Today鈥檚 financial services marketers are facing new demands. They don鈥檛 just need to stay current with new marketing trends in the financial services industry, they need to stay on top of new finance and marketing technology to give consumers what they demand, and capture more market share.
Banks and other financial services institutions have been slow to join the personalization era, and many are now attempting to catch up as they realize that this marketing concept is not a passing trend. Additionally, as data privacy concerns shift, new technology is emerging that is designed to help organizations gather customer insights while maintaining privacy. Now is the time for marketers in the financial services industry to lay the groundwork for a unified customer experience that takes more nuanced factors into consideration when making recommendations to customers. Let鈥檚 take a look at the different ways that organizations can implement personalization in banking:
Personalization in banking is about delivering a valuable service or product to a customer based on personal experiences and historical customer data. It can help to build trust and in turn, drive results and revenue. By creating an end-to-end experience that integrates customer and operational data across all branches, apps and call centers. In short, personalization can help organizations deliver solutions to their customers before they even realize they have a problem.
Personalization in finance isn鈥檛 an all-new trend 鈥� it鈥檚 a re-imagining of the business models that brought consumers to banks before the era of mass marketing. Decades ago, consumers would visit banks where they knew tellers on a first-name basis, as they were all active members of the same community - Today鈥檚 world is much more fragmented.
In recent years, the financial services market became much more transactional 鈥� it was no longer about the relationships with bank tellers. Instead, consumers were more concerned with who doesn鈥檛 charge maintenance fees, and who has the best rewards system for their credit card.
In a race to cut costs, the personalized nature of financial services suffered. This is a huge missed opportunity. Today鈥檚 customers are looking for valuable insight and advice from their banks, however, it鈥檚 difficult to give good financial advice when you don鈥檛 know a customer鈥檚 goals or priorities, something many banks don鈥檛 have the capacity to offer.
In addition to improvements in revenue, personalization in banking can enable a number of benefits including:
For example, think of credit cards. Who doesn鈥檛 offer a credit card? Every bank, and most major retailers are all competing for customers with steady incomes, solid payment histories, and frequent credit card use. This has caused a saturated market where banks are forced to become increasingly competitive 鈥� causing them to tighten their margins, or take a gamble on customers with low FICO scores.
Not only that, but new entrants into the financial services industry have put the squeeze on existing companies. The most formidable new entrant is Amazon, with their Amazon Cash and Amazon Lending offerings that mirror prepaid debit cards and investment services. As of 2019, Amazon was lending over $1 billion per year, and has since promised to continue growing and capitalizing on market share that once belonged to traditional financial service organizations.
As a result of this competitive environment, financial services companies have started to build value by competing based on customer experience. By connecting with customers in a personalized, relevant way, banks can move away from the product-obsession that sacrifices their margins, and towards a customer-centric focus that builds their brand value.
Generally speaking, there are 3 overarching types of personalization that banks and other financial services institutions can employ:
Prescriptive Personalization: The goal of prescriptive personalization is to anticipate a customer鈥檚 wants and needs based on historical data. Working within the context of the business鈥檚 goals, marketers can use this method to create rules and workflows that allow them to more easily manage users.
Real-Time Personalization: Real-time personalization relies on current, real-time data as well as historical data to create a personalized customer experience as it is happening. For example, marketing teams can leverage this type of personalization to make recommendations for customers as they are actively shopping on the site. This helps to drive both customer engagement and conversions.
Machine-Learning Personalization: This type of personalization makes use of intelligent machine-learning algorithms. With AI-driven automation, teams can make informed decisions about how to reach out to customers based on individual behavior.
For the banking and financial services industry, creating personalized experiences will only become more important as customers increasingly come to expect a certain level of personalization in their shopping experiences - banks and financial institutions included.
If a customer walks into a physical branch location, they are going to expect an experience that takes their personal history into account. They don't just want to hear about the companies newest product or available service, they want to find solutions to their problems and they want to know how your business can help them meet their specific needs. Personalization enables this, allowing banks and other institutions to optimize the customer journey with catered recommendations.
Let鈥檚 take a look at 3 examples of the banking industry can deliver personalization for their customers:
Personalization needs to use several sources of consumer information to create a three-dimensional view of a single consumer. As a result, unified marketing measurement is absolutely central to personalization initiatives.
Marketers must link data from multiple campaigns 鈥� and multiple parts of their organization 鈥� to create a cohesive narrative that spells out which personalized campaigns are successful, and which aren鈥檛. This is key for customers that were either referred to the bank, or are part of a remarketing goal. Marketers need to find the trail that these consumers are following, and craft their next touchpoint based on previous touchpoints 鈥� whether they鈥檙e online or offline. For example, consider the following billboard for a credit union:
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For best results, the creators of this billboard should direct potential customers to a special landing page that鈥檚 specifically relevant to people who want to purchase homes in the geographic area of this billboard. If a customer lands on their 鈥�/lockandshop鈥� landing page as their first touchpoint, then all subsequent targeted messaging should involve homebuying, or local trends in finance.
This requires both online integration and offline media optimization technology. To fulfill this need, marketers often employ media planning software alongside their marketing analytics solution. This will help your financial services institution optimize all media placements and messages from a central location, no matter if they鈥檙e online or offline.
Data-driven content creation is becoming integral to marketing strategies, and the financial services industry is no exception. However, creating content isn鈥檛 as simple as making a few standardized resources for customers.
Content isn鈥檛 one-size-fits-all, even if some pieces appeal to wide demographics. Instead, try to optimize your blogs and resources based on small customer segments, and then advertise them to consumers that have the most interest in that content. Here are two primary ways to segment customers when creating targeted content:
Targeting blog content this way can also help strengthen customer relationships. If you send email updates when your team posts to the blog, you can ensure that clients only receive content that is relevant to them. This will make your updates more personalized and show that your organization cares about your individual consumer鈥檚 interests.
To create content that resonates with consumers, it鈥檚 best to link attitudinal survey responses to person-level sales data. This will help your organization find weak areas where more content is needed in order to resonate with a specific demographic or target audience.
Timing is everything. Financial services marketers shouldn鈥檛 promote products simply based on industry trends or sales quotas. Instead, use a marketing analytics platform to turn data from your CRM into a framework for smarter, more timely promotions.
First, marketers should identify which services customers are most likely to desire at each stage in the purchasing cycle. This information can be uncovered by analyzing person-level data with a marketing analytics platform. Then, these customers should be segmented based on their purchasing cycle. Here are a few suggestions:
In essence, banks need to understand that a first-time visitor is different from a customer that鈥檚 researching, which is different from the needs of long-term customers. To encourage action, optimize your CTAs and content based on a consumer鈥檚 place in the purchasing cycle. For example, a first time customer should have a CTA button that says 鈥淗ow it Works鈥� while a researching customer should see a button that says 鈥淟earn More.鈥�
A personalized relationship builds trust. This used to be inherent in the financial services industry, as customers would visit physical branches and speak to friendly tellers directly. However, today鈥檚 consumers have shifted away from this face-to-face approach, opting instead to use ATMs, online banking 鈥� and even banks with very few brick-and-mortar physical locations. Unfortunately, banks have struggled to keep pace with these digital changes, and find it increasingly difficult to understand how modern consumers interact with banks and credit unions.
To understand how consumers interact with banks, it鈥檚 vital that financial services marketers leverage person-level data collected from both online and offline interactions. These insights will allow marketers to better understand purchase drivers, behaviors, attitudes, and where customers are in the buyer鈥檚 journey.
There are several measurement methods required to ensure marketing teams are capturing and properly leveraging all of this person-level data.
Media mix modeling (MMM) allows marketers to determine how certain facets of their marketing mix impact overall sales performance. This is found via analyses such as linear regression or multiple regression. As a result of this statistical analysis, marketers can find valuable insights into what influences key factors like sales volume, a channel鈥檚 impact on sales, and the overall marketing ROI.
However, media mix modeling has a firm set of limitations. It is best suited to measuring offline media, and marketers must wait weeks or months to receive high-level insights regarding campaign outcomes. This makes it hard to optimize campaigns at a detailed, person-level across all marketing channels.
While many banks use media mix modeling, in the 2000s, a new, digital form of measurement became popular 鈥� multi-touch attribution (MTA). This method evaluates digital marketing efforts from the bottom-up, and provides a more person-centric approach by evaluating every touchpoint an individual hits on their journey to purchase. Then, it determines which touchpoints, channels, and messages had the greatest impact on towards a desired outcome.
MTA allows marketers to view insights and adjust their media plan marketing tactics while a campaign is in flight, but it doesn鈥檛 allow organizations to evaluate content effectiveness and track a brand鈥檚 strength. Although MTA is more advanced than media mix modeling, it unfortunately has a strong bias towards digital touchpoints 鈥� leaving the impact of in-person interaction to be largely enigmatic.
Unified marketing measurement (UMM) combines multiple data sets, techniques, and approaches to accurately assign value to both online and offline touchpoints. With UMM, organizations can get an accurate view of purchase drivers, behaviors, and attitudes that influence a customer鈥檚 decisions 鈥� enabling marketers to optimize their messaging on an individual or microsegment level.
According to Forrester, implementing UMM can provide opportunities to improve the efficiency of marketing budgets by 15 to 20 percent. However, brands that use UMM for person-level optimization have seen up to a 30 percent improvement in budget efficiencies.
Consumers believe that financial services organizations provide necessary services that affect their future financial standing as individuals. Financial services marketers need to understand the perspective of the consumer, and offer them personalized, direct methods of marketing communication. By using the right technology, strategies, and insights, marketers in the financial services industry can enjoy increased loyalty from customers, and strong growth in market share.
Today鈥檚 banks aren鈥檛 just competing amongst each other 鈥� they鈥檙e competing against technological powerhouses that are harnessing data to their advantage. To keep pace with this changing environment, financial services institutions must revamp their approach towards campaign measurement to understand their customers at a person-level. With a personalized, people-based approach to marketing, financial services companies can reduce friction in the customer journey and achieve higher engagement.
As public concern and the number of regulatory mandates continue to increase, financial services organizations will need to consider solutions that can help deliver more personalized customer experiences while maintaining compliance and upholding public trust. With the proper measurement tool in place, organizations can shift their focus to the customer and remain competitive in the industry.