Event Recap: Taking a Modern Personalization Approach to Retail Banking

On January 30th, ActionIQ hosted a fascinating thought leadership breakfast, “Taking a Modern Personalization Approach to Retail Banking,” at the a16z offices in NYC. It was an intriguing discussion led by true industry experts, with attendees including American Express, Citibank, Barclays, JPMorgan Chase, Goldman Sachs and more.

Rising Customer Expectations

Paul Evers (Merkle) opened the discussion describing the very high expectations customers have of their digital experiences—set by digital leaders like Amazon, Netflix and Uber. The modern consumer wonders, says Evers, “If I can get a package delivered in 2 hours, why does it take me so long to get a mortgage which isn’t even a physical product?”

To keep pace, retail banking needs to tackle customer experience along a three step maturity curve consisting of: 1) the functional or transactional layer, 2) data-driven personalized experiences 3) context-aware, intelligent engagement that helps customers solve specific problems and achieve their unique goals.

Defining Your Personalization Goals

Stefano Fanfarillo (BCG) stressed the importance of banks placing a concrete definition around what they mean by personalization. Customers don’t think to themselves “I just had a personalized experience,” says Fanfarillo. Rather, they “think of convenience. Is it easy to do business with you? Can I do a transaction how and when I want?”

Banks need to first identify the specific personalization use cases on which they will focus—the ones that will make a difference to the value you can bring to the customer, and therefore the value you can realize from the customer.

Clearing Roadblocks

More than most industries, banks face significant roadblocks when it comes to modernizing the customer experience. These fall roughly into four categories:

1. Siloed organizations. Banks are typically organized by channel and by product. Each runs with its own KPIs, optimizing for revenue within their silo.
2. Analytics. Many banks haven’t yet federated customer-centric data so marketers can use it for analytics, nor democratized centralized data back to each channel so they can analyze it.
3. Legacy tech. The larger the bank, the more legacy tech roadblocks it must overcome. For instance, the most established banks may have 65% of their back-end technology running on COBOL and mainframes.
4. Content. Moving a few product or channel-oriented campaigns through the compliance process is manageable. But personalizing thousands of messages across thousands of touchpoints presents a struggle for managing and governing content and communications.

Taking a Strategic Approach

While these roadblocks generally exist industry wide, the main challenges vary based on the type of bank in question.

Mega banks—like Chase and Bank of America—have the largest client bases and the deepest pockets, but typically have the most legacy technology to overcome.

Super regionals, like PNC and Citizens can innovate with greater agility, but don’t have the large funds to invest, so must focus on the pockets of innovation that best move the needle.

FinTech organizations can innovate and move nimbly, but are typically only able to focus on narrow use cases—savings, investment and payments are some examples. Interestingly, according to Fanfarillo, while FinTech may seem like a source of competition for banks, the opposite is proving true. “FinTech has been very good for banks because they’ve actually been able to integrate these innovations to accelerate their own innovation.”

Perhaps the biggest competition in terms of customer experience is emerging from the digital giants such as Apple and Amazon. Apple Card, for instance, offers a next generation customer experience that will push competing banks to invest in order to keep up.

Where to Focus Your Technology Investments

When asked by an audience member whether banks are typically investing in their “back of house” systems or “front of house” experience components, Evers says it’s “middle of house.”

On the back end, banks have done decades of data warehouse work that has resulted in rich data layers that—while behind on some necessary digital data integration—can serve as a valuable resource. On the front end, they’ve invested in CRM, content management, personalization, and other channel-oriented systems.

What’s been missing is the capability that CDPs can now fulfill—that “middle of house” layer that brings these two major systems investments together, “so we can take the data and activate it across channels to do things we couldn’t do before,” says Evers. Democratizing this data can enable banks to connect the dots on customer experience and make significant improvements without requiring disruptive reorganization or wholesale process reengineering.

Another key component to filling that “middle of house” gap is the decisioning layer enabling marketers to harness all the inbound behavioral interactions they can now capture, and make determinations about what customer-focused actions to take based on that data.

Prepare Your Organization for a Journey

To wrap the session, the panelists emphasized a critical takeaway. Digital transformation is a journey. Buy-in, advocacy and commitment from the most senior executive level is imperative for it to work. “You have to realize you’re investing in something that’s multi-year that will pay dividends, but they’re not going to be realized in the first 12 months,” says Evers. If you find yourself winding down the initiative because “we did a personalization pilot and it did not work,” it was not set up for success to begin with.

“That’s why we work with top leadership,” adds Fanfarillo, “because that’s the kind of sponsorship you need” to see your transformation through to success.

But Wait – There’s More

Our panelists covered a range of additional topics, informed by deep experience as consultants and practitioners in the sector. Stay tuned for a full length video of the session where you can dig into all the details

A special thank you to our brilliant panelists for generously sharing insight from their decades of experience, to our audience for the great questions and observations, as well as ActionIQ’s Tamara Gruzbarg for moderating the panel.

Read the event recap from our Insurance & Wealth Management event here.

Paul Evers is EVP & GM of Financial Services at Merkle. He brings more than 25 years experience helping some of the world’s best known brands across multiple sectors transform into data-driven, customer centric organizations.

Stefano Fanfarillo is Partner and Director, Personalization & Digital Marketing at BCG. He previously served as a consulting leader at CSC and Accenture, guiding financial services organizations through digital transformation initiatives.