Discover the Secret to Driving Customer Value and Growth
The equation between banks and customers has gone far beyond mere transactions and account numbers. The financial industry has been witnessing a significant shift towards building stronger, more holistic connections with customers.
The new-age customer demands personalized and thoughtful interactions that focus on their unique needs and preferences rather than treat them as profit generators. This change in expectations is propelling the adoption of hyper-personalization in banking. A recent Deloitte study revealed that 80% of consumers are more likely to engage with brands that have a deep understanding of their needs.
This is where hyper-personalization steps into the picture. With the help of advanced technologies such as artificial intelligence (AI) and machine learning (ML), banks can create tailored experiences that make their customers feel understood and valued. It offers financial institutions a competitive advantage while ensuring growth and customer retention. Here’s how hyper-personalization is proving to be beneficial in the banking sector.
Impact of Hyper-personalization in the Banking Space
Maria Smith, a long-time customer with a basic savings account, is a tech-savvy professional. She frequently travels for work and enjoys dining out and shopping within the city in her leisure time. Here’s how hyper-personalization can enhance her banking experience:
1. Cross-sell and Up-sell Opportunity
Maria receives frequent annoying and irrelevant calls from her bank, offering her a travel credit card. The scenario would be a lot different if the bank could understand her specific requirements. Imagine the situation if she received a message on her mobile banking app about a travel credit card with monthly discounts at her favorite stores. This personalized offer will leave Maria excited, prompting her to consider the credit card.
The power of hyper-personalization can help bankers turn an annoying interaction into a valuable service. By aligning offers with every customer’s needs, it increases engagement value and enhances the average product holding ratio.
2. Customer Retention
The promotional emails irk Maria and fail to catch her attention. What if she received an offer that was perfectly tailored for her—an increase in reward points at her favorite restaurants and an exclusive travel package aligned with her interests? But it doesn’t stop there. A personalized summary of her financial health, with insights and customized advice, could truly make a difference. Here, the bank has moved beyond the role of just a financial institution and become a well-wisher and a partner who genuinely understands and caters to her needs.
According to the J.D. Power 2024 U.S. Retail Banking Satisfaction study, 13% of customers say they are likely to switch banks in one year due to poor service and experiences. By offering relevant and attractive product recommendations, banks can improve customer retention and reduce churn rates.
3. Behavioral Segmentation
Maria is an avid user of her mobile banking app—from making bill payments to using budgeting tools for saving money and managing her finances. Wouldn’t it be wonderful if her bank could take it up a notch and offer her personalized tips on optimizing her budget based on her spending habits. This kind of tailored engagement could significantly enhance Maria’s satisfaction, encouraging her to use the bank’s digital services more often.
By segmenting customers based on behavior rather than just demographics, banks can deliver relevant communication and offers, improving engagement and loyalty.
4. Pre-Approved Products
Maria prefers a seamless and straightforward process when applying for any financial product. Personalized, pre-approved offers can simplify her decision-making process. In time of need, picture her excitement upon getting a pre-approved mortgage with competitive interest rates and flexible payment options tailored to her financial health.
Adding a dedicated customer service channel to assist Maria throughout the process ensures she feels confident and supported in her financial decisions. This thoughtful approach increases the likelihood of Maria choosing and recommending the bank’s mortgage services, which will enhance product adoption rates.
Supercharged Banking with Hyper-personalization
To realize the full potential of hyper-personalization, banks need a comprehensive platform that effortlessly integrates with various technological components, such as leveraging data from various sources, employing AI/ML models, utilizing GenAI for real-time conversations with data, and ensuring scalability and flexibility. By seamlessly combines these elements, a hyper-personalization platform can transform data into actionable insights and deliver personalized experiences.
Investing in hyper-personalized engagement is about redefining how you connect with your customers. It’s about understanding them better, meeting their needs with precision, and building lasting relationships. With a hyper-personalization platform, every customer interaction becomes an opportunity for business growth and brand loyalty.
Are you ready to create exceptional banking experiences for your customers?
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