Digital Personalization: 33% Say It's Not Worth The Risk

The pressure on banks to really step up their digital experience game is, as we all know, greater than ever.  Branch banking, according to pundits, is probably going away.  “Probably” because, honestly, no one really knows, right?  It sure looks like it, however. 

That being the case, where does that leave banks?  With huge incentive to ramp up their digital experience through personalization.

Also, according to pundits, most banks are offering only the basics in this channel. And why is that?  There is no doubt that personalization is a big deal in customer engagement. Having that deep understanding of each customer’s unique needs, driven by data and analytics and aided by machine learning, is every marketer’s dream.  That understanding of exactly what a customer is thinking, feeling, and needing forms the very bedrock of any solid, strategic marketing effort.

According to the Boston Consulting Group, “a majority of people who are either open to or actively mulling changing banks would consider banking with a tech company—such as Amazon, Facebook, or Google—if they could. This is not surprising, because such companies have spurred a desire for more customized interactions and fostered a willingness to trade data for a better experience.”  BCG goes onto say: “Several consumer brands have shown the way forward. Netflix uses personalization techniques to make movie and series recommendations. Yet while many financial institutions are conceptually on board and heavily investing, the Netflix of banking has yet to emerge. The main reason is that true end-to-end personalization requires developing new muscles—such as strong cross-channel offerings, cross-enterprise collaboration, a single view of the customer, and a new technology ecosystem—all of which are difficult to build.”

Agreed… for the most part. Is receiving a purchase recommendation from Amazon or Netflix the same as getting one from your bank?  I’m not convinced. When Netflix tells me that I might be interested in a certain program because it somehow aligns with one I’d watched previously, I have no concerns about data sharing and privacy. The kind of personal data that a bank needs to personalize one’s digital experience is far different from the data that Netflix uses to recommend their latest docu-series.

A Cognizant white paper on the subject states that when it comes to digital experiences, “critical customer interfaces should be re-examined in an era when Starwood Hotels allows you to check in and open the door to your room with your SmartPhone.  Without making sound decisions over the coming months, many may be left struggling to catch up to digital winners.”

Again, can a bank’s digital experience be equated with the ability to open a hotel room door without “hassling” with a key? What if you received a text or email from your bank saying: “Your oldest daughter is nearly 28 years old. Shouldn’t she be getting married soon?  Maybe you should consider one of our HELOCs for that reception.” Or, better still, “Is everything okay at home?  Over the past two weeks, you’ve spent $187.50 at the liquor store.”

So, are banks “way behind” companies like Netflix and Amazon in offering a personalized experience?  I’m not sure that we’re comparing apples with apples here.  Yes, banks do need to do a better job of anticipating customer needs and engaging them across all channels with “the right message at the right time,” but it does make sense that they tread lightly here. Research from Epsilon indicates that a substantial percentage of consumers want and expect personalization:

  • “90% of consumers feel that personalization is “very/somewhat” appealing.
  • 80% of consumers are more likely to do business with a company that offers personalized experiences.”

However, the research indicates this as well: “Despite consumers’ growing comfort with (and demand for) personalized interactions, a significant percentage of consumers are still protective of their personal information.” Twenty-five percent of consumers see getting personalized offers as “creepy,” and 32% say that getting personalized experiences is not worth giving up their privacy. More than one-third (36%) feel that companies don’t do enough to protect their private information.

BCG estimates that for every $100 billion in assets that a bank has, it can achieve as much as $300 million in revenue growth by personalizing its customer interactions. Moving forward, the lion’s share of that interaction will be digital.  Banks will certainly appreciate the $300 million in revenue growth… but they’re smart to take a thoughtful approach to trying to be the next “Netflix bank.” After all, isn’t personalization about listening to, understanding, and responding to the wants and needs of customers? Those that are listening are, in my opinion, being justifiably cautious.

About Bank Marketing Center

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