How can personalization help the banks of today?
Living in a fast-paced digital age, technological advancements are made every day in different industries; however, the bank’s processes are rooted in legacy systems and these methods do not cater to the ever-evolving needs of the consumers today. Banks need to understand their customer’s better to meet their demands.
A 2021 survey of American consumers by fintech company MX Technologies Inc. found that 50% do not think their banks help them become financially strong. Consumers today want to be understood by their banks. Recently McKinsey & Company found that 71% of consumers expect companies to deliver personalized interactions, while 76% get frustrated when this doesn’t happen.
In the last few years there has been a rapid rise in challenger and neo-banks, which are digital only banks operating solely via mobile apps. The Covid -19 pandemic has also largely affected consumer patterns and habits, According to McKinsey, the use of mobile banking channels increased by 20-50 per cent just within the first few months of the pandemic. The young generation has shown the most interest in such innovative technologies and this provides a unique opportunity for banks to tap into. Galileo Financial Technologies found in their “2021 State of Consumer Banking and Money” survey, that 62% of consumers were “somewhat” or “highly likely” to switch to a digital-only bank, with Millennials (77%), Gen Z (72%) and Gen X (55%) expressing the greatest likelihood of making this switch.
However, banks are not doing enough to advise their customers in their financial decision making. According to another survey by McKinsey, out of the 70% of respondents who expressed openness to using digital channels, only 20-30% have purchased a banking product via a mobile app. Banks need to empower themselves with modern technology to be able to establish a deeper relationship with their customers and target their audiences with personalized ads and customized offers according to their preferences. Personalized solutions that are seamlessly imbedded in the user’s digital journey results in greater customer engagement, which enables banks to serve their customers better – ultimately increasing consumer satisfaction.
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