Right now, many banks and financial services firms are locked in a competitive arms race to deliver faster, smarter, suitably tailored experiences in a bid to set them apart from their peers.
But there are differing routes to delivering personalization. It extends from relatively straightforward structured marketing campaigns to more sophisticated event-based automated approaches, all underpinned by AI, machine learning and customer journey orchestration.
The global pandemic simply has stepped up the pace of investment in this area, while the impact of rising inflation, interest rates and the cost-of-living crisis starts to weigh on consumers. Right now, the numbers speak for themselves.
Digital banking is used by an estimated 93% of the UK adult population and is forecast to increase further within the next two years. By 2024, 435 million Europeans are predicted to be using online and mobile banking – up from 398 million today. Worldwide, the forecast shows an even steeper rise, from 1.9 billion last year to 2.5 billion by 2024.
At a consumer level, the global trends are even more telling. Research shows more than 6.3 million customers plan to switch bank within the next year, while another 31 million are on the fence about staying or leaving their current bank at any given time. Up to half of consumers see their bank as a trusted partner, while the one in three who switched say they did so because personalised offers were lacking. In fact, three-quarters admit they would quickly re-evaluate their choices if a new competitor proved to be better at delivering personalised offers.
Why Next Best Actions Pave a Route to Success
Unsurprisingly, happy customers are loyal customers. Banks opting for a customer needs-based approach that proactively reaches out with appropriate alternatives, when an initial ask falls short, are far more likely to achieve significantly better results. Some estimate at that they increased revenue by 30% or more.
Today’s customer journey isn’t sequential and orderly like it was mapped in the past. In fact, no two use cases are ever the exactly the same, thanks to the multitude of variables continually weighing on personal finances and circumstances.
Next Best Actions / Next Best Offers are determined by the customer's interests and needs on one hand, and the marketing organization's business objectives and policies on the other. The right balance can be found through decision optimization. While simple orchestration tools often offer prescribed paths for users to go down, the pre-emptive flexibility of Next Best Actions and Next Best Offers is much more customer-centric.
Successfully devising Next Best Actions / Next Best Offers is a win-win for lender and customer alike. The business retains the customer on terms that suit its risk appetite, while the customer gets the option of an appropriate pre-determined deal that will suit their needs. It hinges on putting the customer at the centre of all actions, while balancing organisational needs, decision making and internal risk appetites - all thanks to a combination of sophisticated analytics, automation, optimisation and ongoing two-way digital dialogue.
Four Pointers to Success
1. Structure is Everything
Customer centricity cannot be achieved if business lines can’t effectively share customer information and insight with each other. The sky is the limit in terms of what use cases agile, cloud-hosted platforms can address.
2. Siloes Slow the Business
Potentially valuable customer insights are rarely connected and leveraged. Agility is everything when it comes to breaking down well-established internal siloes.
3. Don't Be Linear
Today’s customer journey isn’t neat and orderly in the way it was set out in the past. While the perception was that it used to be simple, it’s unlikely it was ever accurate or genuinely customer-centric. A marketing offer was shipped, the customer might opt to accept the deal and the fragmented relationship got underway.
But it also highlighted a lack of synergy and a mass of missed customer opportunities. Enduring customer relationships require hyper-personalization, strategies and timing when it comes to delivering Next Best Actions. The reality is that the customer journey is far more complicated than first thought. Customers take their own path — it’s never a one-size-fits-all process. Without taking into context their personal situation at any given moment, along with circumstances and history, there’s a likelihood that only providing a one-dimensional generic experience isn’t as valuable, effective, or enjoyable as it could be.
4. Take a Cloud-Based Platform Approach
FICO has enormous experience and clearly defined proof points working in banking, having supported everything from personalized marketing offers, to optimization of airline routes and logistics, to working with start-ups and big tech vendors on key projects.
Our decisioning is informed by continuous improvement, data science, always-on analytics, agility and the ability to be data agnostic or make the most of ‘just in time’ data. All components are integral to informing and allowing financial institutions take advantage of each and every single customer interaction. Regardless of the channel or product, providing the customer with the right offer or service at the right time via the right channel, can all be determined by analysing their behaviour with the different products they have with the lender.
Case Study – How Loblaw Adopted FICO Analytics to Deliver Customer Loyalty at Scale
Award-winning Canadian grocer Loblaw Company Ltd, successfully adopted FICO analytic know-how to help deliver its hyper-personalized customer loyalty program PC PLUS™. Loblaw launched the project in the face of a highly competitive marketplace, already served by numerous well-established loyalty programs.
FICO enabled the retailer’s PC PLUS™ program to provide each Loblaw member with a personalized set of offers every week — despite the store offering hundreds of thousands of products and potential basket combinations. Thousands of specific offer templates were created. Each offer was underpinned by its own predictive model and member score, every single week. The FICO system produced billions of scores every week, successfully delivering more than 35 million offer recommendations. Following the programme's national launch, more than one-third of all Canadian households went on to participate in it.
Next Best Actions for Collections Prevention
While there’s a tendency to focus Next Best Actions primarily on acquisition and customer management, they’re equally applicable to collections, loss prevention and recovery.
Collections prevention helps drive suitably targeted personalised treatments, while mitigating risk and helping the customer through difficult periods of financial stress by tailoring the most appropriate repayment solutions in a speedy and timely manner.
Ultimately, it results in far more effective identification and engagements with vulnerable customers, leading to long-term, sustainable debt solutions. These increase the customer’s ability to effectively manage and resolve debt issues, delivering significantly reduced losses.
Why FICO?
All the key requirements outlined, and the capabilities required to deliver them, are proven components of FICO Platform. It enables our customers to manage complex data flows, drive deep customer insight, understanding, and make real-time decisions on appropriate treatments and engagement approaches for customers. It improves customer interactions through digital and traditional channels, with optimized approaches that consistently deliver the most appropriate business and inform the very best customer outcomes.
Learn More About How FICO Can Help You Deliver Next Best Actions
- See why great digital experience doesn’t always mean great customer experience—and how to excel at both.
- Watch the webinar Putting Your Analytics Into Action.
- Read Empowering Business Leaders with Agile, Actionable Analytics.
