Dealing with changing market needs with faster ad real- time personalized offers

The global Financial Services industry is in a state of flux, reacting to consumers who are not happy at how they are being served. This is because the majority of financial institutions are still stuck in an era of selling mass produced offerings to customers who place a high value on being treated and recognised as individuals. Personalisation needs to happen quickly for digital natives who express their individuality through clothes, music and the video streaming services they use. Soon, they will be the dominant wealth accumulation segment.

Competition for high-street banks is fierce. Over the last five years, the industry has seen a growth of banking licences awarded to startup banks as well as those in other sectors such as technology.

Since 2010,30 new start-up banks have been granted operating licence in the UK, or are in the process of obtaining one from the FCA. This is now a global trend with online banks such as of Fiodr and Simple, challenging the status-quo of established banks in Europe and North America. If traditional banks cannot crack the personalisation puzzle, other organisations are ready and will do it for them.

Competition between banking and non-banking financial service providers puts the customer in a stronger position, with more bargaining power. As more financial service providers come into the market, banking products such as loans, savings accounts and credit cards have become commoditised.

They look virtually identical. Non-banking financial services providers like Apple, Facebook and Google, are uninhibited by the red tape and legacy IT which encumbers high-street banks offering financial services. Startups such as Atom, are redefining the banking service value chain by, for instance, revitalising the humble savings account on smartphones. This is a powerful lesson to incumbents in providing ease of access and security to billions of people worldwide.

At the same time, customer requirements are growing more diverse and more personal than ever. Purchases can be made from an individual’s wrists, and verified unique fingertips or personal social media accounts. There has never been a better opportunity to deliver personalised marketing and customer experience relationship management.

As a result, organisations should start tailoring offerings to individual customers’ demands. The fact is, each customer’s requirements are different and certainly not static as life circumstances change. Customers need support from banks who can help them achieve their life objectives such as buying a car, saving up for tuition fees and purchasing a family holiday. For the right offers to be delivered, banks need to segment and then micro-segment.

In the past, banks got away with offering very similar “cookie cutter” products to customers. Banks need to play in real-time, as customers they serve, search and consume news and content from platforms like Twitter on a minute-by-minute basis. This means banks have to deliver new offerings in real-time and not react to urgent customer needs months later. To achieve this, banks need to bring together all historical data from customer

interactions at various touch points, perhaps including those from third parties, make sense out of it, tie it to past interactions, and craft offers based on customers’ preferences and expectations.

Effective use of analytics plays a crucial part in customer acquisition and retention. The underlying systems of a bank need to be made future-ready with compatible technologies and robust processing power. The banks’ various departments and their respective systems can no longer work in silos. They have to work in a centralized manner so data from various touch points are captured, screened, curated and made available to all the decision-makers at various customer-facing channels.

The “Segment of One”

Classic marketing theory divides potential buyers into certain segments. This could be based on parameters such as location, age, earning potential or academic prowess. Unfortunately, these segments have been proven to be insufficient because organisations need to go beyond the use of basic data and predicts what each customer needs. According to Accenture, 45% of North American banking customers will stay with their bank if they offered discounts at the point of purchase. This is just an example which shows customers value a bank which is in tune with their immediate, not just future, financial situation.

What is more important for banks to monitor are transitions in behaviour, so they can proactively cater for the evolving needs of the customer. The best customer-focused organisations can predict a change in behaviour based on the real-time data they have, whether they spot a soon-to-be dad buying baby milk powder at Walmart or a stay-at-home mum hiring a contractor to build a room extension for the new child.

In each segment, there are micro-segments and personas, which drive people’s behaviour. An individual customer on average combines one to three personas at the same time. Personas are not connected to demographics, but behaviour. These personas are very dynamic.

Qualities such as risk-taking can change with life events, for example taking out a mortgage to buy a first house require more risk to be taken than the usual day to day food shop.

Micro-segmentation is the nirvana.
The segment of one is what marketing professionals are aiming for. Blending data, historic and current, from a variety of touch points to create and bundle offerings which give an exact fit for each customer’s needs.

Banks have no excuse to not know their customers in real-time as there are 2.3 billion active social media users, 500 million tweets sent and 4.3 million Facebook likes created every day. This rich, insightful data should be used on top on the wealth of internal data banks have on their customers.

Micro-segmentation is highly evolved within the telecoms, travel and retail industries. Banks are playing catch up, there is either zero personalisation of offers or mass broadcast personalisation which is cheap to execute, but not specific. Neither works well.

Customers feel their uniqueness should be reflected in the offerings they receive from banks. Banks, particularly the younger ones, are attempting to micro-segment. Atom prides itself on being able to predict how much interest each customer can accumulate in their savings and sends customised alerts to help customers reach their objectives.

Internet-only banking is not the answer

Internet banking offers a route, not a complete solution, to customer experience which is in tune with customer needs today. Atom, for example, gives you the choice to personalise the app with names and photos. Flowever being online-only does limit the bank’s reach and data they can gather on customers.

Access to convenient banking through online and mobile applications is unquestionably good for customer service experience. Customers don’t need to visit a branch for every transaction. However, assuming tech-savvy customers don’t need physical banking is perhaps a form of segmentation that ignores the uniqueness of each customer. Convenient access to a branch is still an important indicator of customer satisfaction, especially for more mature generations. Cutting off the option of branch banking is not looking holistically at customers’ needs and restricts their freedom. The correct answer could be a blend.

How, when, and where to bank down to the prerogative of each customer? The best mix to offer depends on customer requirements. Branches in the traditional sense may not exist in the future, but as long as customers want face-to-face interaction they are an important part of a dynamic customer service.

What type of analytics?

Performing data analytics is a complex task for most banks as their legacy systems were not built with the intention of working with other systems. It is a tough ask to pull the data held In one siloed system and build a ‘single view’ of a customer, let alone across all the systems deployed by a typical high street bank. This makes analytics even more difficult to do at a time when the New York Stock Exchange captures one Terabyte of trade information in each session and the world is predicted to have 40 Zetta bytes of data by 2020. Data created by non-human sources such as Nest and Apple ¡Car Is set to overtake humans in the near future. And this, too, may help serve customers better.

Of the four types of analytics described by Gartner, there are two types which are most important for banks – predictive and prescriptive analytics. Predictive looks at what Is likely to happen.

Looking at past data of customer behaviour, trends can be determined to help banks predict the likelihood of future product needs. Prescriptive analytics is a step above. It builds on the predictive to help inform the best course of action when faced with a range of choices..

Banks are sitting on a treasure trove of data. They have the ability to predict what customers want, especially clients who have been banking with the same provider for a long time. Banks must invest in the technology required as the business value of customer retention and new customer acquisition will give a leg up on competition as micro-segmentation becomes more common and fight off disruptors.


The pace of change in banking is accelerating as it reflects dynamic customer behaviour. Simple, fast and personalised customer experience from other markets is influencing the expectations of financial services. FinTech startups are challenging banks to adopt new technologies and behaviours to attract and keep market share.

Accommodating a growing range of requirements, offering personally relevant services, predicting customer needs and interacting with customers on their terms will set banks up for success. If banks are able to do this, they will profit both in the long and short term perspective. Given the dynamic market, there is no real alternative. Addressing customer requirements on a dynamic, everyday basis, will make for stickier customers and bring significant customer lifetime value to savvy banks.


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