Ever since I started working in direct marketing for financial services (back in the 90s), marketers have been evangelizing about how they use data to develop ‘one-to-one’ relationships with their customers.
Yet despite the advancements in technology -- the numerous acronyms and the rhetoric -- the reality is that ‘personalization’ is still all too often a misnomer for targeted marketing.
Personalization and omni-channel are too often misnomers
Of course, we’ve moved on from ‘ABC1’ target audiences to segments and micro-segments, and we’ve grown from a couple of channels to many. But despite newer job titles like Chief Experience Officer (CXO) and Chief Customer Officer (CCO), most banks remain siloed by products and channels, and most marketing technology is designed to build pre-defined journeys or campaigns for pre-determined segments of customers, taking little regard for their individual context.
And while we talk about ‘omni-channel’, all too often we mean ‘many’ channels, with banks choosing which ones to route customers down.
As we know, people have unique preferences, attitudes, and needs and can change their minds in an instant, even when those customers look similar from a data perspective. Take Ali G. and Tony Blair in the UK for example, or Tommy Lee Jones and Bill Clinton in the US: All are highly educated 50+ men, married with children and probably similarly affluent. But why would we assume that they have similar attitudes to risk, or that they might need a mortgage at the same time?
The fact is that if you’d approached that 1970s bank manager and offered him or her (admittedly probably him) the ability to understand what each customer was doing in any given moment (and then deliver on that automatically) without them having to break lunch for a face-to-face appointment, they’d have bitten your hand off.
Banks are struggling to transition to a customer-centric approach
So why, 50 years later, are so few banks leveraging the technology we have to do just that?
Banks are quick to blame their legacy systems and legacy technology as the reason why the neo-banks and fintechs are winning over their customers. But it’s often business and cultural silos, coupled with a lack of a challenger mindset in both the leadership and workforce which are now the biggest barriers to transformation.
If traditional banks want to be in business in five to ten years’ time, they need to adopt a whole new way of doing business. They need to move from a product- centric to a customer-centric approach, leveraging AI to recognize and understand what each individual needs in their current context, then delivering on it in real time. This means processing every new piece of information (even as a customer browses, types, clicks, or speaks) and reacting and adapting in that moment as a human being would.
Omni-channel must mean ‘every’ not ‘many’
And if customers are to get a consistent and personalized experience, this ability to react and adapt in real-time must transcend channels. Today, 50% of customers switch between channels during an interaction, so those days of segmenting into ‘on’ and ‘off-line’ customers are well and truly over (if they were indeed ever here).
Customers want to be able to chop and change between digital and physical channels without experiencing friction, while also being recognized and understood, all without having to re-start a process or re-explain an issue. But as we know from personal experience, the gap between expectation and experience is widening.
Optimize for the customer not the product or campaign
One of the key blockers is the way bank staff are still remunerated. If your personal bonus depends on you hitting this year’s credit card sales target, why would you care about long term customer relationships or value? Of course, you’d want to push credit cards at the largest number of customers, the maximum number of times to ensure you achieve a decent multiple of your tiny forecast conversion rate. Your colleagues responsible for selling mortgages will be doing the same.
Even when you apply next-best-action models coupled with an effective ‘prioritization process’, the result is that a small seam of customers will be completely over-targeted, while the majority have very little contact with you at all.
That whole issue goes away if you allow AI to automatically evaluate their real-time context, previous transactions, propensity models, and business rules and levers to determine the next best experience for each individual customer in that moment.
And if you replace your pre-determined journeys and campaigns with a library of ‘always on’ experiences or conversations, you don’t need to worry about your on-boarding and cross-sell journeys colliding, or whether it’s best to market to a customer or service them – the AI does it for you. What’s more, each customer outcome automatically feeds back into your self-learning models, so they optimize without you having to employ a team of data scientists to do the job. Simple, eh?
The customer will catalyze transformation
As always, the catalyst for the adoption of this ‘new’ approach will most likely be the customer. Spoilt by ‘Amazon-style’ experiences in other sectors, which many customers got to experience first-hand for the first time during the pandemic, their expectations of retail banks are escalating. Personalized offerings and frictionless experiences are rapidly becoming hygiene factors, and customers are becoming increasingly intolerant of being pushed down pre-prescribed journeys or bombarded with products which didn’t meet their needs in the first place.
Re-imagining the customer experience and using technology as a catalyst for organizational change requires a leap of faith. But it’s the 10% of global banks who have been prepared to make that leap, or a few strides in that direction at least, who are those starting to drive clear water between their competitors.
The gap between the best and the rest is widening
These banks, like Wells Fargo in the US, Commonwealth Bank of Australia, and Swedbank in the Nordics, have set out to re-imagine a new customer experience rather than simply digitizing an existing one. They’ve managed to move beyond the optimized ‘product push’ model to create a truly unified ‘next best experience'. They’re starting to use AI not just to optimize their web content, but to UNDERSTAND what every customer is doing at any given moment and then ADAPT the experience to that individual.
It’s these humanistic abilities, the ability to draw on our prior knowledge and understanding, and then carefully evaluate the alternative actions or reactions based on the likely propensity and value of the outcomes, all within milliseconds, which define us.
Uniquely, human beings are further able to overcome rational conclusions with other factors, such as emotional or political objectives.
It’s the adoption of these capabilities which will likely differentiate the winners from the losers over the next five to ten years. Those who are willing to make that leap of faith and embrace a new way of operating alongside adopting new technology will be able to hold their ground as the fintechs and neo-banks encroach on their territory.
It’s these abilities which enable organizations to not just ‘personalize’ their interactions at scale but ‘humanize’ them too.
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