The banking industry had been making steady technological advances: Banks have been investing very heavily in going digital over the last decade. Most of these digital investments have been around omni-channel convergence, big data, analytics, customer journey mapping, user experience, chatbot and other self-service capabilities. Cloud adoption is still nascent in the Financial Services (FS) industry, and Financial Institutions (FIs) are gradually moving forward with their plans to migrate to the cloud. Today, most banks boast digital features that help their customers conduct basic banking remotely, using a browser or a mobile app. This movement has led to lower footfall into bank branches and has helped banks optimize their costs and capital expenditures.
Growing use of AI in personalization
What do you believe will be the most valuable use of artificial intelligence for banks?
Select one. (% of respondents)
Source: The Economist Intelligence Unit
For the FI’s, their investments in digital have paid off well. Most of them have seen growing volumes of interaction over digital channels. Most have a robust omni channel offering with the ability to allow their customer to acquire products or services without having to go to the branch.
External competition to accelerate the speed of change: Technology led innovations have been ongoing in the banking industry. However, with the arrival of technology players like Facebook, Amazon, Apple, and Google (FAAG) in the traditional turf of FI’s, the pace of innovation has increased rapidly. In addition to the big-tech players, FinTechs are also creating superior customer experiences for small portions of the banking value chain. From mortgages, to payments, to cards, the new age players are continuously breaching the bastions of banks.
What next for Banks: Personalization in the context of Banking is not just about the next best product offer however, using data and analytics to anticipate customer needs, which could be a product or service or advice and offering it to customers at relevant interactions with the bank creating a “nudge”. Meanwhile, doing this in real-time i.e. ‘hyper-personalization’ can expand or deepen the current customer relationships and increase trust. Today, the marketing offers from the banks are mostly mass mailer-based campaigns, offering credit cards, investment accounts etc. There is an opportunity for the banks to move away from mass marketing campaigns into hyper-personalized and targeted individualized offerings for their customers based on their interactions. This can potentially increase the acceptance rate of the offer and improve stickiness, trust, and loyalty.
Case study: Promote financial wellbeing for customers, helping them save through goals, insights & nudges
A Large Bank set and track a savings goal for the customers through the bank app
The bank’s adult Financial Wellbeing Survey found active saving and not borrowing for everyday expenses, to be the most prominent behavioral drivers of financial wellbeing. In Oct 2019, it launched the ‘set a savings goal’ feature in the bank app to help customers better manage their money and develop healthy savings habits.
From July 2020, customers began receiving personalized in-app notifications that encouraged them to set a goal, stay on track and celebrate milestones along the way.
How customers are feeling about the savings goal and notifications feature:
Pre-cursors to Hyper-personalization: Hyper-personalization requires banks to acquire a comprehensive view of their customer, assimilating information from varied sources, correlating the data in real-time and using predictive models to make relevant offers across their choice of channels. Often, banks fail to get a comprehensive view of their customers and their interaction history because of the silos in the organization that prevents them from collaborating across LOBs for the data. To be successful, banks need to break the data silos and work across Business, Marketing, and Technology to create a seamless user experience. Once the data silo is gone, the next would be to fine tune the predictive model based on the customer interaction journey. There are opportunities to enrich the experience through augmenting bank data with external data sources that provide the view of the customer that is missing with the bank. For e.g., the extended ability to access information of a customer who may bank with other financial services provider would truly help fine-tune the models to provide contextual and personalized offers.
Envisioning the Hyper-personalization journey: The move towards approaching every customer interaction, irrespective of who initiates it, as an opportunity to expand and deepen customer relationship through personalization, starts with acknowledging the gaps and creating a vision around it. Once this vision is established, it needs commitment and sponsorship from management to make it a reality. Cross functionally empowered teams need to be formed with participation from Business, Risk, Marketing and Technology stakeholders that can then iterate quickly in an agile fashion to create MVP. A start small and fail fast approach helps the bank develop a feedback loop to realign and test the hypothesis.
Hyper-personalization is a powerful business differentiator, and banks stand to gain significantly from acting on it quickly and having the first mover advantage.
You can find out more in Wipro’s new report on hyper-personalization, in which we examine the changing landscape of customer engagement in the financial services space, along with imperatives for incumbents.
Mahesh G. Raja
Vice President & Sector Head - Banking and Financial Services, Americas
Mahesh is Wipro’s Banking and Financial Services industry leader supporting top-tier full-service banks, large payments, and Fintech clients across US and Canada with P&L responsibility. He leverages Wipro’s Digital, Fintech/New Age ecosystem, which includes developing partnerships with leading Fintech players, helping clients assess the Fintech ecosystem and potential implications to their business, and bringing solutions to clients through alliances and implementation.
Supported By:
Tarun Kumar (Senior Manager – Wipro Insights)
Shri Dhar (Senior Manager – Wipro Insights)
