Financial products and services have become increasingly commoditized, challenging financial institutions to attract and retain customers in a highly competitive environment. Today, financial institutions must contend with multiple obstacles in order to succeed. This includes handling downward pressure on margins and slow balance sheet growth, navigating new regulations, and competing against an emerging set of new, smaller, and more innovative service providers. Decreasing customer loyalty to financial services providers also adds to the challenge.

These trends make it imperative for financial institutions to thoroughly understand and respond to customer behaviors, attitudes, and needs. Customer interactions with financial institutions are normally scheduled and deliberate. Such interactions include payment due dates, account deposits, and life events. As a result, communication and offers must be precise and relevant. To maximize the interaction opportunities, many financial institutions are rethinking their approaches to customer engagement and recognizing that devising effective personalization and targeting strategies will enable them to be more meaningful, relevant, and of value to existing and prospective customers.

Putting Personalization Into Play

Personalization is the use of data to deliver a relevant and engaging experience to a customer across channels and devices. It provides the ability for a digital channel to understand a customer and suggest a product or experience of interest. Effective personalization strategies recognize there is opportunity across a spectrum ranging from unknown visitors to known customers. Personalization efforts do not just occur at one point, but they adjust based on the individual’s location on the spectrum.

To begin with personalization, identify the data and content available for action. Who do you want to target, and what do you want to display? Consider data that is readily available, such as online behavioral data or existing customer segments. As the strategy matures, bring in additional data, including third-party and offline interactions to create a more complete customer profile and move toward the other end of the known spectrum. Generally phased approaches work best to onboard new data sources. It is less overwhelming, less resource intense, and quicker to act.

Next, consider expanding the available content and delivery channels. Now that more is known across the spectrum, there are more opportunities through increased interactions for personalization. In addition, customers and visitors will begin to expect more. They should receive consistent messaging and experiences across channels and devices.

Finally, include a testing plan in your personalization strategy to improve content consumption, adjust customer profiles and data sources, and expand delivery channels. Products and seasonality will change and life events will occur that will alter customer needs. Adapting the product offering and experience will result in higher engagement and satisfaction since it will be most relevant given the circumstances.

Personalization is critical to business success. Customers receive personalized experience as they interact with travel and retail brands, and they expect the same when they interact with their financial services provider. An effective personalization strategy does not need to be daunting. Start with what is available so you can act now and have a plan in place to mature and evolve your personalization strategy.