Smart finance and happy members: the power behind effective data and personalization

In the face of inflation and economic uncertainty, consumers are increasingly seeking ways to make their money go farther. Community financial institutions’ dedication to service and the mass amount of customer and member data they have makes them the ideal trusted partner to step up and help consumers during this turbulence. But doing so effectively requires strategically leveraging their data to humanize digital channels, providing pertinent tools and information at the right time – which is both an art and a science. 

Personalization is a key factor in today's consumer expectations. People want companies, including financial institutions, to understand their unique needs and preferences. They don’t want to be treated like another number. In fact, 60% of U.S. banking consumers expect their primary financial institution to provide personalized financial advice and act as their trusted advisor, according to an NCR survey. This means that banks and credit unions can no longer employ a one-size-fits-all approach to banking. The same survey found that 86% of U.S. banking consumers would be more comfortable with their financial institution having access to their personal data than a big tech company, such as Amazon, Apple or Google. Banks and credit unions still have a trust advantage, but they must be able to get personalization right to sustain this edge. 

The fact is, not all financial institutions are effectively using their data or analyzing how people are interacting with their products and services. And without reliable, real-time data, presenting consumers with the highly personalized products and experiences they expect is nearly impossible.

To more narrowly tailor experiences, banks and credit unions should reassess their data strategies, more intentionally leveraging analytics to set them apart from competition and help them resonate with customers and members today and in the future. Analyzing large-scale transactional data can provide valuable insights into customer and member spending patterns, channel preferences, transactional patterns and recent life events. This information can be used to find out information like why prospects abandon the account opening process or why accountholders pause credit card applications.

Once data is properly organized and accessed, sophisticated AI can then play a crucial role in transforming it into actionable support for accountholders. AI technology enables financial institutions to understand consumers' past behaviors, facilitating the prediction of future needs. It can help humanize digital channels, allowing financial institutions to deliver highly personalized content and recommend appropriate actions throughout the entire customer or member financial journey. For example, if a member frequently shops at a home improvement store, AI can suggest relevant financial products like a home equity loan, line of credit, a rewards or cash back card, etc., even assisting with the application process. 

A particular focus should be placed on improving accountholders’ financial wellness by offering personalized advice and proactive budgeting assistance. This can include offering automatic budgeting tools, guidance on savings goals, debt payoff strategies, and identification of potentially problematic behaviors, such as excessive use of Buy-Now-Pay-Later-type services or excessive cryptocurrency investing. For instance, a customer or member who frequently overdraws his or her account and is late paying their monthly credit card bill is likely getting dinged with late fees and paying interest each month. AI can help them collect insights into why that’s happening (like how they’re spending money on nearly identical monthly subscriptions) and offer personalized guidance on how to fix it. Such a data-based approach allows financial institutions to more actively and narrowly understand accountholders, apply a customer-centric mindset to disrupt the competition and build loyal customer and member relationships through tailored products and services. 

And the ability to successfully analyze data doesn’t just help from a customer or member experience perspective, but from an operational one as well; it allows financial institutions to benchmark current initiatives, determine where to make improvements and recognize new business opportunities. Making decisions based on data can result in higher revenue and greater efficiencies across an organization.

Data and personalization offer banks and credit unions the potential to transform their business and elevate the financial health of their customers and members. By mastering the art and science of data-driven decision-making, banks and credit unions can position themselves for growth and long-term success, helping to ensure their customers and members' financial health is well taken care of, regardless of external market conditions. 

About Author:
Doug Brown, president, NCR Digital Banking

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