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Personalised Banking: The Future of Customer Experience

#Custom Software Development

Retail banking services have seen multiple shifts in the past decade or so. What remains true is that retail banking can withstand the changes and succeed if customers stay satisfied and loyal. 

Banking channels change, customer behaviour shifts but the factor that determines successful banking stays constant, and that is customer satisfaction.

The question is how to keep customers satisfied and earn their loyalty?

The short answer to this is through tailored banking services that clients appreciate or in other words through personalised banking services. 

Let us have a look at what this means.

Personalised banking is a way of identifying personal customers’ needs and providing customers with services and products that are most relevant to them.

Personalised banking is about helping customers manage their finance efficiently by analysing their current activity and predicting future services for them. 

Modern technologies allow banks achieving this using array of data indicating their evident needs and connecting it with ML models and big data analytics. 

So, what makes personalised banking the future of customer experience?

Banks hold tonnes of customer data but very few of them use it to provide personalised services. The current customer expectations of banking services go beyond addressing them by their names or getting a product discount now and then. What customers really expect is that banks establish the level of trust that would make them willing to build long-term finance management plans.

While digital banking allows great deal of flexibility, customer satisfaction level with purely digital banking remains quite low compared to combined types of banking institutions.

The pandemics, on the other hand, facilitated rapid development of digital banking, and many banks are happy to continue using those development methods in their operations. The two key actions that were identified as important development factors for digital banking are personalised guidance and proactive engagement. 

These can be achieved through:

– Smart use of customer data and gained trust from customers (over 80% of retail banking customers state that they are happy for banks to use their personal data for more personalised services)

– Analytics tools that can be integrated with the existing banking systems (personalised banking does not mean that banks need to step away from their existing systems in favour of fully digital).

What is important to understand is that personalised banking is presenting the right service to the right customer at the right moment. This means that the same service may not be of the same relevance to customers of different age groups, social statuses, lifestyle preferences or important events.

Investing into the right technological solutions can help retail banking to build trust with their customers. Let us see what steps they can take to achieve this.

1. Organise data collection process

Banking institutions hold immense amount of customer data that can be used for personalised services. The key issue though is how to collect, manage and store this data securely. This is when data governance comes to the rescue. Data governance helps organisations to successfully manage big volumes of data in order to achieve their goals, which includes:

  • Collecting data from various sources
  • Systematising data insertion and data formats
  • Promoting data uniformity and data quality
  • Setting up consolidated data security and compliance standards
  • Improving integrations and data interoperability
  • Using new approaches and data modelling techniques

The key data that can be used for personalised banking services are:

  • Transactions data that indicate spending patterns
  • Use of financial products and services
  • Customers’ age groups and CRM data for defining customers’ lifestyle preferences

The next stage is to decide how to store the data securely. The options are:

  • Data lakes – are great for storing large amounts of unstructured data that with help of ML specialists and data scientists can be used for predictive models and AI algorithms.
  • Data warehouses – are suitable for structured and well-organised data to further connect with business intelligence and analytics tools.

2. Connect extra data sources through APIs

Modernising all banking systems can be risky if done all at once. Nevertheless, core banking systems carry important information that can be used for personalised services. Therefore, a good solution would be to modernise only the key components. Upgrading a few services to a microservice architecture to build a private API and connect them with the banking analytics system is an effective way to go about it. It is worth considering open APIs from other market participants to incorporate data from their platforms and learn more about your customer preferences. This way you will get additional information without the need to contact your clients.

3. Study customer intelligence

This is how you convert the collected customer data into valuable business information. ML and big data analytics are the tools for gathering customer intelligence.

Some of the established personalised banking services based on the customer intelligence include:

  • Personalised opening of digital bank account and personal onboarding
  • Personal financial management applications
  • Robo-advisors and AI-based wealth-management products
  • Product recommendations based on personal customer behaviour
  • Unique lending products and accurate credit scoring
  • Dynamic service and account fees
  • Micro-segmentation in marketing campaigns 
  • AI service advisors and digital concierges

Going for personalised banking services does not only improve customer experience but also increases revenues for banks. 

The opportunities for personalised banking are endless. The ML algos and big data technologies certainly fired it up for digital banking to evolve further. Reassessing financial products in line with customer needs is the way to increase customer satisfaction and keep customer retention high. This is exactly why personalised banking services are the future of customer experience. 

To get personalised banking software solutions to your specific needs contact us right now.

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