The value of hyper-personalization in banking

By Philip Bush, Head of Amazon Connect, North America, Capgemini’s Business Services

Banks and the banking experience they offer are changing. The emergence of new challengers ushered in a paradigm shift. While brick-and-mortar branches once formed the basis of all customer service offerings, a new digital frontier has begun to take shape, characterized by gamified, hyper-personalized, and readily available customer experiences.

In this transition to a new digital landscape, some incumbent operators still have to adapt. While they may lack digital agility, they are so far seen as more legitimate by many, something challenger banks have yet to achieve. The recent collapse of Australian neobank Volt shows that success in the industry requires more than just an easy-to-use app.

That said, the tone is set and customers are increasingly expecting these hyper-personalized experiences from traditional banks as well. This drives incumbents to create agile, tailored experiences to stay competitive.

Deliver customization at scale

The success that neobanks – banks that exist purely online – have enjoyed since their inception can be summed up in one fundamental principle: establishing an emotional connection with their customers. Competition for share of wallet is getting tougher and marketing managers are playing a bigger role in developing the bank’s customer strategy.

Much like consumer brands, neobanks have focused on gamifying their customer service offerings. Through sociology, psychology, and cognitive science, FinTechs are able to induce behavioral changes and can evoke feelings of accomplishment.

So how can traditional banks adapt their services to better meet the needs of their customers? In fact, among those surveyed for the recent World Retail Banking report, 44% of customers said their banking experiences were not personalized enough. Customers today are looking for services that are always available and easy to navigate, which attracts them to neobanks. Three out of four customers indicated that they are attracted to FinTech competitors who provide these services.

What is needed is a customizable, omnichannel-based, bespoke service. Consumer insights will be the key to unlocking this level of adaptability and can be delivered through a cloud-based contact center and platform. With these, banks can strive to break down silos, break down legacy systems, and become truly frictionless businesses.

The value of data, analytics and AI

To challenge FinTechs and close the customer experience gap, incumbents must truly harness data. They will need to allocate resources efficiently and leverage artificial intelligence (AI) and the elasticity of the cloud as part of a broader data and analytics strategy. Luckily, the incumbents have all the necessary ingredients to implement this change. Through years of customer service, they have swathes of financial, social, media, lifestyle, and consumer behavioral data.

However, having all the necessary components is only half the battle. For many incumbents, there are institutional bottlenecks that prevent their data from informing a broader customer experience strategy. We know that nearly three-quarters of all executives said they struggle to turn their data into useful information. Of those surveyed, 80% cited data reliability as a concern, with 70% saying they don’t have the resources to analyze the data. Recent industry partnerships have shown the value of a collaborative approach. By partnering strategically, incumbents can leverage cross-industry data ecosystems to produce the hyper-personalized experiences customers have become familiar with through their FinTech interactions. Fortunately, regulatory requirements and technologies such as cloud, AI, and data and analytics are helping to foster increased cross-industry collaboration.

Switch to cloud-based solutions

In 2016, thanks to the introduction of open banking initiatives like PSD2[i], traditional incumbents have been forced to move further into the world of digitized finance. The EU directive has forced a shake-up in the industry, fostering collaborative partnerships and connecting banks to a wider customer base.

Despite this initiative, many banks find themselves hampered by legacy systems. A whopping 95% of banking executives said legacy systems and outdated core modules hamper data optimization efforts and delay customization at scale.

However, by implementing cloud-based data, analytics, and AI, banks can overcome these historical hurdles. The role of the customer contact center is essential and innovation is already underway within banking establishments. Various banks are placing more emphasis on Contact Center as a Service (CCaas) as a new operating model. By leveraging Open Finance partnerships, they are transforming into hubs of experience through which technology-enabled customer service agents work to produce personalized interactions, lowering the cost per call at scale.

CCaaS provides everything you need to run a contact center in the cloud without requiring expensive IT and telephony infrastructure. It promotes a “work from anywhere” approach for contact center agents, enabling rapid delivery of omnichannel contact center solutions with minimal setup time and reduced operational expenses by charging organizations only what they use. Take for example Amazon Connect. A solution that is on-demand, serverless, open platform and can scale automatically, enabling benefits and collaboration across a large ecosystem of partner services.

Collaboration through open finance

Open Finance, in essence, functions as a collaboration enabler, facilitating and supporting a network of third-party applications. Open platforms like Amazon Connect are key to facilitating integration with third-party platforms, allowing banks to share customer information. For example, NatWest has partnered with European open banking platform Tink, an open provider that syncs data to create actionable insights. Thanks to this, NatWest was able to organize a news feed on its mobile banking application which generated 1.3 million responses in the first few months, allowing NatWest to know what its customers needed most.

Today’s consumers expect their banking experiences to be hyper-personalized and available at the touch of a button, while always staying on top of trends and providing up-to-date information. In recent times, financial institutions have put their infrastructures through stress tests. However, consumers still need stability. Banks must leverage cloud-based contact center, open finance, and strategic third-party collaborations, making regulatory compliance a critical operational pillar to achieve innovation at scale and retain today’s consumer today.

[i] The second Payment Services Directive (PSD2) is a directive issued by the European Union that entered into force in January 2016, but EU member states had until January 2019 to transpose it into national law. PSD2 is a piece of legislation designed to require payment services to improve customer authentication processes and also introduce new regulations regarding third-party involvement.

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