Last time we started exploring the fast and furious way to banking personalisation. Here’s the next chapter with another two no-pain-all-gain use cases for your digitalisation journey.
3. Digital acceleration and education
We’ve got some no news for you: the pandemic has greatly accelerated digital transformation in all regions and industries. Just how much, however, might not be immediately obvious. According to a global survey carried out by McKinsey, the COVID-19 crisis sped up the digitisation of companies’ customer and supply-chain interactions and of their internal operations by 3-4 years – in just three months. The share of their digital offerings? By seven years.
Customers, too, have flocked to digital channels at never-before-seen rates. E-commerce penetration in the United States, for instance, jumped from 17% to 33% in just two months. Previous forecasts had anticipated a 7% growth by 2024.
But willingness does not always equal readiness. “Many consumers still struggle with the basics of digital banking. While they most likely have become accustomed to tracking their balances on a mobile device, the comfort level most likely goes down from there,” writes The Financial Brand’s Jim Marous. “This is why the least satisfied digital banking consumers are those that use mobile banking the least.”
Meaning that banks face a dual challenge here. They must both drive customers to digital channels and help users become more confident in using them, from transferring money through paying utility bills to saving and borrowing.
The first step here is to look at customer behaviour in terms of channel usage and preference for certain types of activities. Based on a comprehensive analysis of offline data, W.UP can identify customers who still use physical channels to make transactions that could be done in a few taps on their mobile. Upon their next branch or ATM visit, the bank could send these customers a reminder of how much faster, cheaper and easier it would be to complete the same transaction in-app or online, including step-by-step guides or video tutorials.
4. Customer resegmentation
Just last year, my colleague, W.UP senior banking consultant Áron Vitályos wrote about the real reason why incumbent banks are lagging in personalisation. Spoiler alert: it’s legacy thinking. Part of this decades-old mindset is organising financial institutions, from strategy though marketing to service delivery, around three major business segments: mass retail, premium and private. Four, tops. “In the UK, we normally call these oranges, lemons, apples and pears,” explains Chris Skinner on The Finanser. “Apples are mainstream customers; lemons are students and the underbanked; pears are high net worth and mass affluent; and oranges are the die-hard oldies, retired and others with wealth but little income.”
In reality, at least six other fruits should be used. Most banks still put customers into brackets based on location and basic demographic factors, such as gender, age or occupation, and financial parameters, like asset levels, credit ratings or liabilities. The problem is that this “gold standard” of segmentation bears little-to-no relevance to customers’ actual needs. People, EY points out, “are much more than the sum of their banking deposits and loans, and do not align neatly to basic or broad demographic characteristics”.
W.UP enables banks to set up over ten different customer target groups, and market, tailor and price their product and service offerings to these personas’ behaviours and expectations. Applying a more detailed segmentation model, it’s easy to spot if a customer should be moved to a higher category and targeted with more lucrative, premium banking services, rewards and support.