What Financial Institutions Can Learn from Other Industries on Personalization
It’s no secret. Customers today expect personalized experiences at every turn in the customer journey. But which industries are leading the way in terms of providing personalized customer experiences and what can we learn from their approaches?
Retailers Take the Lead in Personalized Customer Experiences
Top retailers like Amazon, Netflix, Kroger, and PayPal tailor product discounts and recommendations to their customer base using data analytics and artificial intelligence (AI). By using customer behavior data and predictive analytics, these retailers are creating a personalized customer experience, increasing repeat sales and, in turn, revenue.
Amazon’s Personalized Experiences
- After logging in, Amazon customers see a personalized homepage based on recent search and purchase data
- When selecting an item to purchase, the website recommends additional products that are frequently purchased together to increase sales
Netflix’s Personalized Experiences
- Netflix’s recommendation engine combines machine learning with the customer’s viewing history to offer personalized movie and TV recommendations
- Taking data insights to the next level, Netflix even personalizes results based on niche categories, such as mood or birth year
Kroger’s Personalized Experiences
- The Kroger mobile app offers personalized discounts for products customers already purchase to increase brand loyalty and drive reliable sales
- My Magazine, a print publication sent to Plus Card members, offers personalized coupons, relevant recipes, etc. based on shopping behavior
PayPal’s Personalized Experiences
- PayPal’s smart payment buttons enable retail websites to display the most relevant payment options for a retailer’s customers (increasing conversion significantly by 82%)
Financial Institutions Stepping up to the Plate, Creating Better Personalized Experiences
Personalization is currently the number #1 banking marketing trend. While the financial sector lags in adoption of personalized customer experiences techniques, consumer loyalty is at stake if more financial institutions don’t reimagine their efforts. To note, 89% of consumers choose financial institutions based on how well they incorporate personalized experiences.
In response, some banks are taking tips from retailers on personalized customer experiences by using data analytics, coupled with artificial intelligence (AI), to offer customers personalized experiences.
From Data to Prediction to Improved Customer Experiences in Banking
Two international banks, The Commonwealth Bank of Australia and The Royal Bank of Scotland follow banking marketing trends by using a model of “next best action” to follow consumers’ financial journeys, predict the future financial products or services they might need, and personalize product offerings and advice to each consumers’ unique situation or life stage.
It’s no surprise that personalized customer experiences dramatically improve the bottom line. Financial institutions that implemented the next best action model saw a 30 to 40 percent increase in sales.
By anticipating customer needs and catering to them with personalized offerings, financial institutions are able to generate increased revenue, all the while meeting customer expectations around personalized experiences with their trusted banking institutions.
Banking Marketing Trends Emphasize Personalized Experiences: Cafés, Chat Bots, and Mobile Apps
- U.S. banks are using fintech in creative ways to appeal to a generation raised by technology. A mobile app packed with features is top on their list. Nearly 80 percent of consumers prefer using a single app to manage their finances.
- Capital One is opening cafés around the US to appeal to millennials. The cafes offer free Wi-Fi, local coffee, food, and free money coaching for anyone interested.
- In 2014, Capital One also acquired Adaptive Path, user experience, and design consulting firm. Through the acquisition, the bank built a large in-house team that focuses on creating personalized customer experiences across all channels. Eno, a chatbot, helps customers check balances, review transactions, make deposits via text, and issue virtual account numbers for online shopping to prevent fraud, all in real-time.
- More than a million Bank of America customers use an AI bot named Erica that is available through their app. Erica helps customers pay bills, shop, and more.
- Citibank recently released a mobile app, 360º Financial View, that aggregates online financial tools and investments, even those outside Citibank. Citibank provides the all-in-one app to both current and potential customers. This allows Citibank to expand their market reach by advertising their products and services. It also gives users the option to open a new Citibank account.
A New Approach to Customer Experiences in Banking
While the retail industry may remain king in terms of delivering personalized customer experiences in the short-term, banks and financial institutions incorporating personalization into their strategies at every turn are on the rise.
With no shortage of customer data, financial institutions are sitting on a treasure trove of answers in terms of where customers are headed next and what their financial needs will soon be.
Armed with that data, institutions can grow wallet share and generate revenue by catering their products and services to customers in anticipation of their time of need. But there is a big difference between deciding to add a roll of paper towels to your Amazon cart and deciding to pursue first-time home-buying with your bank. And that difference all comes down to education and trust.
Financial education enhances personalized customer experiences by delivering useful knowledge that builds trust. EVERFI bolstered Community First Credit Union’s financial education campaign and observed a nearly $2M increase in debt consolidation loans. TCF Bank saw a 31% YoY increase in savings accounts opened with a $100 deposit as a result of their Partnership with EVERFI. Consider the benefits of using digital financial education to scalably target customers on the brink of making a big financial decision and consider the outcomes for your program.