Personalisation – what banks can learn from the telecoms industry

Tailored product offers, timely tips for financial management, curated messages based on a customer’s location – these are all great examples of personalisation. Yet this type of engagement continues to be out of reach for most financial institutions: in a piece of Deloitte research, less than a third of customers think they receive personalised products/services from their banks.

While banks have more than their fair share of customer data to generate this type of service, legacy technology and data issues are often getting in the way of them doing anything about it.

Furthermore, banks continue to take an incorrect approach to personalisation. Rather than thinking about how to leverage data to be helpful to customers, banks tend to be of the mindset that personalisation is just a way of selling more financial products. In the current economic and competitive climate in areas like refinancing, it’s not just about sales but also about service and taking the right action at the right moment.

Turning our attention to the telecommunications sector, over the last decade these organisations have made concerted efforts to boost customer experience and personalisation. In many ways, they have had to, given larger industry issues with customer churn rates and competitive offers. So, what can we learn from that industry around personalisation and apply it to the banking industry?

Telcos put the ‘personal’ in personalisation

At face value, the high customer churn rate that telcos experience could be perceived as a negative. However, the fact that consumers are so willing to regularly switch mobile and broadband provider means there is a far greater incentive for the company to make sure customers stick with them. The sector’s obsession with the average revenue per user (ARPU) metric and plan utilisation rates, means organisations are doing everything they can to invest more into keeping their existing customers happy.

Additionally, telcos can deliver more personalised offers because they have access to clean data sets that include real-time data. Not only does this mean they have detailed information about their customers, but they also understand the context of an individual at any given moment. Understanding whether a customer is at work, shopping, streaming their favourite programme etc., means they can deliver a relevant offer at the right time and the right place. However, this is not unique to the telcos and with the right technology set up any bank can take advantage of geolocation data and far more personalised actions right now.

Banks have a secret weapon

In addition, banks have a secret weapon. In the telco sector, consumers will typically have only one mobile contract at a time (maybe alongside a work phone also), but with banks, people more often hold multiple accounts with different financial providers simultaneously. This means that consumers don’t ‘shut out’ banks in the same way they do with mobile and broadband providers they no longer use. While this perpetuates the lack of need for banks to keep hold of their customers in quite the same way, it does mean that banks have the opportunity to forge longer customer relationships where they can better learn detailed preferences. It also brings into focus even more than for telcos the utilisation factor around, say, their credit card limit, or income or expense data from their current account. However, this brings us back to the problem: how can banks do better at leveraging that data?

Looking outside a bank’s four walls, Open Banking presents another huge opportunity to use data to create tailored offers for customers. They must take advantage now before it’s too late. It’s easy to see examples spreading of easy onboarding through photo/face recognition and government ID approvals online, just as it is to see enabling access of data from other accounts or triggering a payment process from your bank application but into another bank account you have. All these require data and systems to be easily stitched together, combined with an understanding of the opportunity for the customer and the bank.

Personalisation is no longer just a ‘nice to have’

With other sectors supercharging their customer experience and customer expectations growing, banks cannot afford to continue to consider personalisation as just a ‘nice to have’. It’s also no longer the case you can simply assume that if you have customers in some layer of segmentation grouping then you are ‘personal enough’. Retail, and increasingly corporate customers, expect you to know them, understand their situation and act using data available right now from an interaction the customer just had on the app or web. To close this personalisation gap, banks should leverage AI and Intelligent Automation technologies to use their existing data to deliver omnichannel personalisation and real-time contextual engagements. By focusing more on customer experience metrics and a broad range of sales and service activities, rather than purely hitting product sales targets, we will see a gradual shift in how banks engage with their customers, and the results will be remarkable.