Council Post: One Approach For Regional Banks To Overcome The Digital Arms Race

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on the President of America Persona, the global leader in data-driven personalization and customer engagement for financial institutions.

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Regional banks face intense competition on many fronts. The trillion-dollar national banks are capturing 51% of new checking customers, while the seven biggest challenger banks have grown their user base by 40% from 2019-2020. Customers are showing strong demand for digital banking. A recent Chase survey found that four out of five of their customers prefer to manage their money digitally.

Given this backdrop, regional banks may be caught in a never-ending digital arms race. In addition, they may be handicapped with legacy platforms, investment constraints or seller platform constraints.

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Regional banks and community banks run the risk of being trapped in an uncomfortable middle ground: too small to aggressively invest in digital technology like the big banks, too big to be agile like the challenging banks. Instead of chasing digital features to stay abreast of their competitors, regional and community banks should double down on the digital investment that helps them differentiate their customer experience.

Although not silver bullets, data-driven personalization can be an important part of the solution.

What is data-driven personalization?

Data-driven personalization is a key foundational capability which enables us to analyze customer transaction data to financial institutions, providing personal interaction and advice and work actively on behalf of clients.

This ability can help bank customers perform several “jobs” in their personal finances: save for a goal, pay off debt, build wealth, or make a big purchase. This places the customer’s primary bank at the center of their financial decision making and enables the bank to help customers reach their goals.

Here’s how it aims to help banks:

• Get better visibility into customer finances based on customer transaction data, ie spending patterns, inflows and outflows, and account activity.

• Identify information, such as noticing duplicate transaction fees, recent changes in payment activity, or customer low balance issues.

• Recommend products based on customer spending trends, such as loans or credit products.

• Providing value added financial advice. Help customers avoid low balance issues, recommend automatic savings programs for specific savings goals, to help customers apply for low-interest loans.

Data from a recent survey from Personatics found that 55% of the top 40 North American banks are currently implementing (or have already implemented) personalized insights and advice. By the end of 2023, I believe that basic data-driven personalized insights and advice will be table stake for all banks in the North American market.

Enabling personalized customer visits

Banks can identify insights from real-time customer data and engage with their customers with personalized advice right when the customer needs support:

Time for a new car: Transaction data shows higher than normal auto repair maintenance costs and car loan payments in their fifth year. With data-driven personalization, the bank can showcase customer content for new cars at a lower maintenance cost and pre-qualify the customer for a new auto loan. It may also offer an automatic savings program with new car down payment as a target.

Managing Debt: If a customer has external loan accounts, the bank may use privatization to offer that customer a debt consolidation loan at a lower interest rate. The bank may also set up an automatic loan payment program, whenever the customer’s checking account has capacity, to move money from the customer’s checking their loan balance several times per month.

Connected channels for integrated mentoring

Creating “connected channels” enables regional banks to proactively and reactively engage customers across digital, branch and call center channels. This helps the bank’s internal teams to view common information, understand customer needs and provide advice in a unified voice.

How banks can bring connected channels to life:

Identify actionable intelligence from transaction data: The bank recognizes a customer who spends more than usual at a home improvement store. The bank also knows that the customer has an external mortgage and regularly visits the bank branch.

Engage customers with personalized content through digital channels: Based on this customer information, the bank can show the customer personal insights through a digital channel, offer content about home improvement and relevant loan products, and send that customer to the branch to speak with the banker. may invite you to make an appointment.

Create branch channel for personal engagement: At the same time as the digital engagement is taking place, the customer’s designated bank branch receives a curated insight so that the banker can outreach and help the customer meet their needs.

Working with Data-Driven Personalization

If leadership at a regional bank decides to pursue data-driven personalization, a clearly defined 12 to 18-month road map for adoption is an important first step. This will help the bank to gain speed along the path of greater impact.

A typical road map includes:

Step One: Purify and enrich the transaction data. Data cleaning and enrichment can be completed in two to three months by mapping the priority transaction data to its current form and structure. It gives the bank and its customers a clear and consistent view of the spending patterns of each customer.

Step Two: Provide personalized insight and advice through digital channels. Based on this cleaned up data, you can build a strong set of 40-50 personalized insights. Next, use machine learning algorithms to deliver these insights to customer situations such as duplicate transactions, cash flow and subscription management. Connect marketing offers with personalized insights (for example, pre-qualified unsecured credit lines).

Step Three: Get Insights for the Banker Channel through CRM. This creates more informed banker outreach and complements banker lead lists and next best action leads. Start with situations when bankers can help customers with debt consolidation, new credit offers or investment opportunities.

Regional banks can follow a well-defined maturity path for data-driven personalisation. Start with providing personalized insights into the digital channel. Next, enable key customer visits. Lastly, provide curated insights to help bankers deliver integrated advice across various channels. At each stage, banks can help customers complete specific “jobs,” such as saving, managing loans, or building wealth.

While this should be carefully considered in business planning and goals, data-driven personalization can help create a good customer “flywheel” to help regional banks drive higher customer lifetime value and lasting business impact.


Businesshala Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. am i eligible?


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