In the not-too-distant past, tellers at local branches were the main touch point between banks and their customers and were able to offer personalized service. Now, however, mobile and online banking have reduced the human interaction customers have with their financial institutions. Under these circumstances, how do banks create a personalized customer experience as a key competitive differentiator and better market new products and services according to customers’ specific needs and preferences?
Quality of service and ease of use are the primary reasons customers either remain loyal to, or decide to leave their banks, according to Capgemini’s recent World Retail Banking Report. Unfortunately, most customers are not getting the personal touch they want; fewer than 40% of customers around the world report positive banking customer experiences. To strengthen their relationship with customers, banks must understand what each customer wants, when they want it and via which channel.
It’s true that customer segmentation has long been a marketing staple in financial services. But, there are some inherent challenges to this approach – namely that customers are dynamic, multi-dimensional individuals who don’t always fall neatly into a single category. Here lies the power and opportunity of “segment-of-one” marketing: banks with the proper technology in place can look at, understand and predict what might appeal to customers on an individual level to dramatically increase conversion and quality of service.
Segment of One
Banks have traditionally taken an approach where technology is organized around the branch, with call center systems and digital channels layered on top, resulting in sales and incentives information and knowledge about customers living in different systems. Often, mergers and acquisitions make banks’ systems even more complex and increase the difficulty of getting a unified view of customer information.
In order to achieve the true segment of one, banks must break down internal silos, create a new target operating model and architecture across the services and integrate lines of business. They must have a Customer Relationship Management/Master Data Management (CRM/MDM) system in place that consolidates customer information files with all client, product, contract data and social content in a single database to which they can apply analytics to gain actionable and near accurate insights. Leveraging technology such as big data to support real-time identification of the unique needs of an individual customer can help banks adopt more personalized client interactions across branches, call centers, product lines and digital channels, ultimately increasing conversion rates and improving customer loyalty.
Banks have long aspired to drive more customers to apply for and buy products and services via digital channels but the absence of personalized interactions, poor self-service capabilities and awkward shifts between assisted and non-assisted channels makes it difficult for customers to find, let alone purchase new services. This inability of banks to capitalize on using data to offer better, more convenient services is one of the key reasons why people move to newer banking competitors such as Moven and Smarty Pig.
Mr. Kumar is vice president of Banking & Diversified Financial Services for Paris-based Capgemini. He can be reached at firstname.lastname@example.org.