Personalized banking – are you sure you’re not crossing the line?

Are your personalized banking efforts going too far?

If banks want to stand out from their competitors, offering a unique and exciting customer experience is obviously a must. And delivering a more personalized service across every channel is one of the best ways to do this.

This is made easier by the fact that there is now more data to work with than ever. Both individual customer data and information about wider trends can be used to identify patterns and suggest what products and services might be most beneficial to a specific customer.

Banks mustn’t underestimate the power of this information, as it is very easy to misuse it and cross the line between giving customers a value-added service and being intrusive.

The line between ‘cool’ and ‘creepy’

The struggle to find this balance isn’t especially new. A few years ago, there was an anecdote circulating of an angry customer who walked into a Target store, demanding to know why they’d sent his teenage daughter vouchers promoting maternity clothing and baby cribs. The manager apologized, but when he phoned the customer a few days later to follow up, he found the customer apologizing to him for being angry, having had an enlightening conversation with his daughter, who’d admitted she was in fact pregnant.

The idea that a retail store can know its customers’ most personal details even before their closest family will undoubtedly disturb many people, and shows the perils of even the most well-meaning personalization efforts. In Target’s case, the customer wasn’t buying products explicitly related to pregnancy – but the brand knew from its analysis of vast amounts of previous data what certain changes in people’s buying habits could indicate, and reacted accordingly.

Banks, like retailers, have access to a huge amount of data on people’s personal lives – they can tell when someone moves in with their partner, when they’re looking to start a college or retirement fund, and much more.

All of this provides great potential for banks to offer unique, tailored messaging. Do an individual’s payment records show frequent transactions at garages, for example? This could indicate they often have car trouble, so why not offer them a deal on a car loan? But banks must be very careful in how they go about this to avoid crossing that line into being intrusive, or even coming across like a stalker.

Building up trust

A key part of this is building long-term relationships and being seen as a trusted guardian of customer data. A recent white paper by One Connected Community (OOC) noted that customers are generally happy to share personal information with companies – provided they can be sure they will get something of value in return, and the data will not be misused.

For instance, Apple was highlighted as a business people will share details with, as customers appreciate its famous refusal to pass it on to government institutions. This reinforces the idea that personal data is being used for the customer’s benefit only.

Taj Sumal, head of digital solutions at Royal Bank of Scotland, told OOC that because people’s finances are so personal and emotional, trust will have a much bigger role to play than in other sectors.

“Personalization is vital in building trust and is a real differentiator,” he said: “Over the next five years there‚Äôll be a much greater emphasis on generating trust through real personalization. For that you must truly understand what works for your customer.”

As people become more aware and more protective of their data, banks must take greater care than ever when it comes to how they use it. It may be tempting to delve deep into people’s activities to find more personal and relevant offers, but they’ll have to ask if the potential rewards for this are worth the risk if they do cross the line.

Written by Alastair Hogben

Alastair Hogben

Alastair Hogben is a Senior Software Marketing Manager, responsible for the marketing of NCR's Financial Services enterprise software portfolio with a specific focus on CxBanking and enterprise-enabled applications.

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