In today’s world, where the evolution of digital technology, AI and machine learning algorithms has influenced human lives, the concept of AI-driven, personalized experiences across customer touchpoints with the business has been gaining traction for some time.

“85% of businesses say they are providing somewhat personalized experiences to customers, and 60% of consumers agree with that.” – Twilio Segment Report

“72% of customers rate personalization as ‘highly important’ in today’s financial services landscape” – Capco research report “Insights for Investments to Modernize Digital Banking”

The application of personalization is becoming ubiquitous now – from the kind of articles that search sites show us, to the posts and reels that come in front of us on social media, to the kind of products that get recommended to us everywhere on the Internet. Personalized recommendations have become the smart marketer’s greatest tool and weapon for reaching out to their customers and creating a differentiation from the competitors.

For early adopters of personalization in the banking sector, the focus today is on investing in increasingly better and faster ways of personalization. Personalization today combines features bank customers want and are willing to pay for as inspired by digital banking with the human touch that still remains vital for effective customer engagement. Some of the banks, however, are still new in the journey and trying to formulate the strategy of AI-driven personalization.

Below we discuss some of the avenues where the CMO’s office has been able to unleash the power of AI-driven personalization and reap huge benefits from it.

1. Personalized Product & Service Recommendations

Retailers have been using personalization extensively to sell to and engage with their customers better. While e-tailers pioneered this space, we are starting to see companies across Banking, Telecom, FMCG & Electronics sectors, etc. using the power of personalized recommendations to enable their cross-selling and up-selling campaigns.

Banks look at factors like demographics, income & employment, transactional activity levels, spending patterns, debt worthiness & repayment, etc. to build a 360-degree view of their customers. Using this intricate knowledge of their customers’ financials and spend behavior, they are able to create extremely personalized offers aimed to provide the customers with the right financial tools suiting their lifestyle and needs. The level of precision helps the banks not just attract customers better, but also trim down the costs of traditional mass-reach channels like call centers.

Wealth Management firms are using similar techniques as well. As part of a more services driven business, these firms are helping financial advisors cater to investors with more personally tailored advice. Based on the knowledge of the investor’s behavior and life goals, advisors get access to the recommendations around the next-best-action to take to their clients. Also, by understanding the advisors themselves, the WM firms are able to offer them a suite of services more aligned with the advisor’s personal style of research and portfolio building.

2. Personalized Marketing Communication

Not only are companies able to tailor their products and services, but they are also able to personalize the way they communicate these to their customers. Measuring the effectiveness of past campaigns on customers, marketers can tweak some of the below levers for marketing personalization:

Messaging: Depending on the buyer segment, the messaging for a specific product can be focused on offering discounts for the discount-diggers OR for providing detailed product features for the heavy-research users OR for product comparisons for the more flexible early-stage users, etc.

Channel Personalization: Using Channel Affinity models, marketers run focus campaigns targeting the right customers on the right channels. Banks, for example, target customers having high lifestyle spends with credit card display ads on shopping sites. At the same time, the HNI customers get offered a more personal touch with the relationship managers calling them with special customized offers.

Communication Time personalization: Knowing a customer’s travel search history, Telecom companies can offer international roaming plans at the perfect time. Banks also use this strategy to offer instant lines of short-term credit to customers with a low account balance. Also, in general, based on an understanding of when a customer is most active on social media or their smartphones, marketers can run social media campaigns or send notifications to the customer for maximum impressions.

3. Personalized Digital Experiences

Beyond trying to influence the buying behavior directly, the most effective form of personalization to be offered is to update the way customers engage with the firm on a regular basis. By knowing what customers are doing on the company websites, the marketers can get a far deeper understanding of the customers’ needs and expectations. This particular vision led the CMOs to realize the extremely inadequate digital behavior tracking that companies have on their own portals and applications. What followed was a surge in digital data collection platforms like Google Analytics and Adobe Analytics. A few companies have managed to deploy these solutions effectively to understand their customers better than ever. This led them to build models for Journey Personalization, which aimed at providing the customers with the fastest path to conversions based on their interests and preferences.

Businesses that have managed to leverage the power of personalization, have consistently been able to create a differentiated positioning from their competition. This has allowed them not only to attract customers away from competitors but also command a premium price at the same time. The clear business advantage has led them to invest heavily in more use cases and enhance their models from good to great.

Incedo LighthouseTM – A platform to natively support personalization use cases

With our proprietary platform Incedo LighthouseTM, we help clients successfully deploy multiple use cases for AI-driven customer personalization. The platform brings together Big Data (millions of customers, daily updated, across several dimensions), data engineering and data science in an efficient use-case centric manner in self-serve mode. The platform can serve multiple use cases for personalization together, e.g. cross-sell offers with the right channel for right customer cohorts at specific times of the year. This leads to faster and automated implementation of the journey:
– From data to critical insights: e.g. identification of cohorts of customers that would respond to deep discounts
– And, From insights-to-actions recommendations e.g. evaluating statistically the required level of deep discounting to optimize ROI

Significant success of AI-driven, personalized recommendations has not come without its fair share of speeding tickets. Couple of examples include:
– Compromising Personally Identifiable Information (PII) inside the machine learning lifecycle, thus jeopardizing customers’ privacy
– Inadvertently introducing biases into the recommendation algorithms, leading to discrimination and unfair business practices

Incedo LighthouseTM helps in protecting against these issues in a very direct manner – more on that in the next blog!

Udit Agarwal
Udit Agarwal
Senior Engagement Manager, Financial Services
Recruitment Fraud Alert