May 23, 2022

Financial Companies Must Personalize or Perish

With the rapid pace of technological advances and consumers’ high expectations for streamlined and user-friendly customer experiences, the game has changed. Brands across every sector must differentiate themselves through the interface between customer and service provider, and financial services companies are no exception. Personalizing the customer experience has now become table stakes for surviving in an increasingly competitive financial space.

Unfortunately, the financial sector is falling behind other industries in this vital race. According to Forrester, financial institutions trail retail, media, and technology companies in the effectiveness of personalization programs. The same study found that 72 percent of customers see more value in a personalized financial service.

As one might expect, the requirement for personalization is not limited to certain age groups. The EY 2021 NextWave Global Consumer Banking Survey found a strong connection between effective personalization and trust. In the emerging Generation Z customer category, for example, 81 percent said that personalization increases trust in a corporate brand.

Financial service organizations, whether they’re entrenched incumbents or emerging upstarts, need to figure out ways to better engage with their customers, no matter their age. The requirement for these organizations to develop digital products and services that customers love isn’t going away.

Personalization, Privacy, and Trust

Clearly, effective personalization does not happen in a vacuum. Personalization builds trust, but there are other elements involved that help build a strong relationship between customer and provider. Strong cybersecurity is one— a survey done by Centrify and the Ponemon Institute LLC found that 65 percent of data breach victims lost trust in the organization responsible for their data.

Customers are understandably concerned with their privacy. Some want the maximum level of personalization possible for a superior, frictionless experience that anticipates their needs, while others will opt for a less personalized user experience in exchange for greater data privacy.

Banks and financial institutions need agile software development capabilities to deliver these varied user experiences. They need to be nimble enough to provide a custom level of personalization to each customer.

The Components of Effective Personalization

It’s not enough for financial organizations to show customers their account balances, or when their next payment is due. Effective personalization requires the blending of demographic and historical data with real-time behavior. Many financial firms have some level of initial personalization in their digital products, but are not designing them to ingest additional data to be used to hyper-personalize the customer experience. We describe it as interpret, infer, and deliver.

Making this happen requires expertise in the building blocks that go into creating a digital experience. This includes consumer research, user experience, creating user stories and (of course) developing and testing code. When all these come together, the result is a game-changer.

For example, imagine a user engaging with your platform at 4PM each day, checking on their portfolio and account balances. They have also searched in your application for information around options trading in the past two days. Firms need a digital product smart enough to understand what’s happening, and proactively present information around options trading, online classes, and a link to open an options account. That’s the power of adding real-time context to customer and historical information.

Another example of personalization is what McDonald’s is doing with its kiosks in some locations. If the customer is in a loyalty program, McDonald’s knows their order history and perhaps has even developed a persona. These kiosks take into account the weather when making suggestions. If it’s cold and rainy, the app is likely to suggest a special on coffee. If it’s sunny and warm, the app will suggest an ice cream cone. Having that full picture awareness drives more customer satisfaction and brand loyalty.

Applying examples like this from outside the traditional financial services space, like the one from McDonald’s above, is how leading edge fintech organizations are setting the bar across the sector. Software development has reached the point where this kind of artificial intelligence can be integrated to mix and match various data sets for effective personalization. For many companies, this requires a transformation.

Preparing Clients for Transformation

Knowing that an organization needs to digitally transform, and actually executing and achieving that transformation are two very different things. For financial services companies, partnering with an experienced outside firm can help to develop the vision for the future, as well as the roadmaps and execution plans to drive customer-centric transformation.

For example, 3Pillar Global is helping one of the largest credit unions in the US to build the foundation for a digital transformation. Through a longstanding partnership, 3Pillar has provided expertise to prepare the organization for platform modernization and then assisted in the execution of the transformation strategy.

Knowing this would be a multi-year process, the credit union needed to consider the state of its current legacy applications. It was a critical balancing act – finding a way to meet customer needs today by supporting its legacy environment while building a foundation for transforming into a modernized application infrastructure. The client engaged 3Pillar to maintain the legacy applications used to service customers and then create the necessary application programming interfaces (APIs) to connect the applications to a modern infrastructure.

Leveraging its knowledge of development practices, 3Pillar suggested new process approaches, which have historically proven helpful to organizations that have run legacy applications. For example, 3Pillar implemented Agile and Scrum software development processes that the client’s internal teams also adopted. These approaches accelerated code updates by 33% so the client could deploy application enhancements faster and increase the personalization capabilities of new digital products.

It’s this approach—uncovering and understanding the goals of the business and the needs of customers—that lets us develop solutions that set up clients for success building digital products.

Adopting the Product Mindset

Our CEO David DeWolf literally wrote the book on developing digital products built for achieving client business outcomes. The Product Mindset talks about how to help clients think differently and directly connect user needs to company objectives. Adopting the product mindset enables us to identify user needs, minimize time to value, and excel at change.

This mindset is critical for financial services organizations, as their main battle today is for supremacy in delivering a personalized customer experience. Companies that deliver a superior customer experience will build customer trust and gain market share. They will also capture a new generation of customers with far higher expectations of how personalized the financial services experience needs to be. In this unending race, innovation needs to become the way of doing business.

We can give you a leg up in this existential race. Responding to market demand, 3Pillar is expanding our capabilities in the financial services sector. Building from learnings gleaned from a track record of success, we’ve enhanced client support for decision intelligence, UX personalization, mobile innovation, and the application of data. We’re helping financial services clients win by building the next generation of digital products.

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About the Authors:

LinkedInKelli Pierce is the SVP, Product Operational Excellence at Mastercard

LinkedInKen Kritz is the SVP, Banking, Financial Services, and Insurance portfolio at 3Pillar Global