5 US banks nailing personalised customer service
All over the world, financial institutions are gathering enormous amounts of customer data on multiple platforms, from customer spending patterns, transaction data and demographics, to GPS-based location data and social media behaviour.
Yet despite holding onto mountains of information, some banks don’t seem to be mining it terribly well. They’re still miles away from that holy grail of customer service – personalisation.
2016 research indicates that in North America only 37% of customers believe that the banks understand their needs and preferences adequately. This, at a time when brands like Amazon, Facebook, Google, Netflix and Asos are driving consumer expectation for increasingly personalised services and real-time insights.
Here are five inspiring financial brands in the US who’ve blazed trails with data-driven personalisation.
1. Bank of the West
They’re a big traditional bank but Bank of the West is miles ahead after investing early in a giant central data warehouse (reported by American Banker) that allows them to mine the data for specific analytics projects. One of those projects is their ‘relationship pricing’ program.
As the bank describes it in their blog, relationship pricing is where ‘‘a bank essentially says, “You have a relationship with us that we value. To show our appreciation, we want to give you a discount on our products and services based on your being a valued customer.” Pricing on new products is figured out based on the level of overall business the customer does with a bank, the types of services purchased, as well as their individual needs, rather than on a product-by-product basis.
To achieve this and other dynamic pricing objectives, Bank of the West purchased a modular product called miRevenue, with a module designed to let the bank's marketers view customer activity more easily across product silos, as this American Banker article reports. Goods could then be offered at a price that varies according to factors like “demand, customer type, or even the weather”, a pricing capability often used in the travel industry. The approach has allowed Bank of the West to reward its best customers with better pricing and better products, thereby improving customer service and loyalty.
The approach has allowed Bank of the West to reward its best customers with better pricing and better products, thereby improving customer service and loyalty.
New York-based mobile personal lending platform MoneyLion was started with a mission to “empower consumers to take control of their financial lives through better products for borrowing, saving, and investing”.
This 2017 Tearsheet.co article explains how MoneyLion’s algorithms give a 360-degree view of users’ personal finances, determining when its customers get paid, what they spend their money on and identifying recurring expenses like subscriptions. Then it makes recommendations for money saving, and displays electronic cards and blog posts offering personalised financial information to customers depending on their activities, habits and how they interact with the app. The approach makes sense with young customers for whom “services that aim to give a sense of personalised control over finances are appealing, especially when they are put in context with consumers’ wider life goals and lifestyles”.
A new feature announced in 2017 and reported here by bankinnovation.net sends a push notification when a MoneyLion customer is likely to have an overdraft and incur a fee, based on information calculated in the algorithm.
3. Capital One
A pioneer of data mining, personalisation and AI in banking, Capital One shows innovation across the board with its “intelligent call routing system” dating back to the 90s, as well as its personalised credit card offerings, and continual analysis of buyers’ habits and demographics in order to cross-sell the right product at the right time, at the right price.
Capital One’s Second Look program, to take one small, current example, monitors customers’ spending habits to help them spot potential mistakes and unexpected charges. Customers might receive a notification on their phones alerting them to spending increases on their power bill for instance, and are sent a graph via the app showing how much their bill has increased from the previous month. If the customer is not happy with the charge, the bank provides instructions on how to dispute it.
This mobile banking app uses a data analytics system called CRED, which as their 2012 blog article explains, creates a central profile of each customer, and gives real time advice and insights on a feedback loop each time the customer makes a purchase with their phone, helping give greater control over their finances. As the customer makes smart saving decisions, their CRED score goes up and their fees go down. Users’ CRED scores also go up when they tell their friends about Moven on social media.
In 2015 Forbes reported that the bank also uses “gamification and behavioral design” for a feature called “Impulse Savings”: users receive “Lock Away Savings” prompts to encourage them to save extra money if they’ve spent less than usual in a given period. There’s also an emergency cash feature that offers a cash advance (with fees clearly explained) if a user enters a restaurant or grocery store where their average spend is more than the money they have available. The featured is backed by GPS technology and the user’s CRED information.
5. Zions Bank
Not all data needs be harvested internally. As early as 2011, Utah-based Zions Bank was using business intelligence software that gathered insights about the growing Hispanic and Asian communities within its geographic footprint. The software uses data from the Census Bureau, the Bureau of Labor Statistics, the Department of Labor, and other government sources, as well as syndicated data and proprietary data and modeling. It then monitors the subjects’ education levels, home ownership, affluence and other factors, breaking the segment down into groups and identifying financial needs for each.
As an example, Zions’ cheque-cashing product was developed based on data gathered and was then offered in areas showing high demand. The software also showed the bank that smartphone banking is preferred over online banking within the Hispanic community.
Regardless of a financial institutions size or their heritage, these brands prove that personalisation is possible and an essential part of the new age of customer service.