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.