How Can Banks Use Hyper-Personalization as a Strategy to Drive Growth?

Anusree Bhattacharya | April 29, 2022 | 119 views

How_Can_Banks
Digitalization is a high-priority initiative that has uplifted the banking industry by exploring new profitable areas. However, the strategies for becoming digital must rely on efforts to focus on making a bank’s administration and internal operations more efficient. Digitalization refers to a wide range of tools that can create personalized and hyper-personalized experiences for people.


How Banks Have Evolved with Technology Implementation

The banking industry has been consistently embracing technological advancements. Since 2020, banks globally are making heavy investments in digitalization and are focusing on efficient banking operations. With the help of digitalization, the banking and financial sectors are going through a paradigm shift and are progressively offering personal touches to their operations, services, and products.  

Most banks now offer digital features that allow customers to conduct basic banking activities remotely using a browser or a mobile app. This development has resulted in less traffic at bank branches and has assisted banks in optimizing costs and capital expenditures fairly. Hyper-personalization in banking is becoming increasingly important. As a result, the use of technology in banks has equally surged, mainly in operations and customer services.

Hyper-personalization has become an essential part of banks and other financial services providers. With this, banks are now focusing on core customer experiences to provide unique services to their customers. Today, new-age customers need hyper-personalization in banking.

In 2020 ‘The Future of Retail Banking,’ A Deloitte report has stressed that hyper-personalization is crucial for banks and enables them to respond to customers’ basic needs.

While this approach is widely accepted in the banking system, let’s understand a brief difference between hyper-personalization and personalization and which method is more enticing to customers.


Personalization vs. Hyper-Personalization

Personalization focuses on promoting a customer’s name, location, purchase history, buying behavior, and others. The most common example is including the first name of a customer in an email or promotion asset.

The hyper-personalization approach uses a customer’s browsing habits and then reveals real-time behavioral data to determine customer needs. The entire activity builds contextualized communication and encourages more incredible conversions driven by AI and aligned data. For example, they send push notifications to customers, adding high-engagement sections on the website—chatbots.

Therefore, it is evident that personalization banking will be further enhanced and become more personal with hyper-personalization. According to a study by Deloitte, banks are ready to embrace digital opportunities, which would be advantageous for over a trillion dollars. The movement will continue until 2025 and beyond.


Growing Expectations from Customers

Since 2020, banks worldwide have been striving to improve their customer experience and business operations. The digital transformation of the banking sector has changed consumer banking trends. This gives rise to one of the main concerns — what are the top priorities for customers regarding banking services? According to a survey by Wipro, 80% of customers expect their banks to provide upgraded services with improved products and easily accessible apps and websites. At the same time, 20% of customers hope banks have valuable services to benefit them. In addition, 5% of them expect improved communication channels for distributing products and services.

On the other hand, according to a recent Salesforce survey, two-thirds of today's customers expect their banks to understand their unique needs and expectations. Moreover, up until 2021, 52% of customers found hyper-personalized offerings from their banks. Therefore, banks must extensively use customer data to anticipate customers’ banking needs.

Gartner estimated that approximately 48% of customers want value-added services, making hyper-personalization engagements of strategic relevance. This was followed by personalization in banking with products and services.

When it comes to using hyper-personalization in banking, Capital One, a U.S.-based company, stands out. It is one of the finest examples of digital marketing. It usually sends notifications to clients, assists them with simple tasks, sends new offers, and efficiently manages personal finances. In addition, they are currently using geolocation technology by partnering with several retailers. With this, they can reach customers and provide them with purchasing offers.


The Marketers’ Complications

What were the practical problems or challenges for marketers approaching their customers right away?

Markets face several roadblocks to achieving the desired level of personalized customer engagement. Some of these challenges include:

  • Profile: Marketers usually face challenges in categorizing, compiling, and saving online and offline customers’ data.
  • Identity: Marketers must deal with the fragmentation of customers' identities and how they see them across devices and channels.
  • Relevant Communication: Marketers often fail to reach people at scale across different channels with relevant information.
  • Measurement: Marketers often complicate the accuracy of measuring customer behavior, buying habits, and needs.

Therefore, marketers need to sort out these parameters and then proceed strategically to deliver hyper-personalized engagement to customers. Now let’s find out how to do it.


Solutions

Emerging technologies, mainly AI, data analysis, automation, and blockchain, give an insight into customers’ needs, behavior, and activities like transactions, money transfers, deposits, availing insurance, and other banking activities. Marketers can leverage these technologies, crack code, use hyper-personalization in strategies, and work to meet customers’ needs.

There are a series of interconnected strategies following technology in banking that will enhance the use of hyper-personalization in banking in the future. It will enable customers' digital requirements according to products and services and identify intent-based customers in the banking system.


Series of Interconnected Strategies


Customer Segmentation

Having an accurate identification of customer profiles and details determines how to proceed with hyper-personalization. First, you must build a digital identity solution that links customer data across devices and locations. After this, study and get profound customer insights with the help of a third-party customer database to obtain accurate customer information such as:

  • Demographics
  • Online and offline purchases
  • Digital consumption
  • Online interactions
  • Cross-device information according to the usage of personal devices

By identifying these parameters, marketers can effortlessly create a community for their highly engaged customers. In this way, marketers can include value-proof hyper-personalization methods to reach out to customers and fulfil their expectations in banking.


Lead Generation & Nurturing

For lead generation and nurturing, marketers should activate paid search, paid/owned social media, and affiliate sites using intelligent and real-time customer data. This will help understand the effectiveness of the platforms in generating potential leads and nurturing them in the best ways.


A Data-Driven Path

Banks using customer data can monetize it by differentiating between actionable and non-actionable customers. Even so, they can conduct data-driven optimization (DDO), a measurable approach when banks interact with their customers. This approach includes monetizing and identifying customers’ behavior patterns and optimizing their decision-making processes faster and more accurately.

In addition, data-driven optimizations range in different types and sizes—for example, new features, CTAs, pricing, page flow, navigation, and templates. With the help of these, marketers can get a lot of data and use hyper-personalization strategies accordingly.


A Hybrid Environment

Given the current situation, banks should prioritize intelligence by implementing a security-rich hybrid cloud for their hyper-personalization in their banking processes. With this in place, banks can efficiently, inexpensively, and rapidly deliver hyper-personalized services to customers under a hybrid setup. For this, banks should have a robust data analytic infrastructure that can filter the most operational customer data. 


Prominent Examples of Hyper-Personalization in Banking


American Express Sends Videos to Increase Engagement

American Express’s business model includes hyper-personalization of its customers globally. 

We’re delegating much deeper hyper-personalization at a company level.”

Harry Mole, Director of Marketing at American Express

American Express demonstrates its commitment to hyper-personalization by creating videos for its customers. For example, it makes videos accompanying a customer's monthly credit card statements. The video helps customers explore and learn new ways of managing their credit shares. It also helps them learn about account creation for new customers, share financial tips and tricks, and introduce new rewards. These activities further help consumers maximize the benefits of their American Express account.

Since using a hyper-personalization strategy, American Express has seen a threefold increase in marketing conversations and a considerable decrease in the cost of acquiring new customers.


Edward Jones Uses Personalization to Increase App Downloads

Edward Jones, a financial services firm, offers a mobile app that allows customers to easily access their accounts and investment options. The app effectively conveys the benefits of security and convenience and is equally friendly. Edward Jones initiated an email campaign to encourage customers to download and engage with the entire app. It added a messaging section for app users and highlighted services such as tracking investments, depositing checks, transferring funds, and more without visiting a branch.


Frequently Asked Question


What do customers expect from their bank?

Customers need assistance and want their needs to be understood by their banks. They do not prefer a generic approach to services. They prefer a more customized and solution-driven approach.


How is the hyper-personalization approach implemented in banks?

Hyper-personalization in banks can be implemented in the following ways:

  • Compile essential customer data and utilize it to create strategies
  • Create hyper-personalized content according to the customer base
  • Distribute the content across channels to reach customers


Why is personalization important in banking?

According to a study by Gartner, 67% of customers are unaware of the services and products their banks offer. So, with the help of personalization, they can easily connect to banks’ offers, benefits, and services. This is where personalization comes into play.

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