The era of one-size-fits-all digital experiences is over. Customers expect brands to tailor experiences to their unique preferences, needs, and situation — and banks and credit unions must rise to the challenge.
Many banks and credit unions pride themselves on giving financial services a “human touch,” thanks to friendly and helpful branch employees. Digital personalization replicates that human touch at scale, wherever customers do their online and mobile banking. It also positively impacts several important KPIs, including:
- Increased engagement: Customers engage more frequently and deeply with experiences that are relevant to them, deepening the customer relationship.
- Lower customer acquisition costs (CAC): Targeting individual customers with tailored campaigns yields lower CAC than broad, one-size-fits-all acquisition campaigns.
- Lower churn: Personalization lets banks and credit unions address misalignment on a 1-to-1 basis, boosting retention for the long term.
- Higher lifetime customer value (LCV): Deeper customer relationships yield greater share of wallet (SOW) and higher cross-sell and up-sell success.
However, not all types of personalization are equal. Personalization exists along a spectrum, and banks and credit unions that want to reap the full benefits must aspire to the highest levels. Simply inserting a customer’s name in the subject line of an email isn’t enough. Nor is targeting based on broad demographics like age or gender.
Instead, prove that you know your customers on a deeper level by reaching out at the right time with content that actually adds value. That means tailoring experiences to a customer’s individual needs and preferences, and also their circumstances in the moment. For example, you could surprise and delight a customer by sending them an offer for a discounted streaming service subscription when it’s raining outside and they’re just settling down for a quiet night in. Perfectly timed personalized experiences like this are the best way to build deep, lasting customer relationships. In this blog post, we’ll help you figure out your place on the personalization spectrum and identify the tools you need to reach its highest levels.
The Personalization Spectrum
Early stages of the personalization spectrum require fewer data sources and a less robust infrastructure. As banks and credit unions move along the spectrum, they can level up to more sophisticated personalization tactics that deliver a stronger impact.
Stage 1: Basic Personalization
Every day, customers’ inboxes fill with auto-generated emails addressed to them by name. Customers are bombarded with generic marketing messages based on factors like which generation they fall into or where they live. These are examples of basic personalization — the simplest and least effective type of personalization on the spectrum.
Basic personalization doesn’t require many changes to your infrastructure. Marketers can usually pull the necessary data (e.g., customer names) from customer relationship management (CRM) software, even if other proprietary data remains siloed across platforms and lines of business (LoBs). Outdated standards for data management in banking mean that many financial institutions stall out at this level.
However, basic personalization doesn’t deliver the most important benefit of personalization: making customers feel like you know them. At this point, putting a customer’s name at the top of an email is table stakes, and it won’t differentiate you from competitors.
Stage 2: Hyper-personalization
Hyper-personalization targets customers based on their habits and behavior, not just static demographic information. This type of tactic becomes possible when a bank or credit union assembles its proprietary data — particularly transaction data — across platforms and LoBs. Hyper-personalization covers a broad range of tactics and KPIs, such as:
- Cross-selling a relevant product: If a checking account customer has just made a large deposit, target them with an offer to open a savings account.
- Upselling to avoid misalignment and reduce churn: If a customer with a basic credit card increases their monthly spend, particularly on travel, target them with an offer for a travel rewards card better suited to their needs.
- Offering tailored rewards to boost satisfaction: If a credit card customer spends regularly at restaurants, target them with a tailored reward for double points back on dining.
Hyper-personalized offers, content, and experiences can be delivered across a number of channels, from a mobile banking app to email. Chatbots or personal finance management solutions that draw on one or two data sources fall into this category, too. In some cases, third-party data such as credit reports or loyalty program data from your partners could be incorporated as well. For example, you could offer double points back on stays at a hotel where a customer is a loyalty program member.
By keeping the digital customer experience relevant, hyper-personalization boosts engagement and conversion rates. Over the long term, it builds the customer relationship by showing that your bank or credit union understands and responds to customer needs. This bolsters customer satisfaction and reduces attrition, leading to higher LCV. However, this isn’t the highest value banks and credit unions can realize from personalization.
Stage 3: Contextualization
Imagine you step out of the restaurant where you’ve just settled the bill, only to see it’s pouring down rain. You forgot an umbrella, and the pleasant walk home that you’d looked forward to is ruined. You sigh and pull out your phone to call an Uber — and see that your bank or credit union has sent you an offer for 10% off your next rideshare.
That’s not coincidence — that’s contextualization. The most sophisticated stage of personalization, contextualization tailors experiences not just to a customer’s overall habits and behaviors, but to their circumstances at a particular moment in time. In addition to the data required for hyper-personalization, contextualization requires contextual data from two other key sources:
- Device data: Data collected with permission from customers’ smartphones, such as their location or their activity (e.g., whether they are walking or driving).
- Public data: Publicly available data such as weather or traffic.
Because customers have their phones on them all the time, contextualization only works if you use mobile channels to deliver experiences in real time.
Contextualization is the ultimate relationship-builder. It makes customers feel like your bank or credit union is anticipating their needs and always reaching out at the right time. Besides strengthening the relationship and boosting LCV, contextualization also enhances your business KPIs. You’ll lower CAC by selling to each customer at the exact moment they’re most likely to convert, and reduce churn by reinforcing the value proposition of a customer’s account when it matters most. With contextualization, you’ll finally make the most of your personalization program.
Understanding Your Personalization Maturity Level
To put your bank or credit union on the path to personalization, start by identifying where you already stand on the spectrum. To do this, consider three factors:
- Internal and partner data assembly: Which types of data you can gather internally and from your partners
- Contextual data assembly: Which types of contextual data you can capture
- Mobile banking app infrastructure: What kind of experience your mobile banking app delivers
For each of these factors, you can diagnose your bank or credit union’s readiness by asking yourself a few questions about your current capabilities.
1. Internal and Partner Data Assembly
Ask yourself these questions:
- How siloed is your proprietary data (e.g., transaction records)?
- Do your LoBs share data with each other easily and freely?
- Can you assemble third-party data (e.g., hotel partner loyalty points) and use it to personalize?
If you haven’t gathered proprietary data like transaction records internally across LoBs or assembled third-party data like loyalty program records from your partners, then you’re at Stage 1 — basic personalization. You may be personalizing in a limited way, for example by adding customers’ names to emails or targeting campaigns demographically. Until you “level up,” however, you won’t see much lift to LCV, reduced churn, or other major benefits. Assembling your data internally and beginning to incorporate third-party data from partners will be key to reaching Stage 2.
2. Contextual Data Assembly
Ask yourself these questions:
- Are you able to assemble device data from customers’ smartphones (e.g., location) to use for personalization?
- Are you able to assemble public data (e.g., weather reports) to use for personalization?
If you’ve gathered data internally, but don’t incorporate contextual public and device data, then you’re at Stage 2 — hyper-personalization. At this level, you draw on proprietary and third-party data to deliver content, offers, and experiences that are more relevant to your customer, and you’re beginning to see ROI. However, your personalized experiences may get delivered at the wrong time and place, causing them to be missed or ignored. Gathering contextual data and building the infrastructure to deploy it is key to leveling up to Stage 3.
3. Mobile Banking App Infrastructure
Ask yourself these questions:
- Are you equipped to deploy personalized content, experiences, and offers via your mobile banking app?
- Can you do it in real time?
If you have assembled internal data and external contextual data, and you’re using your mobile banking app to deliver personalized customer experiences in real time, you’ve achieved the highest level of personalization: Stage 3 — contextualization. By reaching out to customers with personalized experiences at the right moment, you boost engagement, surprise and delight customers, and build deep and long-lasting customer relationships. An experienced partner can help you refine and optimize your campaigns for even stronger results.
How Flybits Can Help You Take Personalization to the Next Level
It can be a challenge to take personalization to the next level. Wherever you currently fall on the spectrum, to reach the next stage you need to assemble new data sources and implement new infrastructure.
Some banks and credit unions may opt to build that infrastructure in-house. However, their internal IT teams have limited time and relatively little expertise in customer experience solutions, which can lead to budget overages and extended timelines. Working with a trusted partner to level up personalization programs is the best way to avoid wasted resources and build out digital experiences at scale.
We’ve helped dozens of banks and credit unions build stronger relationships with customers and lift business KPIs by enabling hyper-personalized and contextualized digital experiences. Here’s how we help at every step of the process.
Leveling Up From Basic Personalization
Step 1: Assembling Data Across LoBs and Among Partners
Many banks’ and credit unions’ customer data remains siloed across LoBs due to the difficulty and expense of updating legacy infrastructure, stalling them at the basic personalization stage. Our data assembly solution links LoBs together without the need for costly infrastructure alterations. With transaction records and other data shared across your organization, you can start to identify customer habits and behavior that can be used as the basis for hyper-personalized campaigns.
We use tokenization to analyze sensitive data without taking it outside of banks’ and credit unions’ networks, ensuring security and protecting customer privacy. Using this same technology, you can forge data alliances with partners from other industries, yielding another rich source of customer data to fuel hyper-personalization.
Step 2: Orchestrating and Delivering Hyper-personalized Experiences
With your data assembled, use our tools to deliver experiences that target particular hyper-personalized audiences to optimize specific KPIs. With the Flybits Experience Studio, you can select a hyper-personalized target audience — for example, checking account customers who haven’t used their debit card in the past 30 days.
Then, deliver a tailored experience via Flybits Concierge, a widget that integrates easily into your mobile channel. For example, you might send the customers above an offer for $5 cash back if they use their debit cards in the next week. By boosting relevance and improving targeting, you’ll see higher engagement and satisfaction — and a lift in almost any KPI you target, from credit card usage frequency to reduced CAC for primary banking customers.
Enhancing Hyper-personalization With Context
Step 1: Assembling Contextual Data
If you want to take your digital experience to the next level, hyper-personalization, you’ll need to assemble contextual data to layer in with the proprietary and partner data you’re already using to create hyper-personalized campaigns.
Send a mobile nudge requesting that customers share contextual device data, such as activity and location, in exchange for more personalized experiences in your mobile banking app offering. Our data assembly solution automatically combines this device data with public contextual data such as weather, as well as the existing data you’ve assembled across LoBs.
Step 2: Deploying Contextual Triggers
With our Flybits Experience Studio, you can enhance a hyper-personalized target audience with a contextual trigger that ensures the experience is delivered to that audience at the right place and time. For example, target a hyper-personalized audience of credit card customers who rarely buy groceries with their cards. Add a context trigger so they get an offer for double points back on groceries — but only when they’re close to a grocery store.
Contextualization makes customers feel like your bank or credit union is there for them, not just responding to but anticipating their needs. This feeling builds deep, lasting, and high-value customer relationships that make cross-selling and upselling a breeze, reducing CAC and boosting SOW. In other words, contextualization takes many of the benefits of hyper-personalization and kicks them into overdrive.
Making Contextualization More Effective
Reaching contextualization doesn’t mean you can “set it and forget it.” Maximizing the effectiveness of contextual experiences requires constantly testing and tweaking to improve KPIs like engagement and impressions. For example, you could test whether customers engage more with an offer for double points on groceries or an offer for 5% off their next grocery purchase. You’ll also need to design new contextual banking experiences as your business goals and needs change over time. Our solution’s built-in analysis features make it easy to figure out what is working and what isn’t, guiding you to build campaigns that consistently delight customers and lift KPIs.
Conclusion: The Contextual Future of Banking
As more interactions take place online and via smartphone, digital personalization is the ideal way for your bank or credit union to build close relationships with your customers at scale. By meeting customers where they are — on their phones — with relevant, timely experiences, you’ll become a core part of their daily lives. Building these deep, lasting relationships will pay off with increased revenue and lift across multiple business KPIs. Most importantly, though, contextual digital experiences will replicate the 1-to-1 attention customers are used to getting during branch visits, bringing a “human touch” to digital banking.
