Personalization in 2023 Financial Services

Personalization is a core component of many businesses out there today. After years of collecting and analyzing customer data, those customers now expect the brands they deal with to use that information to provide them with products and services tailored to their personal preferences.

In fact, research has consistently shown that customers are even willing to pay more for products and services if they receive a personalized service. And, while these kinds of discussions are often focused on the retail and hospitality industries, the financial services space needs to sit up and pay attention as well.

With digital technology becoming increasingly intertwined with financial services, customers are fully expecting the firms they engage with to offer them the same kinds of personalized experiences they enjoy when interacting with brands in other sectors.

Security

It’s impossible to discuss the concept of personalization as applied to the financial services industry without first delving into the concept of data privacy and security. Data is obviously integral to providing personalized services, but the environment around the gathering and storing of such information is becoming increasingly restrictive and heavily regulated.

This is especially relevant to financial services as people tend to value the privacy of their financial circumstances above all other considerations – research has famously shown that people are more willing to discuss their sex lives than their finances. This means firms need to be extremely careful, sensitive, and restrained when using customer’s financial information to provide personalized services – especially when weighed against Google’s imminent phasing out of third-party cookies.

"While there is no shortage of data in financial services, user privacy considerations will change how much first-party customer data can be collected,” says Google. "As third-party cookies are phased out, digital marketing leaders will need to think strategically about how the [financial services] industry can reimagine the future, as well as ample time and a proper runway to prepare for the upcoming transition.”

Challenges

According to Google, 45% of financial institutions surveyed said their biggest challenge for data-driven marketing was experiencing difficulty collecting and organizing data. This difficulty is being created by several key factors, including:

• Data silos that prevent a holistic view of the customer and proper analysis.
• Existing systems and decisions which don’t always produce actionable insights.
• The lack of real-time updates and predictions which prohibit personalized audience targeting.
• The use of legacy systems that don’t scale, integrate with new platforms, or meet the need for improved marketing performance.

"Collecting data is not a competitive advantage in and of itself,” says Google. "Financial institutions need to be able to unlock the value of their data by using a platform that helps them analyze and visualize insights, and act on them in real time—all while maintaining the highest security standards.”

All this points to a situation where financial firms know and understand the importance of using data to create personalized marketing campaigns and services, but many lack the maturity to make proper use of it. It could also be that many financial brands are crippled into immobility through fear of stepping outside of what is acceptable and/or legal in both the court of public opinion and the increasingly restrictive regulatory environment.

This is why it is so important for financial firms to invest in data scientists and make sure their legal teams are fully briefed and up to date on the latest regulations. According to McKinsey, customers who receive personalized bank offers are more than three times a likely to accept which means there’s a real and tangible reason to get this stuff right.

The solution lies in creating a security centric customer data platform which firms can use to process data as a strategic asset whilst keeping within security and privacy guidelines and regulations. This kind of CX focused data platform helps firms address these challenges by:

• Collecting decentralized data to create unified, 360-degree customer profiles and data views.
• Analyzing the data through smart segmentation and AI/ML generated insights.
• Activating real-time, cross-channel personalized experiences.

"For banks, insurers, and other institutions to compete in this changing landscape, they need to modernize how they collect, analyze, and activate their customers’ data to personalize customer experiences while improving their ability to scale to growth,” adds Google.

Final Thoughts

Personalization is going to continue to be critical to success in any customer-facing business. Financial brands are not immune to this trend and need to innovate and invest in order to provide customers with the kinds of experiences they expect whilst also remaining cognizant of security and privacy concerns unique to this sector of industry.

Personalization is certain to be a hot topic at CXFS 2023, being held in July and August at The Westin Copley Place, Boston, MA.

Download the agenda today for more information and insights.