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Financial Services—Banking on Personalization

The financial services market is going through a major shake-up right now. New disruptive challengers have come on the scene, and they’re giving the industry a run for its money. In addition, customers are more demanding and more informed, expecting convenience and simplicity, particularly on the digital side—online and via mobile devices. What can the financial services industry do to keep up?

Embrace Technology-Led Personalization

The rise of the marketing cloud, big data and intelligent technologies such as artificial intelligence (AI) is allowing industries to engage with their customers on an extremely personal level. Unfortunately, the financial services industry has been slower to embrace this technology-driven business approach. The recent Digital Banking Report found that “roughly 40 percent of all but the very largest financial institutions consider themselves ‘static,’ meaning they offer no personalization within their application.” This seems like a contradiction as better customer experience (CX) through personalization drives more revenue and improves loyalty, affinity and lifetime value, which should all appeal to this money-conscious cohort.

The arrival of completely digital banks (called “challenger banks” in the UK) is dragging the industry, albeit unwillingly, into the digital world. Banks such as Atom and Monzo offer mobile-only banking, which means better interest rates and lower fees. If banks want to stay in the game, they will be under pressure to become a customer-centric business and to change their strategy in order to champion data management and use technology to deliver personalization at scale.

Thinking Beyond Channels

Poll a room full of individuals on whether they’ve visited a physical bank location in the last month and you’re likely to get only a small show of hands. Yet, a study found that the average customers have 10 digital interactions per month with their main bank. While interactions are happening less frequently at physical locations, banks can still have meaningful interactions with customers if the organization can move beyond thinking in channels. Most businesses are marketing to customers based on rules and decisions designed per channel. However, if the bank’s technologies are disconnected across channels, they lose sight of a customer as soon as the customer moves from one channel to another—say from mobile to laptop. Without a single customer view of the customer journey, it’s impossible to know how to best personalize in context.

So, what’s getting in the way? Two things: disconnected data and the lack of automated decision-making from a central source. True personalization considers real-time behavioral data from web browsing sessions, purchases or other expressions of intent both from in-person engagements and interactions via kiosks, email, mobile applications and websites. But it goes well beyond that because to understand each customer’s journey, financial institutions also need to integrate legacy and transactional data locked in silos, such as past orders, as well as “event” data, such as missed payments. By uniting data (behavioral, transactional and historical) into a single view of the customer, the bank can maximize cross-selling by managing the communication stream across multiple channels and become truly customer centric.

As customers become more technologically savvy, banks that evolve to accommodate them will win.

Use AI to Personalize at Scale

The National Business Research Institute 100 financial services executives and found that only 32 percent of the group were using AI technologies such as predictive analytics, recommendation engines, voice recognition and response. So, why should a bank consider AI? Well, the main reason is to enable personalization at scale, which will increase revenue. Traditionally, most banks will think of their customers in segments: They divide customers into groups and tailor offers and communications accordingly. Slicing customers into these segments with modern marketing tools makes them progressively smaller until the number explodes and becomes too complex to manage.

When you get down to individualized offers of 1:1 personalization for millions of customers, you get an “audience explosion”—it’s simply too difficult to serve each customer on your own. Automation alone is not adequate, which is why AI is required to help personalize at scale. However, you’ve got to see beyond the hype and focus on value for your customers, which includes the short-term incremental revenue and the long-term rewards. For example, if a customer starts the process of opening a savings account online but doesn’t complete the transaction, this will trigger the smart AI-based solution to determine if the bank should take the action. The solution might prompt the bank to send a follow-up email to set an appointment at a physical branch—and hopefully seal the deal.

Some banks have already started to invest in virtual assistants to interact with their customers via chatbots, which predict and react to changes in customer behavior with AI. The power to serve every customer in this way across every channel gives banks unlimited potential to grow their business.

Embrace Open Banking

Wouldn’t it be great if you could successfully sync banking applications with other personal finance apps? This is an ongoing pain point for many consumers and the UK is setting out to solve this customer experience problem through the introduction of the Open Banking Standard. Under this new legislation, “banking data will be shared through secure open APIs so that customers, be it individuals or businesses, can more effectively manage their wealth.” In other words, banks will be able to share financial data with other financial companies in a secure fashion so that customer records are accurate across all their financial accounts and applications. This way, customers can manage their accounts and make financial decisions without having to move between platforms. As mentioned earlier, this has also led to a wave of new challenger banks that only offer digital services, which will disrupt the traditional banking landscape.

While the U.S. has been slower to embrace an open banking standard, some individual financial institutions are making strides to adopt this concept. Last year, Citibank announced the launch of a global API Developer Hub and Wells Fargo recently announced a partnership with Intuit to share customer data through APIs.

As customers become more dependent on mobile financial transactions, banks that offer real-time, data-sharing capabilities will win.

Dave O’Flanagan

CEO and Founder of Boxever @daveof

Dave O’Flanagan is CEO and founder of Boxever and is an experienced software executive with over 12 years experience. He has developed and managed enterprise software in a number of verticals including mobile telecoms, travel and cloud. You can contact Dave at

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