Summary
- Customers expect hyper-personalization from their financial institutions, yet most banks and credit unions struggle to meet this growing expectation.
- As fast as organizations want to run to the ‘how’ of hyper-personalization, it is crucial that leaders first understand and align on the way customers define it.
- Financial wellbeing is THE transformative value proposition – not financial health – and the core premise for customer experience hyper-personalization.
Today customers crave hyper-personalization, where their every need is not just met but anticipated at the speed of life. This is especially true in banking, where product and service offerings provide little competitive differentiation. Big data, coupled with the digital revolution, has opened doors to endless possibilities, but, amidst all the buzz, most banks and credit unions struggle to bridge the gap between technology innovation and genuine customer connection.
Customers Want Hyper-Personalization
Cortico-X defines hyper-personalization as the use of real-time data and predictive, prescriptive and generative AI to create customized products, services, and content at a granular and individualized level. In other words, it helps organizations design and manage the customer experience for a customer of one (versus as a total population or defined segment).
Customers expect a high level of immediacy, relevance, and personalization in their encounters with banks and credit unions, just as they do with any other industry. According to J.D. Power’s U.S. Retail Banking Satisfaction Study, 78% of banking consumers expect personalized support from their bank. However, despite this growing expectation, J.D. Power’s findings also reveal that only 44% of banking customers feel their banks are currently delivering it.
Could a central part of this emotional disconnect be how banks are defining personalization in the first place? Much of today’s focus on hyper-personalization is on the ‘how’ – data, technology, analytics, etc. – with little–to-no time on defining the underlying values, beliefs, and assumptions that drive decisions regarding hyper-personalization.
Hyper-Personalization in Banking
Simply put, hyper-personalization in financial services is the ability for an organization to support the financial wellbeing of a given customer. According to Gallup, when banking customers strongly agree that their bank or credit union looks out for their financial wellbeing, 73% are fully engaged. If they do not strongly agree, only 20% are fully engaged. This 50+ percentage point difference represents the idea that powering hyper-personalized experiences along someone’s financial wellbeing journey is THE transformative experience for deep-rooted loyalty to banks and credit unions.
“Powering hyper-personalized experiences along a person’s financial wellbeing journey is THE transformative experience for deep rooted loyalty for banks and credit unions”
However, financial services organizations commonly confuse financial wellbeing with financial health. Financial health is about money – your financial facts; whereas financial wellbeing is about your emotional relationship with your money – your financial feelings. Take, for example, winning the lottery: Their financial health dramatically improves, but lottery winners report being less happy as their emotional relationship with money changes.
Instead of seeing products, services, support, and advice through the lens of a customer’s standard of living, financial plans, or discretionary income, a financial wellbeing mindset pushes a leader to help achieve emotional outcomes like reducing worry, gaining confidence, and encouraging enjoyment. Financial wellbeing embodies a leader’s mindset shift from servicing the customer to supporting the person behind the customer.
What This Looks & Feels Like
Jamie is a single mom with two young children. She is always on the go, juggling her full-time job as a pharmaceutical rep, running a custom handbag e-commerce business on the side, and driving her children to and from school and activities.
| FWB ELEMENT | SITUATION | BEHAVIOR | HYPER-PERSONALIZED EXPERIENCE |
|---|---|---|---|
| Reduce Worry | Jill depends on her car, but her car suddenly breaks down | She starts shopping online for a new car to see what she can afford | Jill receives an email pre-approval for a car loan from her bank with a recommended loan amount for a car size that fits her children and handbag products |
| Gain Confidence | Jill wants to make sure she is putting enough money away for a new home big enough for her family as they get older | She recently opens a savings account online | Jill is able to personalize her online and mobile user experience by being encouraged to add a photo of her family to the savings account as a nudge to help not touch those monies |
| Encouraging Enjoyment | Jill feels guilty that she doesn’t spend enough quality time with her children and wants to plan a small vacation during their summer break | Every evening she interacts with other vacation goers on Instagram on potential trip options trying to get a feel for destination and cost | Jill is prompted on Instagram by her bank to access to a digital “Scenario Planner” to produce a custom plan based on destination characteristics coupled with knowledge of her financial status |
Getting It Right
Long gone will be the days of segment-based marketing or one-size-fits-all digital user experiences. Customers are moving from just wanting a hyper-personalized experience to expecting it. But, as fast as banks and credit unions run to developing an AI strategy or buying new emerging technologies, they must first pause and reflect to align on what the experience of personalization should really look and feel like. In an industry with homogenous products and services, developing and managing complex experiences that support the customers’ financial wellbeing is now fundamental to resonance and differentiation.
In the coming month, check out our first of story, Gambling on the Future and the Sacrifice for Stability, of a newly launched Human Insights & Our Relationship with Money series that seeks to understand the underlying drivers of people’s emotional relationship with money that allow us to explore how the financial industry can adapt to those changing needs of people today.
Anson Vuong
is a Principal who leads Cortico-X's financial service practice
Brandon Barrett
is an Associate Principal with expertise in financial services, consumer products, and B2B strategy
