PERSONALIZATION PROMISE SIX PIVOTAL SHIFTS A Financial Services perspective

 CASE FOR PERSONALIZATION

Power has shifted from Corporate to Consumers. More so in Financial services, where incumbent firms are challenged by convergent disruption from consumer, competition, compliance and core functions. Focus has forcefully moved to consumer.

So, for a trust based relationship with consumer, the foundation will be to stay hyper-relevant to consumer. In Financial services, where service is delivered without goods, to gain goodwill and brand equity for growth, Financial institutions (FIs) estimate that if they could successfully offer customers an individualized experience, they would earn an additional 14% in annual revenue. And 79% of FIs consider it “very” or “extremely” important to deliver guidance to customers in real time. Two in five millennial feel that the offers they receive from their banks are not personalized, and 40% of consumers say that a personalized service would change their loyalty to their bank.

Clearly, FIs recognize the value of personalization but still it is not achieved to the level expected by consumers.

Although FIs recognize the importance of personalization and the consumer demand for it, there is still work to do. Roughly 40% of all but the very largest financial institutions consider themselves “static” — which means they offer no personalization. The top two reasons cited by FIs for why they cannot effectively leverage big data to deliver better experiences are

1) Data is highly distributed and

2) There is a shortage of right talent to analyze the data effectively.

Consumers want their primary financial institution to know about their personal financial goals, lifestyle, major life events, etc. Consumers are even willing to share personal data to help their bank or credit union to know them better, look out for them and reward them. Likewise, the vast majority of financial institutions want to leverage the considerable technological sophistication and vast data resources at their disposal to give consumers the customized guidance and services they desire.

Unfortunately, despite the vast amount of data available, the early start the industry has enjoyed and formidable resources, most banks are far from realizing big data’s full potential. Additional challenges are posed by competing priorities most organizations face, be it increasing compliance and regulations, reducing operational costs, improving digital capabilities. In parallel, new breed of competition or challengers are hitting the ground with lean architectures and redefined process, with high impact customer journeys at the heart of process and systems.

While Digital channels are powering the personalization journey, as per 2018 U.S. Retail Banking Satisfaction Study, 28% of the patrons of retail banks are digital-only customers. Banks are succeeding in moving their customers from costlier branch-based interaction channels to more cost-effective digital channels, however bringing the next wave in digital channels through hyper-personalization cannot wait till the change-over to digital channels cover majority of customers.

Personalization can no way be another traditional program, it’s a continuous journey with changing customer, customer expectations, demographics and market. Personalization programs need to embed the act of dynamically curating experiences to each individual and context in a seamless manner across all interactions and channels, Accenture proposed 4R framework covering Recognize, Remember, Recommend and Relevance to bring in personalization at scale. Extending that framework, there are six pivotal shifts required for powering personalization programs.

SIX SMART SHIFTS  

To enable personalization in the midst of challenges faced with channels, process, legacy core systems, disintegrated relationship view and mounting consumer privacy regulations, there needs to be six smart shifts in financial services across layers.

·       WHO is your customer? 

·      Shift from Customer Segmentation to Segment of ONE. Granular definition of customer enables personalization. Last mile information helps strengthen relationship, trust and loyalty and improves the overall Customer Lifetime value.

·      Enriched data signals across journey to hyper-personalize offerings, price and service delivery. This brings in long standing relationship, where the offering and services are secondary to customer life stages.  

·       WHERE are your customers?

·      Shift from Omnichannel to Optichannel. Shift from one size fits all approach to right size approach. Deliver information and service at the most convenient and used channels to improved overall experience, than mere replication across all channels for broken experience.

·      Integrate Physical and Digital to Phygital distribution models. Neither pure digital nor physical can bring in an immersive experience. Technologies on AR/VR/AR and IOT are enabling tighter integration of Physical and Digital to bring in seamless experience. In Insurance, this includes connected entities (home, health, car, specialty equipments) to bring in invisible connect, information and hence integrated services to avoid risk than compensate risk through claims. Overall objective shifts from “Help in Need” to “Improve Living”

·       How are your customers served ?

·      Shift from Process Efficiency Race to Customer Experience elevation. The next big wave is Customer Experience. Unless we re-engineer all processes from front to back with customer journeys, process will get trapped in efficiency circles and will fail to meet the customer objectives. FS firms are realizing that super efficient processes need not necessarily excite customer experience, more so when high value decisions are taken by customers where high touch is critical than high technology.

·      Build the power of living services through partners and multi-brand presence. In today’s connected world, no customer journey starts with and ends at the same player. The best industry examples today from GAFA illustrate the power of ecosystem. In Financial Services, this movement from primacy focus on money, transactions and value to customer, journey and experience can only be achieved by API First open marketplace. This has become more of high performer pattern in Financial Services. Over 40% of Financial services firms are making joint ventures with tech and non-tech market players to create this experience first journey for customer. This is a formidable shift in redefining the industry.

·       WHAT customer information are you leveraging?

·      Shift from Data Liability to Data Asset and Access. Today in the absence of adequate data controls and looming threat from cybersecurity, Data is a liability for firms. They sit on a time-bomb which can explode and make personalization drivers – a public explosion. The instances of losing customer data across geographies have seen shift of trust from high street financial services players to niche, local and small players.

·      Actionable insights to create ZMOT (Zero Moments of Truth) with rich data inside and outside organizations leveraging consent based access.

·       WHO are serving your customers?

·      Workforce shift from Back-Office to Front-office. The 2018 North America Banking Operations Survey of 80 bank executives points to the future of banking operations—by 2020, up to 40 percent of bank spending on digital transformation will be in operations.

·       HOW are you meeting customer compliance? 

·         Shift from Privacy compliance to Personalized Trust. Chasing privacy compliance is a never-ending game. FIs need to target the compliance as a competitive differentiation in letter and spirit, which entails bringing technology enabled trust framework from Data, Process and transactions perspective at every second. This is enabled today by fingerprinting PII (Personal Identifiable Information) across enterprise data and provide lineage to identify the toll gates and boundaries. GDPR and equivalent directives pointing specifically from Section 2 to 4 under Chapter 3, covering Articles 13 to 22 will be guiding principles for Data Subject rights across geographies.  

·         Data protection compliance with absolute control through consent management leveraging biometrics and IOT. Consent Management will take center stage in personalization and Data access. PSD2 has shown the way in Europe, where identity management and consent management have emerged to be key pillars while driving larger partner ecosystem. Both GDPR and PSD2 lack clarity on the type of consent required. Considering that consent in electronic form is a practical necessity for PSD2, the technical details for providing consent are lacking – i.e. ticking a box or receiving an email confirmation – leaving too much room for interpretation. FIs should keep the consent management at the heart of their personalization approach, applying the most rigid interpretation possible, in the interest of customer.

Summing it up, with the six pivotal shifts, technology offers wider mosaic to orchestrate personalization along with human workforce from distribution, operations, services and products to marketing and recommendations. This hybrid power will be driving the best of personalization experience for customer in his journey from a prospect to a long term trusted partner.

Closing Note

Personalization is all about customer, not about corporate institution serving customer.

How corporate will shift from this cultural mindset is key. The cultural shift is not limited to leadership or workforce. The culture of technology and adoption within Financial service to move towards customer in every design and operations is key. When this power shift disrupts the market, only customer first personalization will weather this wave.

With mounting business, markets and customers, incumbents have migrated to Standardized personalization. Time is up to shift to Flexible personalization where personalization is beyond consumption of services, it goes below at depth on collection, curation, content, consent and convenience. All components make a personal interaction combination. Let the powershift to customer take its toll on those who are yet to realize the promise and power of personalization.