Why does personalisation matter in financial branding?

“Who should ultimately design the product? The customer, of course," says Philip Kotler, often referred as ‘the father of marketing’. Kotler reminds us that the true purpose of marketing is to know the customer, closely and personally to build products and services that are going to succeed. The entire process of designing a product or service must begin and end with the customers and their needs.

In theory, personalisation is understood as a means of acknowledging each customer's individuality and meeting their needs by tailoring products and services to align with their specific preferences. 

When executed effectively with the customer's unique personal and behavioural data, this process enhances the overall customer experience, fostering long-term loyalty and satisfaction.

Defining personalisation in financial branding

The financial services industry, with its countless touchpoints in customers' daily lives, recognises the necessity for hyper-personalization more than many other sectors. 

Personalisation in financial branding goes beyond merely suggesting relevant products; it involves providing tailored experiences across various channels. This shift is driven by the convergence of AI and data analytics, enabling financial institutions to gather intelligent customer insights that result in customised products and services, including personalised savings plans and investment strategies. 

Recently, this has come to characterise the increasing customer expectations regarding 'value'.

Leading financial institutions, in a sense, focus on customers through a micro lens, utilising behavioural insights, diverse interests, and life stages. 

They implement customisation tools across various channels, including intuitive mobile apps with self-help options, relationship-driven banking services, 24/7 phone banking, and extensive ATM networks that address many day-to-day activities, among others.   

Let us examine several advantages of personalisation for financial brands.

Enhances engagement and lifetime value

By providing tailored solutions, financial brands can improve Customer Lifetime Value (CLV), thereby fostering long-term engagement. An Accenture report indicates that 91% of consumers favour brands that offer personalised content, relevant messaging, and suitable product recommendations. 

This reflects a greater awareness of their interests and preferences, providing them with actionable insights. They were likely to engage with a bank that refrained from sending them irrelevant material.   

Fosters loyalty and trust

Jeff Bezos aptly stated, “if we want to have 20 million customers, then we want to have 20 million stores,” encapsulating the significance of personalised branding in our customer-centric initiatives. 

In an era where customers receive countless marketing emails daily, particularly in the wake of Covid-19, capturing even a moment of attention—let alone prompting action—has become a significant challenge. Surveys indicate that once brands successfully capture that fractional attention, they can win the hearts and minds of customers, fostering long-term loyalty, conversion, and trust. 

Once they understand that you are aligned with their desires, it becomes easier to motivate them to take action. 

A distinct competitive edge

Numerous top banks are leveraging personalisation as a strategic advantage, establishing themselves as institutions that genuinely comprehend their customers' needs.  

JPMorgan Chase serves as a notable example, utilising data analytics to deliver personalised credit card offers tailored to individual spending behaviours. 

In a similar fashion, American Express employs sophisticated algorithms to customise rewards programs, thereby improving the overall customer experience and fostering brand loyalty.

Monzo, a neobank based in the UK, has established a reputation for delivering a highly personalised user experience in the digital banking space. Monzo’s platform provides real-time financial insights, spending tracking, and personalised savings recommendations, guaranteeing that customers enjoy a genuinely customised experience.

Personalisation can improve financial inclusion

In a large country like India, despite significant government efforts, only slightly more than 50 crore individuals possess bank accounts. By tailoring personalisation to align with customer profiles, banks can effectively serve underserved communities. 

For instance, numerous rural customers require fundamental banking services or may have specific needs based on their income and life circumstances. 

Applying the general credit rating rules for loan requests or overlooking earning potential based on geographical location or chosen profession will continue to deprive financial institutions of a potentially large customer base. 

For example, by examining supplementary data points such as rent, phone, and utility bill payments, a more comprehensive customer profile can be developed.

Personalisation strategies

As the cliché goes “data is the new oil”. Financial brands are increasingly utilising customer data to provide tailored financial advice, personalised savings programs, and customised investment portfolios. 

Through the analysis of purchasing habits, transaction history, website interactions, social media activity, savings patterns, and financial goals, companies can provide solutions that cater to customers' specific needs, thereby enhancing satisfaction and loyalty.

Financial institutions have the opportunity to enhance their offerings by employing behavioural targeting to develop tailored solutions for distinct customer segments, such as affluent clients or Gen Z consumers, thereby fostering a more personalised experience that boosts engagement. 

This should be accompanied by tailored content, such as specific financial advice that meets an ongoing need.

Preparing for the personalisation journey

Jack Welch famously stated, “No company, small or large, can win over the long run without energised employees who believe in the mission.” Personalisation is effective when there is a comprehensive understanding of its value and the business impact of these strategies. 

The organisation will consistently prioritise personalisation goals at the centre of their customer journey initiatives by optimising programs and processes, as leadership allocates the appropriate business, technical, and creative talent to execute these actions effectively.

In India, personalisation is increasingly becoming a fundamental aspect of financial branding; a strategic approach that cultivates trust and nurtures stronger relationships with customers. 

The emergence of digital platforms, sophisticated analytics, and evolving consumer expectations has placed personalisation at the forefront. Personalisation has evolved beyond basic product recommendations; it now impacts every aspect of customer interaction, driving brand success and cultivating lasting loyalty.

(The author, Kedarswamy Ravangave, is Executive Vice President - Marketing, Kotak Mahindra Bank.)