The Bank of One: Taking personalisation to the ultimate level

The theory of the ‘Bank of One’ is well-rehearsed. Today’s tech-savvy consumers are demanding banking services tailored to their particular requirements. They see financial services as an enabler for other aspects of their lives, and they want their banks to deliver the products and advice they need in an efficient, timely way – matching their experiences of being a customer of other digital businesses. Think of Wells Fargo’s personalised ATM messages in the US. Or UK digital challenger Atom Bank enabling its customers to customise the look and feel of their banking app as well as the name and logo of their own – personalised – Atom Bank.

Indeed, the concept of contextual banking services is at the core of the propositions of many new entrants to the industry. Leveraging their digital nativity and a range of leading edge technologies, they plan to exploit the dissatisfaction of customers with their incumbent banks to help consumers improve their financial lives with personalised experiences, products and pricing.

How easy is it for established banks – with legacy systems, organisations and cultures – to provide contextual services? Are they in a position to respond quickly enough to offer products and services at the right time and place to correspond to customers’ individual needs?

The answer cannot be simply serving up offers every time customers check their balances. Instead there must be some value and mechanism to encourage continuous dialogue between the provider and consumers. New entrants and existing players bring different strengths and weaknesses to the table when it comes to delivering on the vision of the Bank of One, but they must all grapple with this central problem – creating an engaging and ongoing customer experience in what is an ‘occasional sales’ industry.

Driving customer engagement

Customer-centric banks are those that truly understand each customer at an individual level, and can therefore form a relationship with that customer, and work for that customer 24/7. Taking it a step further, many of today’s banks also aim to provide a service that is smart, cognitive, helpful and delightful– something which is very hard to do in banking, especially considering that this is a very low engagement category in business.

While incumbents are responding in different ways – many are becoming multi-channel/ omni-channel banks by adding more channels into the mix, and are exploiting the ‘chattiness’ the new channels provide to become ‘engagement banks’ – new entrants into the banking space are leapfrogging those stages to be customer-centric banks by bringing machine learning and artificial intelligence into play.

Technology is underpinning the Bank of One

Many incumbent banks are saddled with time consuming, ruinously expensive projects whenever they want to make a change to their digital offerings. In a time when flexibility and agility are key, it is imperative that they follow the example of challenger banks. 

This means putting in place technology which can personalise and contextualise the customer experience by aggregating, analysing and mining huge volumes of data, structured and unstructured, in real-time. By implementing predictive analytics technology, banks are enabled to predict and satisfy customer needs, in some cases even before the customers know they have them. Banks can become trusted advisors by proactively warning customers ahead of time that they may need a credit product, for example, or that there may be an opportunity for a savings product – and then providing them the product they need at exactly the right time.

The next step within the digital service model is for banks to price for the individual, and to negotiate that price in real time, taking personalisation to the ultimate level. As a result, the entire service model feels generous, warm and incredibly personal.

As an added benefit, technology offers banks the ability to de-risk rather than take risky decisions. To illustrate, traditional credit scoring algorithms typically take into account 23 variables for a yes/no decision. The latest systems take into account more than 400 variables. By combining behavioural and transactional data, banks can make better assessment decisions upfront.

Taking personalisation to the ultimate level

Customers want their banks to understand them, to provide solutions tailored to them and to speak to them in a voice that is for them alone.

In response, we are starting to see some great initiatives from banks out to their customers, especially among new entrants who, due to their flexibility, have important advantages in delivering on the Bank of One vision. In order to survive, incumbent banks will need to rethink their mindset and organisational structure, which in many cases doesn’t yet lend itself to consumer centricity.

In order to build customer loyalty, banks need to match the kinds of digital experiences customers are receiving in other sectors. They need to make strategic bets and re-architect their platforms in order to be ready for the true impact of digitisation.

This article was based on 'The Bank of One: Providing Contextual, Personalised Financial Services' whitepaper, Produced by Finextra in association with SAP Customer Experience