Critical Steps to Improving Hyper-Personalization at Scale

Research shows more than half of all decision-makers understand the importance of hyper-personalization. In fact, more than half know it’s the critical route to driving improved customer engagement, loyalty and reputation. But achieving a comprehensive 360-degree view continues to pose a challenge for many.

As a result, hyper-personalization is now front-of-mind among banking’s boardrooms. It’s also a minimum mandatory expectation among bank customers. Everyone is talking about it, and everyone is doing it — at some level. But are hyper-personalization efforts effective? And more importantly are customers convinced?

Alyson Clarke, Principal Analyst at Forrester, presented the latest research and insights based on 350+ banking professionals at FICO World 2023 in May. In this interview, she discussed some of her findings with me.

What is the biggest mistake banks make with their hyper-personalization strategies?

CLARKE: Many banks say that they are already delivering on personalization and view improving their capabilities and technology further as a top priority. But banks' current efforts are nowhere near the level necessary to engage increasingly demanding customers.

Consumers are interested in personalized experiences that help them with their finances. The problem is that most banks are more focused on business needs – such as selling more products — than they are on customer needs, and often approach personalization in silos. As a result, personalization efforts are often missing the mark because they are narrowly applied, lack customer value, create awkward interactions, and, or lack understanding of a customer's context.

Banks need to break down their silos and think more broadly about the customer — and not just the product — to deliver personalization that adds value across the customer lifecycle. To do this at scale, they will need to leverage technology that includes customer engagement and orchestration, as well as an intelligence layer that works to synchronize data, centralize decisioning, and deliver insights right across the enterprise.

What are the key building blocks for successfully achieving personalization at scale?

CLARKE: Having a strategy and a plan are very important. Banks need to ensure they have a personalization strategy that is enterprise-wide, customer-focused, and aligned to both the overall company strategy and strategic priorities. With that, banks should also continually look at both the business and customer value they are delivering.

Success begins with a combination of starting small to learn, while also ensuring there’s investment in medium to longer term programs and technology. Short-term initiatives will help achieve quick wins, provide momentum, and start to prove the return on investment. Medium to longer-term initiatives will be more focused on driving scale and investing in the right technology to execute on the agreed enterprise-wide personalization goals.

The personalization strategy also needs to evolve over time as the business’s overall strategies and priorities change. It will also need to grow as the firm becomes more mature at personalization, and as the technology stack evolves and opens up to even more personalization possibilities.

Why are so many firms struggling with implementing AI and Machine Learning (AI/ML) models, and what can be done to overcome this hurdle?

CLARKE: AI/ML are necessary to personalize at scale, yet according to Forrester’s 2022 Data and Analytics survey, less than one-third of banking data and analytics decision-makers say their firm is currently using AI technologies to scale and optimize personalization. Lack of trust is creating an internal barrier. According to Forrester’s 2021 Global Trust Imperative survey, one-fifth of global data and analytics decision-makers at firms that use or are interested in AI say that employees’ lack of trust in AI is the biggest challenge to the organization’s adoption of AI-enabled technologies. Innovations in AI/ML and analytics have made it possible for every interaction to be personal and unique, and customers expect banks to be investing in technology that fuels meaningful experiences.

How can personalization be used to build trust and increase customer loyalty?

CLARKE: Trust is a major driver of customer loyalty and attrition — but it’s hard to earn and easy to burn. Forrester’s US Financial Services Customer Trust Index, 2022 found that US banking customers trust banks that are dependable, empathetic, and accountable. Trust levers create a particular combination that reflects both present economic challenges, as well as a bank’s role in demonstrating their care for customers’ financial well-being. At a time when the US economy faces high levels of inflation that are contributing to record levels of consumer debt, customers naturally yearn for dependability and empathy.

The most important lever of trust banks is dependability. It’s the expectation that an organization will be available, reliable, and able to predict and meet individuals' needs and demands. Empathy is the second most important lever of trust for banks. However, only 54% of customers in our recent survey believe that their primary bank exhibits the traits of emotionally connecting to customers and understanding their feelings and experiences. Banks’ lackluster performance in this category poses immediate concerns as households grapple with financial challenges stemming from persistent levels of inflation.

Banks have a unique opportunity to earn customer trust and differentiate themselves by making meaningful connections with customers — and personalization focuses on building customer relationships and providing value through better customer engagement. For example, personalization can help banks provide tools and support to help customers become more confident with their finances during economic uncertainty and rising inflation.

Where do you think personalization will be in five years’ time?

CLARKE: Within five years, I believe personalization at scale, or hyper-personalization as many call it, will be table stakes in banking. Banks will be leveraging AI/ML and automation to deliver proactive, always-on personalized customer experiences and interactions that can be followed up with action. Advances in technology, devices, and the way consumers interact with them will mean considerably more data, and an even greater expectation of embedded finance when and where consumers need it.

Firms will need to have a centralized and standardized approach to ensure they can observe and analyze customer behavior in real-time to deliver the right experience, action, and message instantly at the right time to every customer. This will also require firms to have a better understanding of business and customer risk, and the ability to continuously assess that risk.

Customers won’t always know an experience is personalized, but they will feel like the bank is more proactive in trying to help them, and that the bank is providing information and help that is more contextually relevant and valuable. Ideally, customers will start to feel like their bank understands them and cares about their financial well-being.

How FICO Can Help You Unlock the Value of Hyper-Personalization

FICO can help you assign hyper-personalized offers to each client or consumer in real-time to maximize your sales and improve your customer loyalty and experience. Cloud-based or on-premises FICO AI-powered analytics solutions enable you to fully automate your marketing campaign, quickly respond to business requests, continuously improve marketing processes and develop hyper-personalized marketing strategies.

• Watch Alyson Clarke’s FICO World presentation, Forrester: Catering to an Audience of One
• Read Unlocking Hyper-Personalization at Hyper-Scale.
• Find out more about How to Unlock the Power of Hyper-Personalization.
• Read Hyper-Personalization and Prescriptive Analytics for Customer Offers.
• Read more on hyper-personalization in the Top 5 2023 Trends Redefining Banking Today.

About the Research

The findings are revealed in Unlocking Hyper-Personalization at Hyper-Scale. It’s a commissioned study conducted by Forrester Consulting on behalf of FICO. Feedback was analyzed from more than 300 senior decision-makers responsible for personalization of customer experience at banks across North America, Brazil, South Africa, UK and Thailand. The results yielded a mass of interesting findings and highlight where critical investments look set to be made within the next 12 months.