Webinar

Everything You Need to Know About Personalization in Banking

The concept of personalization has long existed in the financial industry. Yet, few financial institutions have been successful in incorporating it in their business models to achieve significant performance gains. Watch this webinar for a discussion on how to create personalized banking experiences that differentiate and win in the market. 1. Myths and realities about personalization in the banking industry 2. What are the key ingredients to delivering personalized banking journeys that customers want? 3. The benefits of personalization for financial institutions and your customers 4. BONUS: Step-by-step guide on how to incorporate personalization in your digital banking strategy

Speaker

Anita Profile Pic

Anita Tang

Product Marketing Manager

Flybits

Webinar Transcription

Anita Tang:
Hi, everyone. My name is Anita Tang and I am the product marketing manager at Flybits. Today, we have a very exciting agenda for you. We’re going to be splitting the webinar into four sections. First, we’ll be talking about the top five biggest myths and realities about personalization in the banking industry. Next, we’re going to talk about the key ingredients to enabling personalization at your banks or credit union. Then, we’re going to dive a little bit deeper into the key benefits and impact of personalization. Lastly, we’re going to provide a step-by-step tactical guide on how to incorporate it in your existing strategy.

Anita Tang:
The first section is myth and reality. The first myth that we wanted to debunk is a fact that banks and credit unions need third-party data to effectively implement personalized banking experiences. Without a doubt, the most important element of personalization is data. The reality is you already have a wealth of data that can be used to enable this today. In fact, 48% of leaders at top organizations have cited that the number one challenge to personalization is not the lack of data, but not knowing where it is and how to use it. This challenge is often a result of siloed data sources, coupled with complex data infrastructure. Therefore, to implement a successful personalization strategy, orchestrating your existing data is much more impactful than adding new data sources.

Anita Tang:
Myth number two. It’s difficult for banks to quantify the benefits of a personalization strategy. Today, many banks and credit unions have deployed what would be considered basic personalization, for example, sending an auto-generated email personalized with a customer’s first name. These types of basic personalization is table stakes in today’s digital age and doesn’t drive significant business impact. What does result in significant business impact is delivering about one-to-one personalized advice, offers and recommendations to customers in the moment that matters. This is what would be considered advanced personalization. However, only 6% of financial institutions today are doing so, but despite that, the business results are quite staggering for the 6%. In the third section of the webinar, we’re going to take a closer look at what some of these business results have derived for these institutions.

Anita Tang:
Myth number three. Implementing a personalization strategy is a multiyear project that involves technical teams, like data science and AI. There are many banks and credit unions today have actually gone to market with a personalization engine in as little as 60 days. This was all done by leveraging their existing core assets, data sources, and digital channels. The most important part of these case studies is the fact that the entire platform can be managed end to end by their business teams. This means they don’t have to rely on the technical data scientists or the technical resources to get this going on a day-to-day basis.

Anita Tang:
We’ve talked about three myths as it relates to implementing a personalization strategy at banks. The next two myths are related to what banks think customers are looking for from a personalization perspective.

Anita Tang:
Myth number four. Customers want to have the opportunity to customize how they manage their finances with budget setting and spend-tracking tools. The reality is only one in 10 customers are adopting these personal financial management tools. Let’s face it, the adoption rate is just not good enough. Notifying a customer that they’ve reached 80% of their goal on let’s say a down payment to a house is useful information, but so what? Customers are looking for that personalized recommendations on what to do next, and this is evident in the fact that half of the customers want their banks to proactively recommend helpful products and services. Imagine instead of simply alerting the customer that they’ve hit that 80% savings goal, at that particular moment you could deliver a notification from your bank informing them that they’ve been pre-approved for a mortgage, and what’s more, you’re providing a checklist to help them on their new house hunt. This level of engagement is what the customer is truly looking for.

Anita Tang:
Myth number five, and the last myth for today. Tailored offers and discounts should be the top use cases for your personalization strategy. The reality is, customers are clearly looking for the empathetic banking from their primary institutions. This doesn’t have to be an offer or discount to a product or service, it simply has to be an experience that makes your customer feel seen and understood. This oftentimes can be as simple as providing the right advice and recommendation based on their individual needs. Let’s take an example. In the current COVID climate, if you’ve noticed that your small business customers have significantly reduced foot traffic to their retail store and that their sales have continuously declined, providing tools and best practices on how to transition to an eCommerce store might be the advice that they’ve been looking for from their bank.

Anita Tang:
Now that we’ve debunked some of the myths as it relates to the implementation of personalized banking and what the customers are looking for from banks, let’s take a look at what some of the key ingredients would be to enable personalized banking. From our perspective, there are three key ingredients for consideration. Number one, having an empathy mindset, two, building trust with the customer, and three, approach personalization with privacy by design principle. Let’s double click on each of them.

Anita Tang:
Oftentimes, banks and credit unions are deep rooted with a sales mindset, where the banking product and service are the key focus and the different segments of customers are simply a way to improve the performances of these products, whether it’s the conversion rate in a cross style campaign or increasing spend simulation for a credit card portfolio. However, with personalization, customer centricity is a must, and this requires your organization to transition from a sales mindset to an empathy mindset. By understanding what the customers want and need and delivering that right solution and recommendation at that particular moment is how you can achieve customer centricity and truly deepen their relationship with them.

Anita Tang:
Let’s take a personal loan offer as an example. With a sales mindset, the bank might segment customers who currently do not have a personal loan and send a mass communication in an attempt to maximize reach and conversion. But with an empathy mindset, the bank would recognize that the top reason a customer would get a personal loan is to consolidate their credit card debt as well as lower the interest payment, since personal loans typically have a lower interest rate than credit cards. Therefore, the bank, with this new information, should reach out to a customer with the loan offer at the moment when interest payment is top of mind. This moment is typically when the customer received their credit card bill. While the customer is reviewing the bill and dreading the enormous amount of interest they have to pay, if at this moment the bank can send a personal loan offer as a solution to help them reduce the interest payment, the likelihood of this particular customer taking the offer is significantly higher. What’s more is that now this particular customer knows that the bank understands them and their needs, so their relationship is now deepened.

Anita Tang:
The second ingredients to personalized banking is customer trust. When you have trust, you can get the attention of customers when you need it, which is very important for our personalization strategy. But without it, no matter how relevant or personalized your message might be you will be ignored, because you are seen as spam to the customer.

Anita Tang:
Now, the good thing is that banks today are ranked relatively high in terms of consumer trust, especially compared to other industry. Excuse me. But in order to maintain this trust, banks must take into consideration two factors when designing personalized experiences, the frequency of interaction and the impact of each interaction. In a little bit, we’re going to go through a journey of Michelle and see how this could be unfold into your strategy.

Anita Tang:
Last but not least, the third ingredient is a notion of privacy by design. This relates to the way personal data from customers are being collected and handled for personalization. These data can be personal information from the customer, their current location, transaction history, et cetera. With that, privacy must be a default setting and not an add-on or afterthought. Banks must ensure personal data is automatically protected and don’t require the customers to do any action to ensure this protection. Banks must also maintain this visibility and transparency to the customer in the way that their data is being used and handled. Lastly, banks must make it easy for users to manage their personalization preferences, giving users control to their own data and allowing data to be erased when they no longer want their banks to have it.

Anita Tang:
So recap, the three key ingredients to personalized banking is, one, having empathy mindset or transitioning to the empathy mindset, two, building customer trust, and three, leverage privacy by design approach. With that said, let’s take a look at what a personalized banking journey could look like with these three ingredients. We will use Michelle to help guide the journey with her bank through the mobile banking app experience.

Anita Tang:
Michelle is currently a travel reward credit card holder, but she’s no longer traveling like she used to given the current restrictions on travel. In fact, her spend have largely shifted from travel to dining and take out. At this moment, her bank sends a dining reward card offer, which is better suited for her new lifestyle. When Michelle gets a new credit card in the mail, she receives an engaging onboarding quiz. Research shows that customers who understand the benefits and the feature of their card tends to have a higher spend amount as well as higher customer satisfaction. As part of their early engagement, 10 days after Michelle has activated the card, she will also receive a reminder and step-by-step guide on how to add her new card to a digital wallet. This guide will ensure that the friction with regards to card switching can be minimized and allow Michelle to pay the way that she wants digitally.

Anita Tang:
Now that Michelle has been onboarded to her new card, she is able to tailor the card to her needs. The next time when she logs on to the account, she’s guided to provide her preferences for offers and rewards, and because recently she has been spending a lot on dining and restaurants and take outs, she has opted in to receive dining offers. If she goes out a night out with her friends, she can look out for these dining offers for restaurants.

Anita Tang:
With Michelle’s busy schedule, card benefits are not always top of mind for her. That’s why she could rely on her bank to remind her of the benefits at key moments. Like when she’s making an online purchase, she is reminded that she has zero-liability protection so that she can have peace of mind when shopping online. Michelle will also receive personalized offers when she is exploring around, let’s say in the Soho district. She can expect her bank to send her deals and offers of nearby restaurants, which is aligned to the dining offer she has opted in to receive.

Anita Tang:
After a dining and shopping excursion, Michelle approaches 90% of her credit card limit. At this moment, she would be notified that she’s eligible for a credit limit increase so that her card won’t get declined when she makes the next purchase at the restaurant or a different store. If and when Michelle’s credit card balance is high and keeps on revolving, a few days before her payment is due she will receive a personal loan offer with a much lower interest rate. This enables Michelle to have a peace of mind and recognizes that the bank is looking out for her financial wellbeing.

Anita Tang:
Throughout her day-to-day spend, Michelle’s bank is able to act on key moments through an empathy mindset, building trust with Michelle by showing her that they understand what she needs and have her best interest in mind. This is just one example of how different banking products and services can come together to provide a personalized customer-centric experience.

Anita Tang:
Now that we’ve shown case what the experience could look like, let’s uncover the business benefits that banks and credit union can come to expect. The first benefit of personalization relates to customer acquisition and retention. In a recent survey, 54% of consumers have said that personalization plays an important role when making the decision to join a bank, 41% of them has said that the lack of personalization triggered the decision to leave, and 68% of them noted that personalization is important in deepening the relationship with their current bank. As a result, when it comes to customer acquisition, retention and loyalty, personalization contributes significantly.

Anita Tang:
The second benefit is financial related, and we’ve highlighted some key revenue metrics and cost metrics of personalization. On the revenue side, institutions that have implemented this advanced personalization strategy have seen conversion rates improved by three fold, as well, the annual revenue have increased by up to 10%. This makes a lot of sense, given the fact that more relevant experiences are now being delivered to the customer. As a result, the engagement is increasing, leading to increased spend and conversion. On the cost side, given that customer-centric approaches to products and service recommendation, customer acquisition costs can decrease by two to three times. Attrition costs is also have seen to decrease by 10 to 30%, and this is a direct result of reduced churn as customers feel like their banks understand them and become loyal to that particular bank. This is just a couple financial metrics that we’ve highlighted. Of course, personalization can do much more with regards to the business impact.

Anita Tang:
Then the third, and let’s say a little bit less tangible, benefit of personalization is that as a customer gains more control of their own data, the bank must provide proof points that the data that they provide to the banks is in exchange for something valuable in return, for example, personalized experiences. Consumer data and privacy concerns continue to be a hot topic and we’ve already seen many OEMs and tech companies taking steps to give this greater control to the customer. Furthermore, they’re providing more visibility in terms of how this consumer’s data is being used by other applications, like the banking appropriate. This ties in really well with the privacy by design concept that we talked about earlier. The good thing is that currently 63% of consumers today are willing to give more data to banks in exchange for better experiences. To maintain this valuable exchange, personalization is a great strategy to continue to be the proof points to customers that their data is being used for their benefits.

Anita Tang:
Now that we’ve seen what business results personalization can bring to your bank and credit union, let’s take a look at some of the tactical steps to get started. To kick off, the first thing to do is really to get an internal assessment of the goals and objectives for the organization and to truly understand how personalization can help you get there. Some questions that could guide this assessment is to understand the key organizational goals and business priorities that you’re looking to solve and documenting some of the business challenges that you might be faced with as it could be related to data, infrastructure of the IT system, et cetera. Also, what is a north star customer experience that you are striving towards and will personalization help you get there? Last but not least is to understand the privacy by design approach and whether it has already incorporated into the current infrastructure in your bank.

Anita Tang:
Once you have completed the internal assessment, next is to start with understanding the customer, their pain points and their needs. This can be done by building a customer lifecycle map. Mapping key moments of the customer lifecycle is very important. Today, a lot of banks and credit unions already do this, but the starting off point is typically from a banking product perspective. For example, for a customer who’s buying a home, the bank might build a journey from a lens of a mortgage product and the lifecycle stages could start from a application of a mortgage to the approval of the mortgage, to the disbursement of fund, to account management, to the renewal of mortgage. This is all from the perspective of the bank from that mortgage product lens.

Anita Tang:
Instead, we should incorporate some of the earlier points with regards to customer centricity and empathy mindset, and we should build that customer lifecycle from the perspective of the customer. Let’s say the home buyer’s perspective, instead of starting from the mortgage, we could have stages that start from saving money from a customer for a down payment, then to getting approval for mortgage, to house hunting, then to making an offer on the house that they would love to buy, and then finally, the last stage is moving into the new home.

Anita Tang:
With this approach, banks can get a better understanding of the needs and pain points of the customers at every single state of this lifecycle, and they’ll be able to provide recommendations of multiple products and services throughout this journey versus just pitching a mortgage product to the customer. This is ultimately the customer-centric vision that personalization can help you get to.

Anita Tang:
Of course, in order to map the customer lifecycle, you need data to help support some of those proof points. The chances are you already have more than enough data about your customer to get started. However, the opportunity here, again, is not the volume of data, but really distilling the insights from the data. Knowing a customer who doesn’t have a credit card doesn’t mean they need to be promoted with a credit card offer, but leveraging multiple data sources and then layering the insights of them that’s currently within your bank, you might uncover that this particular customer doesn’t have a credit card because he or she is a new immigrant, and as a result, haven’t built up the credit profile to get one. For this particular customer, advice on how to develop their credit would be much more relevant experience to them. Of course, whenever possible, compliment what you already know about the customer with additional data sources to really get that holistic picture and the more accuracy on the customer lifecycle.

Anita Tang:
Once you’ve mapped out the customer lifecycle and the different key moments at each stage, what you want to do is prioritize the experiences to launch. The prioritization can be focused around two metrics, one, value that’s bringing to your customer and the customer experience, and two, help you drive business results. These business results should align to the goals and objective that you’ve highlighted in step one. There’s multiple ways on how to prioritize this, but a simple step of plotting the experience in a two-by-two matrix can really allow you to visually see how you can get started really quickly.

Anita Tang:
Once you’ve defined the experiences to launch, next is to test and learn. The approach that we recommend is to start small and test with one customer lifecycle at a time for the learnings. Approaching it as small tests will enable you to move much faster and see what’s working and what doesn’t very quickly. One key element in this step is to clearly define the success metrics to track and measure the impact. Again, this goes back to taking the learnings of what works and what doesn’t and quickly get it right.

Anita Tang:
Also at this step, the channel engagement is also very important. What we’ve seen with our customer is that mobile banking app is typically the default channel that they leverage. This is based on the simple fact that the mobile app is where the customer is at, and if you want to deploy personalized engagement, you want to be where the customers are. Lastly, which we already talked about is to take some of these learnings into a feedback loop and continuously iterate and improve on the experiences.

Anita Tang:
Step five, and the last step, is to scale with ease. With the learnings, you can now scale the experience from the first customer lifecycle that you’ve tested with cross to different customer lifecycles and different product lines. One key element, as you’re scaling, is to really streamline the process and day-to-day maintenance for the business teams. You want to be able to have a solution and platform that could be managed by them. This was really to ensure that there’s less reliance from a technical resource perspective and allow your team to be much more agile to market dynamics. Whenever possible, you will want to build experience templates that can ensure repeatability and expedite time to market. For example, an onboarding experience template could be used for both the home buyer journey, as well as the credit card holder journey. Lastly, you would also want to automate performance tracking and reporting to ensure that the results can be used for real-time decision making, especially as the market is moving very quickly.

Anita Tang:
That was a high-level overview of the tactical steps to get started with personalized banking. Now, I wanted to quickly talk about our company Flybits does and why we’re talking about personalization and banking today. In a nutshell, Flybits allow banks to deliver that end-to-end customer-centric banking experience that we’ve talked about today. The way that we do it is, first, with a few lines of code, Flybits creates a feed in the bank’s existing mobile app. This means that the banks do not have to do a redevelopment, rip out what they currently have existingly and then build new things. This feed is delivered to the customer in a form of personalized recommendation and content. The content and the personalized experience is fed by the bank’s different lines of business and products.

Anita Tang:
What Flybits does is listen to the cues from customers, like a location or transaction, or even a specific date, like bill cycle or bill payment, like in our earlier personal loan offer example. Then we enable the banks to provide the relevant products and services that fits in that particular moment for the customer and we help ultimately shift from the sales mindset to the empathy mindset, where the customer comes first.

Anita Tang:
To enable all of this, Flybits also helps banks assemble data from the existing silo system. For example, pulling transaction habits and demographic data along with account portfolio and risk data directly from no CRM backend and other banking system. To provide additional data, Flybits also bring out-of-the-box data sources to compliment what the banks already have. In essence, Flybits is the end-to-end platform for banks and credit unions that can deliver, orchestrate and assemble the personalized experiences that customers are looking for. If you want to learn more about what Flybits does, feel free to reach out to us after this webinar or visit our website at flybits.com.

Anita Tang:
This concludes the presentation version of the webinar today. I hope this was very informative in learning more about personalization in the banking industry. I’ll pass it over to Ben, and happy to answer any questions that might have come in.

Ben Smith:
Thank you so much, Anita. That was great. Yeah, we just have a few questions here, so I will read them out now. The first question that we have is what type of personalization initiatives return the highest engagement?

Anita Tang:
Mm-hmm (affirmative). That’s a really good question. What we have noticed from our customers and what we’re seeing in the market is that the onboarding experiences is a great one to start to improve the engagement. The reason is because during the first, let’s say 30 days on when the customer get a new product, this is the best time to reach out to let them know what the features of the products are, more education and advice on how to better leverage your product, and what are some checklists or guides that they can help them maximize the value from the product. What the research has shown is that during the onboarding period, reaching out to a customer five to six times would yield the highest customer satisfaction, and of course with customer satisfaction, engagement and also customer lifetime value is also improved. But the research also showed that banks today do zero times during this onboarding engagement, so if there was one area to start, I think onboarding will be a big opportunity for the banks and credit unions.

Ben Smith:
Okay, great. Second question, how do I figure out what my customers care about?

Anita Tang:
Mm-hmm (affirmative). I think this question is deeply rooted in understanding the customer holistically, right? In the tactical steps that we provided, I think step two to four is where this is really important. As you are mapping the customer lifecycle in step two, you want to be able to leverage data that could paint the holistic picture. One good way to start, of course, is doing research, but talking to customers through, let’s say, a consumer research engagement will also be very helpful, if budget permits so. You can cover a lot of their pain points that you might not know about, and this is what we’ve done in [inaudible 00:32:59] Flybits as we go and cover some of these pain points and needs from the customer. Even things like a Google consumer survey can provide additional information of what the banks don’t already know today about their customer.

Anita Tang:
Of course, once you’ve gathered those research and have mapped it out in a customer lifecycle journey, then you could really define experiences and to test it out. So step two and three is really to sort of provide the hypothesis, what you think that customer want, and step four is when you validate it in the market. The reason why we suggested to start small is to do exactly that, to take the learnings of what you know about the customer, validate the hypothesis that you have, and once that’s done, scale it out to full deployment. I think that could be a good tactical steps to figure out what your customers would care about from a personalization perspective.

Ben Smith:
Okay, perfect. Thank you. Then one more question, for advanced personalization, is AI a prerequisite to launch this strategy?

Anita Tang:
Mm-hmm (affirmative). I think that’s a very good question, and oftentimes we leverage personalization and AI synonymously. Certainly with AI, many of, let’s say, the data orchestration or client identification can be automated, but what we have seen is a lot of our customers have successfully started their personalization journey with rule-based engine. As they become more sophisticated, as they are able to build some of these propensity models in house or even leverage AI models from third party, they’re able to incorporate it into that existing framework. So AI is not a prerequisite, but as your organization become more sophisticated, having a platform that could be flexible enough to intake them, that will be important key factor.

Ben Smith:
Okay, great. Yeah, that sums up the questions that we have. I just wanted to say thank you so much everybody for attending and thank you so much, Anita, for this. This was great. I hope that everybody got good value out of this. We will be sharing a recording of the webinar later this week.

Ben Smith:
Then I also wanted to take this opportunity to share that we will be hosting another online event called The FinTech Wind Down, which will be next Thursday. We’ll follow up with details about that with the webinar recording. Thank you so much everyone for joining, and I hope that you have a great day.

Anita Tang:
Thank you, everyone. Talk to you guys soon. Bye-bye.