How To Deliver Personalized Customer Experiences In BFSI World

How To Deliver Personalized Customer Experiences In BFSI World

This article will provide a brief overview of the Fintech industry's current trends and how personalization can enhance the customer experience in BFSI World

India is a global fintech superpower with more than 6000 registered fintech startups. The pace of innovative Fintech brands is keeping everyone on their toes. The total market opportunity for fintech in India is predicted to reach $1.3 Trillion by 2025, expanding at a CAGR of 31% from 2021 to 2025. This is expected to be made up of Lending Tech for 47% ($616 Bn), Insurtech for 26% ($339 Bn), and Digital Payments for 16% ($208 Bn).

With a CAGR of 57%, Insurance tech is outpacing the other two Fintech sub-segments in terms of market opportunity. Fintech SaaS and Investment Tech are following closely behind. It’s time to welcome multifold growth with enough space for fresh business models to emerge in the Indian fintech market.

Banking and Fintech brands are shifting from crisis mode and staying ahead of the curve, with the pandemic acting as a catalyst for digital transformation.

To say that this wave of digital transformation has changed customer behavior in the banking and finance space would be a massive understatement. With dwindling branch visits and a drastically reduced volume of call center calls, it is clear that digital banking is the way forward. In fact, estimates suggest the number of branch visits dips from six times a year to two visits among customers aged 18 to 24. 

The change in customer behavior is driving changes in banks' and financial institutions’ plans. They’re more focused on properly utilizing digital channels (as a means to provide service at the convenience of customers) rather than expanding branch networks.

The BDO’s 2021 financial services digital transformation survey says that among the 100 C-level executives in the banking and fintech space, only 30% are implementing digital transformation strategies. However, 77% plan to increase their digital technology investment by 2022.

consumer fintech adoption across 27 markets

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Moreover, the EY Global Fintech Adoption Index says that India has the top fintech adoption rate of close to 87%, way higher than the global average rate of 64%. 

So, with such an upsurge in adoption comes the natural question of engaging and retaining the said consumers. But how do you do that? Well, a natural starting position would be to provide the customers with a seamless and rich omnichannel experience. 

Modern consumers no longer view banks and financial institutions as mere custodians of their financial wealth but as advisors who will point out the best investment opportunity, recommend the right additions to their portfolio, and more. Naturally, banks need to cater to this change in customer behavior. This is where having an insights-led approach to customer engagement comes in handy.

It helps banks and fintech enrich customer experiences, making them more personalized by providing them with relevant portfolio additions, investment opportunities, or the loans they’re looking for. Consequently, if the customers are happy and satisfied with their bank, it will reflect in the retention rate for the said financial institution.

The importance of personalizing customer journeys within the app or the website 

 importance of personalizing customer journeys within the app

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Today, Netflix, Amazon, Spotify, and every other consumer brand worth its salt, is trying to incorporate relevant experience by hyper-personalizing based on customer needs and preferences. Investing in personalized customer journeys is bound to provide serious results regarding meaningful engagement and improved retention.

According to the latest research, 71% of customers feel frustrated with an impersonal shopping experience. Customers want personalization and are willing to share their personal information in exchange for a relevant and contextual experience.

New Epsilon research suggests that 80% of consumers purchase from a brand that implements personalized customer journeys. Behavior and action (within the app or the website) based customization is so important that over 83% of the consumers are willing to share their information to get a more personalized experience, as per a survey conducted by Accenture.

Consumer expectations have significantly changed during the past ten years, especially with the pandemic-driven paradigm shift over the course of the last two years. With the advent of digitalization, customer experiences that are highly customized and personalized are now essential to a brand's success.

Banks have been using personalization tactics of some kind for years, but most of the time, they are not enough to help them keep up with rising customer demands. Modern consumer brands now need to look beyond the traditional methods of customer segmentation based on age, demographics, and related variables.

To survive in such a competitive industry, incumbent banks are becoming ‘Al first’ in execution and vision. They’re transforming their full capacity stack, including Al-powered decisions, engagement layers, core technology, operating model, and data infrastructure. All these features strengthen customer engagement beautifully by supporting customers' financial activities.

Today fintech and financial institutes require data to construct holistic data-driven strategies for better customer experiences and foster demand generation. More cross-selling opportunities exist, lower customer acquisition costs, increased customer loyalty, and new markets for digital-first customers. That’s how customized experiences influence brand loyalty.

Banking, financial institutions, and fintech brands require innovative technologies to navigate across the digital-first world. Al-powered and enhanced innovations push disruptive change for the bank and fintech companies, ready to embrace natural language processing and machine learning to optimize their engagement efforts.

Needless to say, financial institutions are also reassessing and reprioritizing the role of data in their marketing strategies and operations. This is where insights-led Customer Engagement Platforms (i.e., CEPs) fit into the bigger picture and further enrich the process. These tools provide highly customized solutions that are delivered through an interface that is quick, seamless, and intuitive.

Personalization enables marketers to enhance customer experience

personalizing across customer engagement channels

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Driving highly customized experiences for millions of individual customers are too intricate for competitors to imitate. That’s the power of personalization in enhancing customer experiences. Personalization, when implemented correctly, enables marketers to gain sustainable competitive benefits. 

Segmentation plays an important role in personalizing customer experiences. By categorizing customers into groups or cohorts with identical demands, a brand can market to each cohort differently and emphasize what each type of customer wants at any given time, which can significantly impact customer management. Combining personalization with a robust segmentation strategy maximizes the effectiveness of any consumer brand's marketing communications.  

Moreover, it drives up customer loyalty toward the said consumer brand that personalizes contextually. The modern consumer has come to desire and expect a hyper-personalized customer experience, thanks in larger parts to online retailers like Amazon and Flipkart, who personalize based on customer behavior, browsing, and spending patterns, among other variables. Personalization for modern consumer brands thus is no longer a good-have but has become an absolute must-have, now considered a ‘common hygiene factor’! 

Initially, customization or personalization was limited to targeted offers, but now, it has extended to the whole customer experience across the lifecycle. Now, customers are looking forward to experiencing personalized services across various stages of their lifecycle because the personalized touchpoints allow them better to spend their time and money on their preferred brands. 

Personalized customer journeys enable consumer brands to thrive, improving customer satisfaction and retention percentages and increasing loyal customers and brand evangelists. It is important to note that while customers might take personalized experiences for granted (as it is the bare minimum these days), brands, on the other hand, can’t afford to do so and need to keep it on top of their minds. 

Maximizing the results of a personalization program is crucial, and it can be done by focusing on loyal customers and promising segments initially. Brands can build strategies with data around the most loyal customer cohorts and generate more-relevant data with a higher response rate, further boosting the quality of your personalization experience for the customers.

As per a recent customer insights report by MoEngage, most Indian marketers put their trust in Customer Relationship Management tools(CRMs) to understand the current customer engagement landscape and engage audiences accordingly. Some of the other favored Martech tools in their stacks are Marketing Automation Platforms, Multichannel Customer Engagement Platforms (CEPs), Customer Data Platforms (CDPs), and Customer Analytics Platforms.

Ways to create personalized customer experiences to improve brand loyalty

Creating a personal link between the brand and a customer is essentially what customization or personalization allows. But how do marketers begin incorporating personalization into their communication strategy? The best way to start is by getting to know your customers: 

  • Beginning with Buyer Personas - Dive into the challenges faced by your customer and how you can help solve them. For this, you can gather all the demographic information like age, income, gender, job, etc. See what type of media they use, i.e., the social media platforms. Check their lifestyle, marital status, entertainment, and hobbies. What’s their personality like? Are they looking to get started on their crypto journey? Are they looking for a credit card that’s more suited to their needs? Are they looking for specific types of loans that correspond to their lifestyle choices?
  • Using Buying Stages to Segment Customers: The promotion of certain services/products by marketers in the banking and financial industry shouldn't be based solely on market trends or sales targets. The customer journey's current buying stage should act as a guide for this. This ensures that brands promote offerings that customers are most likely to desire or want across each stage in their buying journey.
  • Delivering Quality, Relevant, and Contextual Content: Now, that you know your audiences’ likes and dislikes much better, this type of content will help you move them down the sales funnel and get them more invested in your brand. And even if some content pieces cater to a wider demographic, optimizing your content based on different customer segments and cohorts is important. This is what ensures that your customers receive content that is specifically relevant to them. 

Conclusion

stats on personalization

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The financial sector has a reputation for being slow to adapt to rapidly changing customer needs because of its dependence on legacy systems, product silos, and somewhat conservative business models. 

But as with every industry over the course of the last two years, the pandemic has acted as a catalyst pushing the banking and finance sector towards inevitable digital transformation. Thus making the call for personalized customer experiences even more urgent than it already was!

One such Capco study shows that personalization in the banking and finance sector directly correlates to its strategic value. About 70% of customers perceive personalized offers as being extremely significant for banks and other financial institutions. These customers expect their banking partners to be more than just financial custodians but financial advisors.  

So, needless to say, its puzzling when financial institutions lack the aspect of personalization in their customer engagement strategies. Banks deal with tonnes of customer data daily. However, it frequently goes underused to provide users with customized offerings. It is time for banks to start thinking from an insights-led perspective, taking into account the customer preferences, needs, and wants and personalizing their experiences accordingly. 

As discussed above, using AI-powered, advanced analytics features, banks and fintech can analyze the customers onboarded, predict preferred content and channels, and aspects like the probability to churn, go dormant, etc. The content and channel affinity (among other attributes analyzed) can thus be used to create cohorts with layers of personalization added on top.

The banks and financial institutions can then orchestrate data-driven user journeys, thus improving reachability and optimizing performance using machine learning. The banks can retain churn and reactivate dormant customers by reminding them about incomplete and abandoned applications and processes. They can also nudge such customers by providing personalized and relevant offers at the right moment and on the right channel.

It is expected that 2022 will bring a 40% increase in the number of digital customer service interactions. Needless to say, marketers for financial services must comprehend the consumer's point of view thoroughly to provide them with customized experiences. Banks today don’t just face competition from other financial institutions but also technical behemoths that are using data to their advantage.

So to adapt to the ever-shifting ecosystem with such competitiveness, financial services brands must adjust their approach to marketing communications and incorporate personalization on a cellular level to better serve their customers! Using the right Martech tools, BFSI brands are bound to achieve increased customer loyalty and satisfaction. This is why insights-led Customer Engagement Platforms (CEPs) are the future.

Nidhi Prakash is a content marketer at MoEngage with decent experience in B2B and B2C domains. She is a strategic thinker and integrates her skills in content creation and marketing methods. Besides work, she is an avid reader and a passionate traveler.

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