Home / Banking Strategies / Know your ‘rights’: How to leverage personalized data to make financial relationships sticky and profitable

Know your ‘rights’: How to leverage personalized data to make financial relationships sticky and profitable

Nov 1, 2018 / Consumer Banking

Heading into 2019, big banks and financial services firms continue to expand digital interactions to enhance relationships with their customers. And as technologies such as mobile, AI and cloud-based platforms influence how we create and deliver financial services products, we stand at the threshold of an exciting new era in customer relationships. Let me explain what I mean.

Saying today’s banking customers feel comfortable using portable and mobile devices is like saying fish prefer to be in water. Smartphones, tablets and laptops keep customers ready to go 24/7—and they in turn expect their financial services firms to be similarly engaged and available. And this creates an exciting potential: the ability to attain a new level of “stickiness” between financial services organizations and their customers. 

Doing this well certainly poses a challenge. But it also represents a tremendous opportunity to take the vaunted concept of customer service to a whole new level. The ability to collect a wide range of information on both current and potential customers empowers forward-thinking banks—and specifically their lending arms—to customize, personalize and increase the effectiveness of the interaction. This has broad implications for expanded, longer-term relationships and improved brand recognition.

Reappraising pricing

Banks now move away from pricing various banking products in their portfolio to pricing longer-term customer relationships. Much of this shift comes by way of new technologies that include mobile, big data and most importantly API-first platforms. API stands for application program interfaces, which connect systems and ecosystems to deliver context-rich data at the right place and time.

As digital tools facilitate and expedite mortgage origination processes, for example, the breadth and depth of customer data acquired can easily form the basis of a broader interaction strategy for financial institutions. For one thing, the bank can use that assembled financial picture to determine the value of its relationship with individual customers. Now, add more “rights” to the picture—for this in turn inspires pricing innovations that ensure the right customers get offered the right product at the right price.

Big data, bigger opportunities

Big data has also changed consumers’ expectations for transaction experiences. Smart customers expect smart companies to know them and their needs and think ahead—not unlike the way Amazon sends a recommendation when you buy a book: “People who bought this book also purchased…”

Customers’ expectations are no different when they purchase financial products and services. They want to work with an up-to-date partner that leverages the latest tech solutions and understands their portfolio and banking history. Then as banks use this insight, the customer expects that their interaction will not only be safe and secure but also fast, convenient and personalized. 

For example, let’s assume a consumer can walk into a bank or contact a personal loan division via email or mobile app, or even make a phone call. She requests $20,000 and someone might be ready to take her information and get the process started. That covers the fast and convenient part. But on the personalization spectrum, banks often fall short.

The consumer likely has many options available to her—a credit card, a cash-out refinance, home equity line of credit (HELOC) and more—each with advantages and considerations. Today, no easy way exists for that consumer to compare her options and experiment with different scenarios. Why is this? It’s because these offerings exist in silos across the bank’s different lines of business (LOBs).

But if the bank can break down those silos, breakthroughs result.

So long silos

Imagine leveraging a dataset around all the consumer’s previous interactions with the bank, across all LOBs, to determine her value as a customer. With AI, the bank could instantly offer her personalized prices for the relevant products she qualifies for and leverage the dataset to make recommendations based on her goals and personal situation.

So: Should she open a HELOC? Or would her needs be better served via credit card cash advance? In today’s banking environment, humans who utilize extensive, available customer data will help find the best solution from the range of options across the company. 

Today’s smart companies invest in interconnected platforms and build out new data-driven approaches on them to provide personalization that characterizes 21st century banking at its finest. Connecting wide-ranging sets of information from the customers and financial services firms can eliminate silos and deliver value across LOB boundaries.

Ultimately, you end up with satisfied customers comfortable doing long-term business with a banking partner as their financial needs change and evolve. And as you begin the journey, keep in mind that for your customers’ minds, there is no “right way” to bank—only right places (everywhere), right times (all the time) and right products (personalized or customized through their information). By knowing your “rights,” you can better treat all your customers right.

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Rajesh Bhat is the CEO and co-founder of Roostify.