From playlists to portfolios: There’s power in personalizing bank customer relationships

You’ll find this article and additional insights on growing deposits and attracting customers in the BAI Executive Report: Strategies for customer growth, deposits and retention. 

In a world where music playlists curate our moods, streaming platforms recommend movies tailored to our preferences and social media algorithms fine-tune our feeds to reflect our interests, the demand for personalized experiences has become an intrinsic part of our daily lives. This very essence of personalization is now a defining factor in the realm of banking, steering the course of customer growth and retention—and the direction of your balance sheets.

Traditionally, banks have relied on customer segmentation within their marketing strategies to ensure relevance in their communications and offers. But as consumer expectations and needs continue to drastically shift, the question arises: Is segmentation alone sufficient to drive deeper customer relationships?

Striking a chord with personalization

Much like how Spotify or Apple Music playlists can adapt to individual music tastes, banking is increasingly embracing tailored financial “playlists” that resonate with each customer’s unique financial aspirations. This shift transcends traditional banking, offering not just financial services but harmonious experiences that resonate deeply with individual needs.

The echoes of personalization can be heard in the way people expect banks to understand and cater to their distinctive needs. According to Salesforce’s State of the Connected Customer Report, 73% of surveyed customers expect companies to understand their unique needs and expectations, while 56% expect offers to always be personalized.

And according to the Bain Retail Banking NPS Survey, if you’re not meeting these expectations, you may be losing out on valuable business. The results show that a bank’s ability to personalize offers and communication directly correlates to its overall loyalty score.

The cinematic journey of customer relationships

Consumers now seek more than just transactional interactions with their banking institutions. They desire a financial journey that mirrors their individual story—one that guides and supports them through life’s financial ebbs and flows.

Think of personalized banking experiences as a script designed for each customer—a script that evolves and adapts with every financial milestone. Much like how a captivating movie keeps viewers engaged by resonating with their emotions, personalized experiences aim to evoke similar sentiments in customers.

This transformative approach presents an exceptional opportunity for banks to create symbiotic relationships where customers feel understood and valued, fostering lasting loyalty and mutual benefit—a true win-win scenario for both banks and their customers. McKinsey & Company consultants stress that the benefits of this approach could lead to substantial reductions in customer acquisition costs, increases in marketing ROI, as well as improved performance and better customer outcomes.

However, the real evidence lies in the results of your peers.

That’s why having easy access to and effectively using data has become the cornerstone of success. In fact, data analytics ranks among the top three technology investments for financial institutions over the next two years. Even still, 73% of financial executives surveyed by Capgemini said they struggle to turn data into useful insights. Marketing automation and data-powered business intelligence solutions can streamline data analysis and audience segmentation, creating personalized outreach quickly and thoughtfully while uncovering additional insights into your customers to generate a full picture profile.

The grand finale

At the heart of personalized banking is a harmonious medley of strategies.

Approaches might include meticulously tailoring product portfolios as if they are the next chart-topping album, communicating with the finesse and precision of a screenplay script and leveraging customer data as masterfully as social media platforms curate personalized feeds.

Joseph Mearn is Director, Product Management at MeridianLink.