As the old curse puts it, banks are living through interesting times. Industry consolidation. Regulatory burdens. Ever-more sophisticated fraudsters. Technology that moves faster than institutions are built to keep up with.
On top of all that, major shifts in customer experience are piling on the pressure. Consumers bring increasingly heightened expectations to financial institutions, driven by great CX in other, less-regulated industries.
Fintechs and neobanks, which often find their way around many of the regulations banks must follow, have significantly disrupted services such as money movement and borrowing. Their digital experience becomes the new norm: one survey found that 41% of all digital banking consumers would be more likely to change financial providers if another offered a 5-minute mobile or online account opening experience for deposit accounts. That number goes up to 49% for younger consumers.
Of course, there's one thing traditional banks can offer that the neobanks can't: the personal touch of an in-person branch experience. But local branch interactions are in a steep, probably irreversible decline. That means ever-fewer opportunities to make personal connections with customers, to get to know their needs, and to provide recommendations and education about other products and services the bank offers.
In this rush to make the digital customer experience more robust and easy to use, consumers are missing out on advice that could help them get a better handle on their financial health and build wealth - and they are noticing.
Only 38% of regional and community bank customers say their provider’s recommendations have become more relevant over the past year, compared to 53% for neobanks, according to a recent Alkami study. Another report, this one from 2021, found that 72% of consumers viewed a personalized banking experience as highly important - but only 44% said banks are actually delivering it.
To fill the gap from less reliance on in-branch interactions, banks have leaned heavily into personalization. Financial institutions increasingly leverage advances in predictive analytics and generative AI to provide customers with insights and recommendations for budgeting, cash flow, financial goals, and wealth management.
To cite some examples, specialized solution providers like Personetics and Element by Dynamic Yield (Mastercard), as well as digital banking platform services like Jack Henry and Alkami, allow banks to quickly offer retail customers and SMBs specific insights and highly relevant recommendations.
It’s paying off for banks that have made the move. One study shows that of customers who get personalized guidance, 76% act on it. That's an enviable hit rate - which makes it all the more remarkable that it could be even higher if it wasn't for one nagging issue still holding too many banks back.
Many financial institutions are missing personalization across large parts of the customer journey. They're only seeing half the person. Here again, customers can sense it. Just 21% of customers say they receive personalized recommendations from their banks - while almost 90% of banks say they personalize their customer content.
That means an awful lot of banks think they're doing just fine with personalization, while their customers never feel like the messages they see are just for them. What's going on here?
For one thing, behavioral patterns and demographics alone don't cut it anymore. Without the sophistication of real-time customer profiles that add journey analytics and CRM, as well as rich content managed by marketing teams, banking customers won't recognize their unique selves in the content they're being served.
For another, most Journey Orchestration platforms coordinate across marcomm channels out of the box, but banking platforms require APIs and custom development to fully integrate. Marketing campaigns and content sit idle or get deployed with less precision as they often lack the rich insights developed within the predictive analysis engines of these personalized banking platforms.
And we'd be remiss not to mention the age-old problem that makes those others worse: organizational siloing. This covers everything from the high-level uncoordinated priorities across different business lines to the nitty-gritty of, say, a personalized email leading to an unpersonalized landing page because the two are owned by different marketing teams.
That's why, organizationally, banks must set priorities and assemble teams that support whole customer journeys. A fragmented institution will deliver a fragmented experience. Customers expect more today.
Banks that already have pieces of the equation - Customer Journey Orchestration and Personalized Banking Engines - need to invest in integrating these systems to get the most value from each of them across the customer experience.
When the organization is all pulling together and the latest tech is assembled and integrated, customers will start to see the shape of something familiar re-emerging: the friendly, knowledgeable banker down at the local branch, but with digital 24/7 convenience and effortless account management. That's when times will really start to get interesting.
WNDYR can help. With our deep CX expertise and our years of experience integrating digital platforms, we're ready to close the gaps that are keeping you from realizing the full benefits of AI and personalization before your competitors do. Contact our CX practice today.