How customer insights are shaping bank propositions

‘There’s only one boss. The customer.’ The grand patriarch of retailing, Sam Walton always had one agenda – to please the customer to a tee. Customers who could ‘vote with their dollars’ were welcomed by clean stores, great layouts and friendly staff. They could even ‘argue for themselves’ with the suppliers for more discounts, taking the whole hog of customer centricity and insights to another level.

Today, with the power of technology, customer-facing businesses like banking can learn and exploit customer insights much faster, using data-driven decision-making in product development, marketing, customer experience, and the overall business strategy. On the other hand, with proliferation of digital and mobile banking, customers are seeking on-demand services, user-friendly interfaces, instant support, robust security features and financial wellness.  Thus, every customer insight holds a vital clue and an opportunity to the banks to thrive and survive in the emerging intensely competitive era.

A recent survey by Accenture anticipates banks will irreversibly transform or fashion their operations to offer hyper-personalized experiences, anticipating customer needs and driving loyalty seeking long-term growth. Though the process of digitization did enhance the efficiency of banking, it, somehow, left out the personal touch for some. With fintechs and non-banks easily fulfilling the void, banks are forced to take in every customer insight to shape their future. Let us examine the how this trend is unfolding.

Extreme hyper-personalization: A hyper-personalization strategy ensures that every customer feels exclusive and well-understood, leading to deeper engagement through tailored programmes that match their preferences. Listening continuously to customer vibes and whispers – during travel or shopping - can give invaluable clues into their changing lifestyles and choices, further helping banks refine the personalised offerings. Research shows that customers want banks to help them fulfil their aspirations and the need for safety nets or alternate income streams through wealth management ideas.

Many banks are now using ‘hyper personalisation’ in customer communication, right from the first touchpoint to the final digital experience using AI and data analysis. Customers are segmented into specific cohorts, tailored to their business and age profile, relationship vintage and the product usage, creating a responsive dashboard. Personalized documents, anchored in customer’s business goals with relevant solutions, are embedded in digital journeys to create a seamless, one-to-one brand experience at scale, leading to greater customer loyalty and engagement.

Connected product and service strategies: Like many other businesses, banks are steadily moving from product-centricity to customer-centric models – more on the lines of those that ‘they need’ than ‘they can use’. It is observed that most customers have their set of ideal solutions, including some that are not provided by their main bank. If banks can rightly gauge this insight, they can refine the advice and offerings, extending the relationship. But this requires banks to rework their data structures and data management, organizing them around the customer to increase the acceptance to newer products, including those in the bundle. Customers must be endowed with better pricing and more incentives, especially curated around non-banking services so as to increase the share from their wallet.

Though we all know the potential of our MSME sector, most small businesses feel that they are given a standard or generic banking service, devoid of any understanding of their emerging needs. Banks can integrate their needs such as accounting and taxation seamlessly into mobile apps or hand hold them to utilise wealth advisory services, thereby making them feel cared.

Similarly, despite their outsized contribution, affluent Indians feel there is no cohesive program that offers curated wealth management, coherent lifestyle experiences for their families and easier means to credit. They also feel that they don’t have enough resources to fulfill their audacious dreams. A valuable insight from such aspirational Indians is that banks need to extend privileges to their immediate families which is an ultimate badge of honor and recognition for them.

Enhanced risk management: Bank customers, today, are more aware of the trust, transparency and risk management aspects than before. Thus, banks that utilise or talk about state-of-the-art fraud detection and prevention methods to get the customer attention. They also feel safe when banks flaunt tools such as advanced analytics and machine learning algorithms that spot fraudulent activities and limit financial losses. Transparency in terms of strong data governance and handling, resolute adherence to laws like the Digital Personal Data Protection Act, 2023, and regular employee training to understand data privacy will be seen in a positive light.

Early detection of churn and customised advisory: Certain analytics enable banks to assess fluctuations in repayment behaviours, thus forecasting high-risk clients. Consequently, banks can implement customized financial advice and adjusted repayment schemes, reducing the likelihood of defaults. Simultaneously, banks can leverage customer insights obtained from behavioural trends, transaction records, and overall feedback to accurately predict the chances of potential customer churn. 

Banks realise that a customer – once lost – is gone forever. Thus, early signs of a possible churn can be gauged from any insight; dissatisfaction with overall services or high fees or a total apathy to listen. Such cues must trigger targeted retention strategies including personalized offers and loyalty programs.

Conclusion: By lending a smart ear to customer voices, many banks are gaining a deeper understanding of their needs, preferences, and behaviours, resulting in optimized operations, product development, marketing strategies, resource allocation and service delivery even through branches, ATMs and digital banking platforms. An incisive evaluation of customers allows banks to differentiate themselves in the market, offering superior customer experiences and more relevant products and services.

As Brett King wrote in his book ‘Bank 3.0: Banking is no longer somewhere you go, it’s something you do,” banks, which calibrate every customer insight and build on it, will be seen as valuable solution providers and partners in their life-cycle journeys.