Fintech Insights

Using data to personalize customer experience strategies for banks

Diane Stuckey | Director, IBS Business Unit Manager, FIS

November 29, 2021

The role of data in customer experience

Ideally, regional and community banks would know each of their customers personally and maintain strong human relationships with them. Massive customer bases already make this virtually impossible, and the pandemic has all but eliminated the human element from banking. Banks know that data-driven personalization is a key differentiator. By harnessing customer data, banks can segment customers into meaningful groups and design engagement strategies to best serve each segment.

Doing this at scale across all customer groups is difficult and expensive. Moreover, pre-built segmentation programs for banks are costly and inflexible. IBS Business Intelligence (BIC) can provide banks with the right combination of insight, tooling and usability to realize a significant competitive advantage. BIC delivers a massive pool of more than 60,000 pieces of information about a bank’s customer base at the account, individual and household level, in a familiar user interface that makes the data easy to investigate and apply to real world use cases like segmentation.

Why is customer experience important for banks?

In-person or digitally, the importance of a bank’s customer service offering can’t be overlooked. Not only is it essential to meeting customers’ needs, but it can be key to marketplace differentiation. Providing a superior customer service can:

  • Attract new customers
  • Lead customers to more substantial products and services
  • Create lasting customer loyalty

Breaking customers into segments

With a well-segmented customer base, banks can shift their focus to learning the profile of the customers in each segment. What are the attributes that set them apart? Demographics, psychographics, product penetration and usage inform the unique characteristics and behaviors of each group of customers. The data itself can help executives to better understand the differences between profitable and unprofitable customers. Once the attributes are identified, banks have criteria to effectively target only the most profitable new customers. One size does not necessarily fit all.

Through developing segmentation in this way, banks are now poised to design different customer experience strategies for each profitability profile.

For customers who represent low current revenue and low future potential, banks may employ a cost-minimization strategy and try to move them from a high-touch branch/call center engagement model to a digital self-service experience. Those with low current value but high future value may demand a strategy that nurtures and grows the relationship. Fees may be waived, or special incentives and financial education may be offered to foster a long-term relationship.

Customer data provides the insights banks need to better “know” their customers and deliver a more personalized experience.

How you can improve personalization through data

Customer data provides banks not only with a clear view of their current and potential base, but also a deeper way of identifying and knowing their customers as people. This valuable data is the key for banks to determine how to best approach their most desirable customers for optimal impact.

Data can paint a vivid portrait, including each customer’s current financial goals and pain points. Data-driven, dynamic content can help increase the relevance of each customer touch.

For example, an image that corresponds with each customer’s demographics accompanied by a message and offer tailored to their psychographics. Messages that resonate have impact. Consider: one customer may have just started a career after college while another may be approaching retirement. Personalization allows banks to deliver targeted marketing and offers to each of these customers and build a deeper connection based on who they are and where they are in life.

Industry-leading banks are rapidly adopting data-driven personalization and seeing high levels of customer engagement and strong returns. This strategy can increase profits and improve customer acquisition, engagement and retention. Investing in data-driven personalization now may ultimately prove critical for banks to grow and retain customers in a highly competitive landscape.