companies acquire users’ personal data with lengthy and hard-to-crack terms and conditions, Ryze explained. To get ahead, financial service companies need to be transparent about the information they want to collect and how the customer benefits from it. 

Customers are always willing to trade their data when they know they are getting value for it, Ryze added. Financial service companies should answer these questions:

  • If you were to consider data a true currency, how could you connect the data and real-time value you can return to the customers?

  • Do you have a way to identify the moments that really matter when collecting data?

“If done right, data helps with personalization and thus, improves user experience,” Ryze said. Today customers are often willing to be part of the process and trade data in return for better customer service, he added.

4. Leverage IoT

Financial services firms and other companies need to be able to accept data and take action using the ecosystem of the Internet of Things (IoT), Barata said. “Smart devices like refrigerators being able to remind customers about buying milk seems nice, but in the banking world, I interpret this as allowing customers to use whatever channel they want to interact with their bank, whenever they want.”

Phone, chat, website, mobile app — customers in an “on-demand” world communicate with their banks as needed, and in multiple ways, Barata added. This is where banks and financial technology can differentiate from insurance companies, in that they can be reached by their customers and that can be extended to all products, to all members of the “family” for any reason.

“This ubiquity of communication presence combined with a cadence and frequency that shows predictive and preemptive problem solving is a key way for banks to get a hyper-personalized world,” Barata said.

The Takeaway: Get Going on Hyper-Personalization 

As Bush points out in his article, hyper-personalization is a process that many financial services companies are still at the very early stages of, but the strategy is critical if they want to compete effectively with digital-only firms, which have much lower costs since they don’t have the expense of physical branches.

Using the four strategies above will help financial services firms accelerate their hyper-personalization process.