By Published On: August 17, 2020

As marketers, we understand the effectiveness and value of using personalization in our marketing messages. Having worked in financial services for several years on both the client side and agency side, it is apparent that banking has lagged behind in this regard. There are many reasons why this is the case – legacy technology, product silos, privacy concerns and a business model built on face-to-face interactions. However, now more than ever with almost every marketing channel oversaturated with content, using personalization that speaks to individual customer needs and experiences may be the factor that separates the banks who thrive from those who do not.

The Financial Brand (one of my favorite sites) has several great articles about personalization in banking – the psychology behind it, why it matters and suggestions on how to do it better. Summarized here are some of the take-aways from the Financial Brand and other industry experts on a subject that seems simple on the surface, but is often not given enough consideration.

Customer Expectations are High

According to a Deloitte Consumer Review, “Consumers’ power is consolidating with improving access to information, ever widening choice of goods and services, and opportunities to share their experiences more widely.” New digital offerings from both fintech firms and traditional institutions have increased competition. As financial products are easier to access and obtain and switching costs have become lower, personalized services that can help to form stronger relationships will become more important for customer retention.

What Does Personalization Mean?

Personalization in marketing does not simply mean using the consumer’s name in marketing communications. (That said, don’t underestimate the power of doing that. Using a person’s name as opposed to “Dear Valued Customer/Client” shifts their perception about the relationship and could better influence their thinking.) It is moving beyond segmentation, discovering individual customer preferences and identifying the next financial activity in order to create a tighter customer-bank bond.

Advances in digital technology now enable banks and credit unions to know their customers again – their preferences, interests, and where they are in their life journey – as they once did when the business was highly personal with one-on-one interactions.

When we discuss the power of personalization, we often mention the power of predictive analytics and the ability to predict future behaviors. We assume that predicting behaviors will lead to a positive action on the part of the consumer. In reality, what we really want advanced analytics and machine learning to do is to help us predict the consumer’s response to messages and offers at a given time with a selected channel.

According to a report from Baynote, The Human Need for Personalization: Psychology, Technology and Science, experiences don’t have to be unique to each user, but tailored to satisfy their individual needs that may be the same as other consumers. “Personalization is much like a matchmaking exercise with the ultimate goal of pinpointing the best product or service from your catalog that best satisfies your customers’ needs.” Because a consumer’s interests and needs may be similar to others, it is important to determine which consumers are similar and to build strategies that will best influence behavior to take a positive action for the consumer and the company

Web psychologist, Liraz Margalit, PhD, states “because of some of the complexities of personalization and consumer behavior, financial institutions should apply psychological theory alongside analytics, allowing them to identify how external factors combine with their customers’ different personality traits, mindsets, expectations and preferences to impact on their decision to buy (or not buy) products. Once organizations understand how their customers are likely to behave in any given mindset and situation, they can develop personalized experiences that will delight customers and drive sales.”

“If banks and credit unions learn to recognize certain behavioral patterns, they can determine which type of personalized experiences individuals will find helpful in real time. For example, they could send a personalized recommendation to an explorative or disoriented customer during the shopping process to help them make a purchase decision,” offers Margalit.

The Benefits of Personalization

When personalization is done well, it benefits both the consumer and the financial institution. The banks and credit unions that best understand the psychology of personalization will do the best connecting with consumers.

Consumers want the companies they work with to know them, understand them and reward them as an individual. If a bank or credit union eliminates noise and provides financial solutions that apply to a specific need or are driven by a real-time behavior, this provides value to the consumer that builds trust and loyalty.

Using personalization in financial services provides the impression that all customers have their own 24/7 personal assistant who can be trusted to help them make the best possible decisions. This is what they are receiving from the big tech firms and what will be the primary differentiator in the future.

Industry expert, Joe Welu contends that the underlying premise of personalization is for financial institutions not to just “sell more stuff,” but to be able to become trusted advisors. That is an ongoing process, but even a 5% increase in customer retention typically brings a 25-95% increase in profits. In addition, he cites Boston Consulting Group data indicating banking providers can expect a 10-30% lift in revenue from personalizing the customer journey.

Following are additional stats regarding the results of using personalization:


… say that website and email personalization influences their shopping decisions


… have recommended, chosen, or paid more for a brand that provides a personalized service


… will only engage offers if they’ve been personalized to their previous brand engagements


The Psychology Behind Personalization

Here’s why it works:

Consumers are attracted to personalized experiences because they make them feel special and unique. Personalization gives the impression that people matter on an individual level to the banks and credit unions that serve them. This is despite the fact that most personalization is an automated process made possible by the collection of data and the use of analytics.

Personalization provides a sense of control and reduces information overload. Today’s consumer is getting bombarded with marketing messages. Content or offerings that are tailored to the consumer’s needs based on previous activities, behaviors or purchases makes the consumer feel in control since engaging feels easier and less likely to be a waste of time.

Being relevant matters. Technology has given the consumer the power to filter information and be selective. If something relates to what we care about, we allow it to enter our brain for consideration. But, people still want choices. Relevant choices that educate or empower the consumer can actually make the consumer feel more in control.

Strategies for Financial Institutions

In my opinion, the inability to understand the value of or focus on the individual customer experience is often not due to lack of knowledge or lack of trying on the part of bank marketers. Technology limitations and the lack of coordination and resources can be tough hurdles to overcome. Many financial institutions lack the technology that is needed to provide meaningful insights into their customer’s behavior and respond quickly to opportunities. And, vying for marketing resources becomes even more challenging in an environment built with distinct lines around product offerings, each with their own competing goals.

Here are some suggestions to help financial institutions move in the direction of creating the unique experience that consumers expect:

  1. Dig deeper into transaction data. Banks and credit unions have an abundance of valuable transactional data. Create a more holistic view of the customer by looking at transactions in an aggregate way – online payments, ACH payments, transfers and card payments. This provides insight into not only your own institution, but also other financial institutions, retailers and service providers that make up your customer’s profile.

Analyzing this data can uncover meaningful patterns in spending behavior, depict life stage (children, home buying, college, retirement), identify trends in lifestyle activities and interests, or spot a change in financial status that may signify new financial needs and concerns.

  1. Create and understand personas. This is where you take customer segmentation to the next level by understanding the demographics, values, goals, communication preferences, digital propensity, price sensitivity etc. of a customer set. Understanding buyer personas helps to build effective marketing strategies, target your efforts, communicate more effectively, and build rapport.
  2. Build customer engagement across marketing channels. Develop dynamic content that educates and provides the customer with helpful information. Be conversational in your tone and become a trusted advisor. Marketing channels are saturated and competitive, so use all available channels, evaluate the content already out there and strive to create something better, and provide a consistent user experience across channels.

Creating a personalized customer experience is an ongoing process that requires planning and commitment. However, it is critical for success for banks and credit unions and, when done effectively, will result in a win-win situation for both financial institutions and their customers.

About the Author: Sheryl Doyle

Sheryl Doyle
A problem solver by nature, Sheryl loves working with clients to solve a tough marketing challenge. She gets to the heart of it by first uncovering their real business needs and then works to develop marketing-based solutions. As if they were an extension of her family, she strongly advocates for her clients and keeps their best interests at heart. With her broad base of marketing knowledge and experience, ability to see the big picture, and knack for managing the details, Sheryl marshals the right resources and confidently wrangles the process to ensure a successful outcome every time.
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