FICO and Forrester Consulting research shows need to improve processes in banks

Hyper-personalization is now front-of-mind among banking boardrooms. It’s also a minimum mandatory expectation among bank customers. Everyone is talking about it, and everyone is doing it — at some level.

The way we all bank has undergone a huge transformation — driven in part through technological innovation and in part through a post-pandemic cultural shift. Customers expect personalized engagement from all businesses they transact with, including financial services.

There's little patience for a one-size-fits-all approach. At the same time, consumers are getting far more data-savvy. They know their personal information is valuable and many are reluctant to share it without getting something back in return, be it personalized offers, competitively priced deals, or tailored service.

But are hyper-personalization efforts effective? And more importantly, are customers convinced? Boardrooms know that an inability to deliver is costing in lost businesses — and it has emerged very few are satisfied with their institutions’ performance.

The findings are revealed in Unlocking Hyper-Personalization at Hyper-Scale. It’s a commissioned study conducted by Forrester Consulting on behalf of FICO. Feedback was analysed from more than 300 senior decision-makers responsible for the personalization of customer experience at banks across North America, Brazil, UK, Thailand and South Africa. The results yielded a mass of interesting findings and highlight where critical investments look set to be made within the next 12 months.

More than half of all decision-makers readily admit that hyper-personalization is the critical route to driving improved customer engagement, loyalty, and reputation. A significant number also see it as a key building block to culture change, breaking down internal siloes and ensuring informed real-time insights from their deep investments in data.

But gaining a comprehensive 360-degree customer view continues to pose a challenge for many.

Acknowledging Poor Performance and Legacy Systems’ Impact on Personalization

Of the 53 South African companies surveyed from the financial services industry in the Forrester Report, there were significant levels of dissatisfaction around their firms’ customer-focused processes:

• Attract and engage customers — 32 percent dissatisfied
• Originate and onboard customers — 26 percent dissatisfied
• Nurture and manage customers — 36 percent dissatisfied

Personalization Strategies Lack Critical Data and Insights Capabilities

Organisations are currently focused on customer needs, with 62 percent of leaders in South Africa saying their bank has expanded communication channel options for customers, and 40 percent saying they have expanded customer service automation. And the majority report that their organisation has begun deploying foundational tools to support personalization strategies including, Identity and Access Management (IAM), security tools, and lifecycle and deployment tools.

• By gathering these insights the study shows an increase in the competitive edge and financial performance that most leaders lack due to the challenges of achieving or expanding their personalisation objectives. Of the companies interviewed, 42 percent use data exhaust tools to gain insights into the impact on the engagement of customers’ use of products/services through real-time app monitoring and usage analytics.
• 53 percent use infrastructure tools to leverage a cloud-native architecture with high availability, disaster recovery, and SLAs to meet their needs.

Personalization Practices Are Maturing

As banks advance their personalization practices, strategic shifts to implement essential data and insights capabilities are underway. Amongst the study’s respondents, 43 percent of those interviewed said that by next year, their bank will incorporate more third-party data and services, 34 percent will enhance customer engagement through real-time decisioning, and 49 percent will have simulation and testing of personalization strategies on real customer data.

To keep up with client expectations, banks are accelerating their deployment of personalization tools and services. Moving past the table stakes and foundational toolkits that guided their first implementation efforts, banks are intentionally addressing capability gaps to enable the delivery of personalization at scale.

Achieve a Singular View of Your Customer Through Accurate, Accessible Data

To succeed with personalization at scale, banks are deploying data capabilities to advance their journeys. More than half of respondents said their firm has feature management (a shared library of derived data attributes across the enterprise).

The survey reveals that 49 percent of respondents’ firms have external data access capabilities to derive signals from third-party data and other alternative data sources. Up to 43 percent said their firm has composable dataflows that improve customer-facing business decisions and 35 percent have contextual processing capabilities that seamlessly and cost-effectively handle real-time and batch scenarios in decisioning applications.

Gather Insights at the Individual Level By Applying Analytics and Machine Learning to Your Data

Once banks achieve a singular view of the customer through accurate and accessible data, they must leverage that data to gather insights. By next year, 34 percent of respondents’ banks plan to have a single, unified view of existing customers and applicants to detect suspicious behaviour and prevent fraud through link analysis, and 53 percent plan to model business problems and calculate the best possible decision to maximize desired outcomes through optimization.

Fewer than half of respondents’ banks have feature generation and profiling to calculate and serve derived data attributes throughout their organizations and to maximize value. And even fewer have advanced analytics and ML models to deeply understand and predict customer behaviour. A rapid adoption shift is anticipated, even with the least leveraged insights capabilities.

Turn Your Insights Into Actions So Changes Can Be Implemented By All

Once a bank successfully creates a singular view of customer data and gathers segmentation insights, it must take those insights from the realm of data scientists and translate them into actions.

Nearly 57 percent of the respondents said their bank leverages user interactions to build web and mobile experiences for customers with low-code employee tools and only 31 percent have a decision capability to make consistent and intelligent decisions across the enterprise with control over decision logic.

Turning insights into actions requires more than user interaction and decision capabilities. During the coming year, the number of banks leveraging composition and orchestration to animate customer journeys is expected to double, and those using virtual agents to engage in customer conversations via two-way, omnichannel interactions anywhere across the customer journey through a communication capability are expected to grow by 10 percent.

Monitor

After the deployment of insights-based actions, banks must successfully respond to the outcomes of those actions based on their results in the market. It is worth noting that more than half of all business leaders surveyed admit that they continue to be hampered by siloed processes and siloed thinking. It’s a trend most prevalent in feature management, external data access and dataflow, contextual processing, and decisions, plus the more critical predictive disciplines of governance, testing, visualization, and simulation. Significantly, around three-quarters (77 percent) of all firms say they plan to invest in and implement feature management, external data access and dataflow, and contextual processing within the next 12 months.