3 Reasons You Should be Using Personalized Banking and How to Get Started

Why is personalized banking important? At the core, personalized banking can differentiate you from the competition, and draw on the emotional connection with a prospect or account holder to build a tenured relationship. 

Account holders want to feel like you are personally talking to them and they expect it. Fifty-six percent of customers expect offers from companies to always be personalized. Account holders want to be valued and treated as an individual. Consumers have different preferences and interests, and if you can tailor a user’s experience based on what they need, want, or are looking for, they will be more likely to engage and continue to grow their financial product portfolio with you.

Personalized banking offers an advantage to meet the account holder where they are and deliver the right message at the right time. It builds stronger relationships and trust and will make your account holders feel valued, which will increase their product and channel utilization; ultimately contributing to revenue increases and growth. It also gives your institution a competitive advantage – there are banks and credit unions in the market not focusing on this tactic. 

Digital banking Americans who are completely satisfied with their digital banking user experience are most likely to recommend the provider to friends and family, as well as try, use, or engage with other digital banking products from that provider. Your financial institution can become leaders in the market by using artificial intelligence (AI) in banking to reveal behavioral insights based on transaction data, and craft tailored messages to deliver within the banking experience.

The Top 3 Reasons Financial Institutions Should Implement Personalized Banking

Improve the user experience 

Eight percent of consumers say the experience a company provides is as important as its products and services. Account holders want an easy and quick user experience. They don’t want to have to go through a bunch of webpages to find an answer. This can cause frustration, confusion, and more support tickets. 

Customers and members’ financial behaviors change and evolve over time, and they want (and expect) their primary financial institution to change and evolve with them. They expect quick response times when trying to solve a problem or find an answer. When you use personalized banking tactics, your financial institution can show that you understand your users’ needs, you can meet their demands and tailor their experience to what they are looking for. 

Build institutional loyalty

Eighty-eight percent of consumers say good customer service makes them more likely to purchase again. Personalized banking can help your financial institution retain account holders and build trust with them; fostering loyalty. When using transaction data insights from your account holders, your engagements and messaging become significantly focused and relevant for the right audience. 

Consider an account holder that is showing multiple overdrafts, late payments on a personal loan, and frequent buy now pay later transactions – this account holder may be in financial stress and would benefit from an engagement around consolidation support or financial education tools. By reaching out to this user and providing them with the right message, your financial institution can demonstrate how you’ve taken the time to understand the account holder’s needs and know how to support them throughout their financial journey.

Increased satisfaction = increased revenue

Seventy-three percent of millennials (28-44) think a bank or credit union’s digital banking experience today reflects how much they care about their customers or members, the highest of any generation. If your customers and members are happy, they are more likely to purchase again, adopting additional products, growing share of wallet with your financial institution, as well as encouraging them to tell their peers about their positive experience banking with you. This can increase revenue, accelerate acquisition rates, and enhance brand reputation. 

5 Steps to Create Personalized Banking Experiences

By unlocking data, you can create hyper-personalized marketing campaigns within minutes. The revenue generated from these campaigns can be used to fund other initiatives within your institution. Marketing for financial institutions is no longer a cost center, but a significant profit generator.

Your institution has so much transaction data from your account holders. It’s time to use it. But how? And where do you start?

Leverage and connect your data

• Financial institutions can leverage clean, tagged data through transaction enrichment to deeply understand account holders, without personal identifiable information.
• Connect your data from different sources for a unified, complete view.
• Better understand your users by asking “What are their preferences? What are they looking for?”
• With actionable insights to make data-driven decisions, create personalized banking experiences and deepen relationships.
• Use competitive intel to grow share of wallet.

Use predictive modeling to know what’s next

• Artificial intelligence in banking isn’t a nice-to-have anymore. It’s a competitive advantage financial institutions can now leverage.
• Anticipate your account holders’ journeys based on their financial behaviors to increase product adoption; enabling you to stay top of mind and achieve primary financial institution status.
• Use AI to drive personalized marketing and make the right offer to the right person.

Define areas of impact:

• Determine what elements of personalization can make the fastest, greatest impact on your account holders’ experience.
• Where are your account holders spending the most amount of time? Where are they running into obstacles? What are they contacting your support center for and if fixed, would save time?
• Seventy-four percent of consumers expect to be able to do anything online that they can do in-person or by phone.

Start small and expand

• Personalization can sound like a daunting task if you think about all of the different ways you can personalize the experience for each individual website visitor. However, it doesn’t have to be. Start small and look for trends.Start with a section on the website or with a small segment of users that share commonalities. Are there any trends being received from your support center? Are there any trends from a specific group of customers or members?
• Scale personalization with always-on campaigns. This means you can set up as many campaigns as you want at one time, and the system automatically places account holders in and out of campaigns as their behaviors change; saving your team time by eliminating the need to manually update campaign audiences.

Launch, test, learn and then optimize

• Personalization is not a one and done experience. And it doesn’t have to be perfect to start. Run a small test on a segment of account holders, learn from the results and optimize. The data will tell you what’s working and what’s not, which takes the guesswork out. What you think might work or what users want might be completely different from the results. Based on campaign performance, make iterations on your personalization strategy.

Forty-four percent of digital banking Americans wish their financial provider offered a more personalized digital banking experience, including 56% of younger Millennials (28-35) compared to 28% of Boomers (59-65). Marketing for financial institutions drives revenue and growth by leveraging actionable insights to create personalized banking experiences and deepen relationships.

Sources:

2024 FI Perceptions Research, commissioned by Alkami, surveyed 150 unique banking platform decision makers/influencers across the U.S. to explore their digital banking provider perceptions and experience. Survey was fielded December 21, 2023 – January 26, 2024.

The Center for Generational Kinetics – National Research Study 2024, commissioned by Alkami, included 1,500 U.S. participants ages 22-65 weighted to the 2020 US Census for age, gender, region, and ethnicity. Survey was conducted online from January 12, 2024, to January 30, 2024.

Salesforce, Inc. Sixth Edition State of the Connected Customer Report 

Link to additional resources:

Generational Trends in Digital Banking Study

Winning Primacy with Personalized Banking: Strategies for Banks and Credit Unions