Banking needs to be hyper-personalised

We’ve all experienced this frustration before: calling your bank, wanting a quick answer or solution, only to have to first listen to a pre-recorded, endless list of options that don’t apply to what you need at that moment. Or using the USSD (unstructured supplementary service data) feature on your phone, having to reply for the umpteenth time just to get to the option you have chosen so many times before that you are left wondering why your financial services provider has not picked up on it and offered it to you on a subscription basis.

Consumers have become used to, and now demand, convenience and hyper-personalisation – and their interaction with banks is no different.

According to a recent paper by Deloitte, hyper-personalisation means to prepare options for “a segment of one”; clients no longer want to experience that they have been lumped together in a monolithic group where preferences have allegedly been pre-determined.

“Ultimately, every client wants to feel that their banking experience is unique while remaining consistent with standards validated by their peers (indeed, surveys of millennials have shown repeatedly that they believe both in their uniqueness and in the wisdom of their tribe),” the report reads.

Clients not only want service providers to give them what they want in the most efficient manner, they also expect them to know what they need even if they don’t yet know it themselves.

“Incumbent banks have to compete with the Googles and Facebooks of the world on hyper-personalisation or we will lose the connection with the customer and simply become a supplier in the value chain,” says Andrew van der Hoven, head of digital and ecommerce consumer and high net worth at Standard Bank Group.

He argues that while these digitally-born companies have a step-up in terms of customer behaviour data and understanding individual preferences, banks have relationship capital built up over years of interactions that they can leverage.

“Banks have at their fingertips enormous pools of data which, when coupled with their experience in relationship-building and client management, places them in a strong position to catch up in the personalisation race,” he says.

Digital must remain acutely personal

Van der Hoven argues that many financial services providers still see digital as just an additional channel through which to offer their services, instead of a place where they can learn about their customers’ needs and behaviours, to then offer them bespoke and relevant solutions which will improve their financial lives.

“Client-centricity has long been a cornerstone of banking and just because technology can create more personalised experiences it does not mean that relationships fall away,” he says. “In fact, in a digital world human relationships and interaction will become even more important. Even as banks evolve, they must remain truly human, while providing the services and solutions their clients need.”

One of the ways to ensure this, he says, is to make sure that big data enables two-way conversations. It should not be used in order to simply push product just because the algorithm indicates a client might need it.

Data has to turn into information and then into insight.

An example at Standard Bank was the creation of its tiered home loan solutions, says Van der Hoven.

The bank’s data indicated that clients had additional funds to allocate towards the settlement of their home loans, but instead of doing this, clients were choosing to channel these funds to savings accounts and so on. No matter how many times the bank prompted them through individual interactions to change their behaviour, the clients did not react in the way the data indicated would be best for them.

“As we then started having more in-depth conversations with our customers, we realised that there wasn’t enough incentive for them to push excess funds into home loans.

“This played into the development of our tiered home-loan solutions for some clients, where your interest rate improves as you pay off the debt over time,” says Van der Hoven.

If, however, the conversation remains one-sided, big data and well-intended personalisation interactions can lead to even more frustration and alienation. Take the example of a client being called, again, to be offered a credit limit increase because the data shows that they use their facility quite extensively, even though they have indicated, on record, that they do not want an increase. No one likes being ignored, especially not by someone who is supposed to be a trusted partner.

Relevance leads to trust, trust leads to loyalty

Hyper-personalisation could also result in a boost to the financial service provider’s bottom line. According to the Boston Consulting Group a bank can achieve as much as $300 million in revenue growth for every $100 billion in assets that it has, by personalising its customer interactions.

While the immediate benefit of using digitally-gained insight to provide hyper-personal banking experiences and offers would be the take-up of more products in that moment, Van der Hoven believes the real value lies in the long game.

“There is a lot of distrust at the moment in financial services providers and I believe the actual benefit of providing bespoke and relevant solutions for clients lies in the result of building trust over time.

“Research has shown that with that increase in trust, a client will have a longer tenure with us, sharing more information, which again reinforces the feedback loop to provide even more personalised solutions. It is profitable for the bank, but it makes a meaningful difference in the customer’s life.”

Brought to you by Standard Bank Group.

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