Digital Banking – This Time It’s Personal

By John Fleming, Marketing director Webtrends EMEA

Customers are increasingly interacting with their banks through remote channels, over the internet and mobile devices. Over two-thirds of UK customers now conduct the majority of their banking over the internet – a three-fold increase from 2005*.  Research from the Centre for Economics and Business Research (CEBR) said the value of mobile transactions will double in the coming years, from £1.7bn a week last year to £3.4bn in 2020.  The sum of all internet banking transactions will total £9.4bn a week, up from £5.8bn in 2013.  With fewer transactions now requiring any ‘human’ contact cost-efficiency levels have dramatically improved.  People have been sold on the idea that everything can be done digitally.

But contrast this to the view that as internet usage has increased, customers have now become better-informed and more mobile.  The brand loyalty that once existed, where people rarely switched current accounts in a lifetime, is changing with an increasing number of us showing the confidence to vote with our feet, particularly when a digital experience or service didn’t quite meet expectations.  As a Microsoft study stated last year, attention spans have dramatically decreased over the last 15 years from 12 to 8 seconds, this means consumers will readily shun digital channels if they came across any snags or shortcomings.  Some of these will prefer to head straight for the High Street [if a physical branch existed] to speak to the calming voice of a real person.

However, there is more to it and herein lies the dichotomy.  Consumers aren’t abandoning digital once they get frustrated; many want more personal interactions when dealing with banking matters.  And people don’t necessarily want to visit a physical branch; they just have an affinity for a personal service, remembering the days when bank managers knew them personally.  Is there a way for this level of service to be delivered digitally, one that marries old with new?

Making it personal – differentiating in the digital world

With established banks rapidly closing branches, as customers move online, there is a real opportunity to differentiate using digital personalisation to support the acquisition and retention of customers.  Emerging and challenger players, like Virgin Money, Metro and Atom, (billed as the UK’s first digital-only bank) are already capitalising on their technological agility with personalisation spearheading their offerings.

Capitalising on Big data, analytics and contextual personalisation gives you the ability to reach different customers with different creative messages or offers; allowing banks to tailor executions based on demographics, interests, location or even savings and investment history. Imagine being able to reach millions of customers but each with something personally relevant and interesting.

Using analytics a bank could identify customers with “packaged-accounts” who were paying twice for their mobile phone or breakdown cover, before they went online, contacted the call centre or met them in person.  The bank could use analytics and personalisation to identify and contact every customer paying for insurance products twice to alert them they were already covered and drop a personal message of that nature in their inbox or browser.  The simple gesture of making a customer aware of their spending error would enhance reputation and trust no end.

What about if an existing savings customer was searching for loan rates?  Surely that would indicate that they were looking to see if they have the best rate and potentially move their savings?  Dependant on how much savings they had, a personalised page offering preferential rates for “existing high value customers” could replace the standard savings rates with a call to action to sign up for the better rates.  Over time, through honesty and open dialogue, you would expect to reduce the savings attrition rate.

Making IT happen

While we’ve only scratched the surface in terms of the benefits to contextual personalisation delivering a personal banking experience that differentiates and drives more business is going to take data, lots of it.  The data tends to reside in disparate systems, each serving only one specific delivery channel or product silo.  And as long as the data remains in its silo it will be extremely difficult to provide a superior and personalised banking experience. Whilst internal big-data systems can help with the volume, and the speed of the data coming into an organisation, breaking those silos is still a challenge for many.

Three or four distinct groups or departments within a bank are making this happen; IT, marketing, business intelligence and customer experience. Many financial institutions have already embarked on bringing elements from each of these areas together to create a “Digital Centre of Excellence” DCE – where the traditional departmental silos are broken down and decisions are made based on high level strategic thinking rather than the more tactical approach often taken within each department.

This brings significant benefits, the most powerful of which is using data extracted by the technology to help drive business decisions rather than the technology driving the business. It is no coincidence that banks and financial companies that adopt this model are those that are leading the way in delivering an enhanced customer experience across online and offline channels.

Even those Banks wishing to benefit from the lower operating costs offered through digital banking must think strategically and can benefit from a DCE to deliver an efficient service with a personal touch. This will have a magnetic effect on customers – attracting them firstly then and convincing them to stay.

Churn rates pose a major concern.  The cost of acquiring and retaining customers is eroding much of the savings made through the switch to digital banking.  Financial institutions need to rethink their approach toward customer service and personalisation needs to happen across all touchpoints on all channels, and new technologies and applications that enable this must be taken seriously.

Delivering your very ‘own’ High Street bank to your laptop, tablet, smartphone or any other device is making it personal.  And while you may have all the data it is only ever valuable if you can actually do something with it.