From Customer Centricity to Customer Intimacy: The Era of Hyper-Personalization

1. Opportunity for Financial Services Institutions: Building Trust and Lifelong Client Relationships

Hyper-personalization goes beyond one-time marketing events. It is about harnessing the long-term drivers of growth and prioritizing customer lifetime value. This is achieved by utilizing data and analytics collected at each customer touchpoint, transforming them into sales opportunities with the right content, delivered at the right time through the right channel.

To deliver hyper-personalized experiences, businesses must focus on data, specifically in the collection, organization, and analysis of data. Predictive analytics and algorithms play a crucial role in determining the products and services of interest to customers at different points in their lifecycle.

By leveraging data and technology to comprehend and anticipate individual customer needs, businesses can craft highly targeted, efficient products and services that drive improved revenues, margins, customer advocacy, and loyalty.

2. The Three Converging Driving Forces Behind Hyper-Personalization

1. Increasing Revenues: Traditional marketing strategies frequently yield limited success due to their arbitrary and impersonal campaign timing, their primary focus on product sales rather than addressing customer needs, and their tendency to prioritize transactional relationships over recognizing the long-term value of partnerships. Our research and case studies indicate that companies experiencing rapid growth generate 40 percent more of their revenue from personalization compared to their slower-growing counterparts.
    
2. Customer Demands: Customer loyalty is currently at an all-time low. Purchasing behaviors have undergone significant changes since the pandemic. Customers now expect to be recognized and heard and to have their needs met on their terms in terms of channels and timing. Additionally, the impact of rising inflation and reduced purchasing power means that customers seek targeted promotions and incentives for their loyalty.
    
3. Technology and Data Monetisation: Hyper-personalization represents a customer-centric, data-driven, and highly focused marketing approach that contrasts with a one-size-fits-all mass marketing strategy. It is true one-to-one marketing, in contrast to segmentation that targets groups of people rather than individuals. This approach hinges on effectively utilizing the data collected, which includes both quantitative and qualitative data, and harnessing Artificial Intelligence (AI)/Machine Learning to predict behaviors, needs, and purchase patterns. 

3. Where To Start the Journey: It Is All About Data and Tech Disruption

With the growing abundance of consumer data, the initial decision to be made is selecting a handful of capabilities that will both improve the customer experience and set the brand apart. Following that, the next challenge is deciding whether to develop these capabilities in-house, acquire them, or establish partnerships with the extensive ecosystem of fintech and InsurTech disruptors. To arrive at effective decisions, financial institutions should follow the steps outlined below:

1. Knowing Your Customers: Hyper-personalization requires a strategy centered on understanding both human behavior and data. This approach combines a company's proprietary data with third-party behavioral data, bridging the gap between quantitative and qualitative analyses. This synergy empowers companies to design tailored services and products that cater to the entire customer journey.
   1. Data Collection: Financial institutions have access to a wealth of information about their customers, extending far beyond traditional socio-demographic data. This includes data from open data, open finance, open banking, social media, purchase history, consumer trends, and browsing history. This wealth of data empowers them to create highly personalized offerings, effectively shaping a “market of one.”
   2. Assembling and Analysing Data: Utilizing data lakes, data extraction layers, and PaaS, both financial institutions and fintech/insurtech companies gain the ability to access customer data from various sources through APIs, bypassing outdated legacy systems. These platforms are then equipped to develop scalable user application "apps" that deliver personalized experiences.
       
2. Designing a customer journey that spans the entire life cycle and encompasses key life events. Each life event triggers new needs or requirements that can translate into sales opportunities. For example, a daughter preparing to study abroad may require a bank account with preferential Forex rates, a son turning 16 might need insurance coverage on his parent's car, or a couple planning to marry may be considering purchasing a property and opening a joint account. Additionally, individuals setting up a business will have financial planning needs.

Financial institutions already have access to this data. However, the key lies in using this data to anticipate these life events and simplify the customer experience. It involves employing a comprehensive range of solutions and providing content, advice, and guidelines that foster loyalty and boost the adoption of products.

3. Developing a Digital Strategy: 

Once a company gains access to real-time data at critical junctures in the customer journey, financial services companies must familiarize themselves with the array of available solutions. This knowledge is crucial for crafting a business case that informs whether to build, buy, or partner.

Another benefit of cloud platforms and other sandbox environments is that they allow for rapid and agile design of proof of concepts. This approach allows for early value demonstration and accelerates the learning process, facilitating more informed investment decisions.

4. Conclusion

Hyper-personalization, in simple terms, is how financial institutions demonstrate to customers that they are recognized as individuals. This is achieved through the utilization of data and technology to establish a personalized market for each customer, which is closely linked to brand loyalty.
 

^{© Copyright 2023. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.}