Marcel Van Oost on what he believes will be one of the most prominent trends in financial services over the next few years – and the fintechs making it happen
Netflix, Amazon, Spotify and other tech giants are at the forefront of hyper-personalisation strategies. They apply digital tools to offer an omnichannel service that is more tailored to the consumer every time he or she uses it.
I’d like to introduce you to some fintech startups that are helping banks lead the way in this area, too. But, first, what is hyper-personalisation, really?
It combines real-time data and cutting-edge technologies like artificial intelligence (AI) to deliver more relevant product or service information to users. It allows companies to combine all this data to create comprehensive profiles, aka personas, and offer the most relevant recommendations for products and services.
According to Accenture’s 2019 Global Financial Services Consumer Study, consumers have a strong appetite for greater personalisation from banks and insurers. The report pointed out that this should go beyond just highlighting a consumer’s spending patterns and should, instead, extend to offering genuinely-tailored advice and offers.
Customers choose digital products that they feel connected to, products they can engage with, products that make them feel good. US financial educator EverFi tells us that ‘89 per cent of consumers choose financial institutions based on how well they incorporate personalised experiences’.
A common problem in the banking sector is almost infinite product variants that customers can choose from: some may feel overwhelmed with this range of options, but personalisation tools can lead them to relevant products or services in a straightforward way. A major advantage of hyper-personalisation in banking is that it allows banks to remove any obstacles in the sales funnel and create a seamless shopping experience.
Mainstream banks are already offering some degree of personalisation in their banking services. For example, more than a million Bank of America customers use an AI bot called Erica in their app, which helps them to pay bills, shop and more. But the real game-changer in banking services is the fintechs taking this feature to the next level.
US fintech startup Otomo claims to have reframed banking around each customer’s life, wants and needs. With its patented technology, partners can empower their customers to easily organise money in relation to their goals, preferences, comfort levels and earning styles.
With Otomo’s conversational user interface (UI) and allocation engine, customers can, for example, decide which percentage of their income goes into which savings pot and send it there automatically, unless their balance falls below a certain pre-set level.
“We define hyper-personalisation as a framework to deliver comfort and efficiency on an individual basis at scale,” says Khellar Crawford, founder of Otomo.
“Rather than solve for the average person, Otomo was created with the financially vulnerable in mind. We built in flexibility and safety nets to provide control and peace of mind to those who need it most. The result was a new universal basic. The opportunity is to offer people more than predictive, one-size-fits-all systems. It’s especially important when it comes to something as vulnerable as money,“ adds Crawford.
Another US fintech using hyper-personalisation is Fanbank, the first-ever personalised commerce platform for small businesses. By adding Fanbank to their point-of-sale (POS), they can intelligently recognise customers and drive their next purchase. Remembering customers creates a personal connection with every transaction and increases customer visits, spend and, ultimately, profit.
Fanbank uses machine learning (ML) and small business owners can build their own unique campaign or leverage major brands to promote their business much more cost-effectively.
Millennials and Gen Zers
Taking financial services hyper-personalisation to millennials and Gen Zers is a different game altogether. These new generations are not only digital natives but also more financially-savvy. Plus, they have a different way to spend their money – both in how they transact and what they choose to spend on. Spending more consciously, paying attention to their own carbon footprint and choosing brands with the same values as them are extremely important for millennials and Gen Zers.
I’ve previously written about a new breed of online banking services for under-18s and young adults that are placing the responsibility on their young users. In many cases, adolescents and young adults will have full control of their spending and earning. This greater financial responsibility, combined with a more environmentally-conscious way of life, requires a different approach to hyper-personalisation, such as that taken by Mitto, a Spanish neobank focussed on teens and young adults. On top of offering a high level of personalisation with tools that pinpoint spending habits and maximise the ways in which users can save money, Mitto has a business ethos that focusses on conscious spending and reducing carbon footprints.
It offers a carbon footprint measuring tool that tracks the CO2 impact of their users’ purchases and compares them with those of their friends. By understanding the impact of each of their purchases or payments, the bank can nudge them towards more sustainable behaviour. Mitto also offers discounts on sustainable brands and services, bringing together consumers and brands with the same values.
With a tag line of ‘Awake the Activist Within’, founder and CEO Marcos Cuevas has been quoted as saying that the bank aims to create ‘the biggest marketplace on sustainability, the one-stop shop for everybody to make it easy to respect the planet’. A newly-launched Crowdcube campaign will see it attempt to expand beyond Spain to the rest of Europe.
Hyper-personalisation is one of the strongest financial services trends in the coming years. Fintechs investing their time and creating a product or service that offers a high level of it will be the winners in the banking battle.