By Rob Heiser
Millennials and the need for responsible marketing in 2017.
Bank executives are investing considerable time determining the best way to reach, attract, and retain millennials. And for good reason. According to Pew Research, the millennial generation—born between 1981 and 1997—is now the largest generational cohort, at over 75 million strong. To bankers, millennials, with their growing and fluid set of financial needs, represent the primary fuel for growth over the next decade and beyond.
The focus on millennials is a sound strategy. However, there are storm clouds on the horizon for community and regional banks. According to the J.D. Powers 2016 U.S. Retail Banking Satisfaction Study, “Big banks have been most successful at acquiring and satisfying millennials,” primarily due to their superior digital offerings.
So how should community and regional banks compete in 2017? By employing the same successful strategy to their digital channels that they use in their traditional channels—highly personalized service. And by making sure that personalization is based on real-time transaction analysis.
Millennials are digital natives. They’ve grown up in an era where the success of the leading Internet-based companies is defined by the level of real-time personalization delivered to users. Amazon, Netflix, Facebook, Pinterest, and others have conditioned millennials to expect—and ultimately demand—to be treated as an individual. The 2016 Segmint Consumer Banking Report revealed that 67% of millennials would welcome highly personalized messages from their bank. If Netflix is recommending new programs based on real-time viewing history, why aren’t banks offering services based on real-time transaction analysis? The digital white glove experience of services like these make it all the more frustrating when banks send millennials information that applied to them six months ago.
Banks are sitting on a trove of customer data that could allow them to anticipate their customers’ needs and determine the right advice or recommendation for each individual customer. The challenges are determining and delivering the messaging at scale and in a strictly compliant manner.
Determine financial need and the right message.
We hear a lot about big data and its potential for financial institutions. What we don’t hear enough is the realization of its potential. Why? Too much data creates overwhelming complexity. So, let’s turn the tables and focus on small data, where the combination of just a few data types and elements provide deep insight into a customer’s needs and intent. This includes:
- Account Holdings: Current and past relationship and product usage levels as well as insight into share of wallet
- Bill Pay/ACH Transactions: View into important monthly expenses (e.g., mortgage, rent; loans) and relationships with competitive institutions
- Debit and Credit Card Transactions: Recent and recurring purchase behavior indicating what’s “top of mind” and why the person is in the market for a certain financial product
- Bank’s Public and Private Site’s Page Views: Financial intent, what a customer is looking for
A few examples will bring to life how bank marketers can deliver highly personalized, timely, and relevant messaging using a limited data set.
Delivering at Scale and Securely.
These examples demonstrate that with the right data, determining need and the relevant message to millennials can be straightforward. However, to execute at scale and in a controlled and strictly compliant manner requires sophisticated data handling, analytics, campaign management, and digital delivery technologies. Banks will need to leverage a technology that fully integrates these complex functions. When choosing a provider banks should ensure the solution:
- Requires no personally identifiable information (PII) to avoid the bank’s exposure to a data breach.
- Securely ingests and handles all relevant data sources paying particular attention to its ability parse and effectively aggregate the rich transaction level data.
- Employs predictive modeling techniques developed by data scientists with deep experience in retail financial services.
- Dynamically updates customer profiles in real time to ensure banks offer products and services that meet an actual need or desire.
- Delivers coordinated messaging across all channels to ensure a consistent customer experience across all contact points.
- Provides real-time performance reporting and campaign management to allow for instant campaign rule adjustments to optimize results in real time.
Simplifying, not selling.
The conventional wisdom is that millennials are willing to trade privacy for personalized service. But the truth is more nuanced. A survey by Atomik Research reported that over 80% of millennials believe it’s vitally or very important that PII and financial information be shared only with authorized parties, while they are much more free with other information like social and purchasing behaviors. The study also showed millennials rank financial institutions highest in terms of trusting them with their data.
Millennials are willing to allow banks to mine their private data in return for personalized service. However, they will hold banks to a high standard. Bank marketers must develop and execute their personalization strategies in a deliberate manner, which includes:
- Ensuring personalization algorithms are finely tuned so only highly relevant messages are delivered to customers. Not sending any message is better than sending an irrelevant one.
- Managing contact frequency and campaign rules to ensure customers are exposed to only a limited number of the most pertinent recommendations or advice to avoid overwhelming or confusing them.
It’s important to keep in mind that the goal of personalization is to simplify customer’s lives by giving them information that is relevant to what’s happening in their lives. Sales will naturally follow when real-time transaction analysis is done right.
Controlled and responsible marketing.
Up to this point we’ve been focused on digital channels, but the same principles apply to offline customer contact points as well. Once the personalization engine is in place, bankers should consider integrating it into the teller system, call center, and other applicable channels to ensure consistent service across channels.
An effectively implemented omni-channel personalization strategy gives banks much more control over marketing execution. We’ve recently witnessed the vast fallout when a bank’s sales and marketing efforts run amok. Relying on sophisticated predictive modeling—rather than the varying intuitive insights of all frontline employees—will help ensure banks are truly providing the right recommendation and advice at each customer interaction.
Looking beyond millennials.
Millennials are challenging bankers to rethink how they do business. The largest banks have responded and are winning market share. Now is the time for community and regional banks to respond in earnest and do what they’ve always done best—win by providing great personalized service.
With the recent advancements in data-driven marketing technology, bankers can confidently automate delivering personalized advice at scale through all digital and traditional channels. Millennials may be the cohort that is forcing banks to change, but what customer doesn’t want great service? Bankers need to make 2017 the year they meet the demands of the millennials—and by extension, exceed the expectations of their other customers.
Rob Heiser is CEO and co-founder of Segmint, Inc., a provider of data-driven marketing technology that securely activates enterprise data to intelligently deliver personalized engagements measured across all channels.