One Size Fits Few: How personalised content will shape the future of Financial Service Providers
By: Applied Behavioural Economics At Genesis Analytics
Tags: Financial Services, Behavioral Economics, Marketing, Behavioral Segmentation, Personalized Content

From personalised Spotify playlists to Netflix movie suggestions, people are becoming more and more accustomed to personalised content. Now, clients are coming to expect this level of personalised content from their Financial Service Providers (FSP’s) too. Gone are the days where addressing clients by their first name in an email is enough to impress. FSP’s need to dig deep to ensure that the content they deliver is personalised too. Join us in this month’s Applied Behavioural Economics newsletter where we explore why FSP’s have been slower to adapt than other industries and how they can successfully create personalised content for their client base.

Why have FSP’s been slow to adapt?

There are two behavioural biases that help to explain why FSPs have been slower than other industries to create personalised content: status quo bias and overconfidence. For hundreds of years, the primary purpose of banks has been to accept deposits and prudent provision of loans to select customers. As such, careful lending decisions rather than customer service was at the forefront of the banking business model. Over time, banks have needed to balance a focus on prudence in lending with the need to improve customer service. However, complex systems and processes allow for status quo bias to prevail and makes changing the industry culture slow and sticky.

Moreover, FSPs tend to be overconfident about the loyalty of their clients. The baby boomer generation is known to be incredibly loyal to the brands they support and so in the past, FSP’s could count on these clients to stay with them for life. However, FSP’s cannot expect such loyalty from Millenials and Gen Z. Based on research done by Accenture of retail banking consumers in the United States and Canada, Millennials switch banks twice as often as other consumers. With an evolving customer base, it is time for banks to change their approach to customer service.

It’s adapt or fail: what can FSP’s do to catch up?

While FSP’s face a number of institutional challenges to rethinking their customer content strategies, they cannot afford to rely on outdated expectations of what their clients want. FSP’s need to create personalised content that is built upon a deep understanding of client behaviour. For example, some clients might prioritise the features of a banking application, whereas others may prioritise ease of use. Analysing how clients interact with a banking app will unlock insights that can powerfully inform the content they see going forward.

Behavioural segmentation is a valuable tool that considers not just who customers are, but what they do. It looks at patterns of behaviour and allows for customers to be grouped according to knowledge of, attitudes towards, use of and response to the product or brand. Various customer personas can be created, based on real data and insights, which encapsulate the business’s client base. Businesses use these personas to guide the personalisation of their content across the board: from acquisition techniques and communication styles through to loyalty programs and retention efforts.

Illustrative example of personas in an FSP:

Achieving an objective will look different for each of these personas based on the behaviours they exhibit. For example, if an FSP wanted to sell a Loyalty Program based on the three personas identified above:

The Time Maximiser would require concise communication with the cost upfront and an easy channel to sign up.

The Value Seeker would require benefits to be extremely compelling and salient.

The Brand Believer might require drawing on exclusivity and framing the Loyalty Program as suited to only the FSPs’ most valued long-standing customers.

With a large customer base and sticky processes and systems, FSP’s need innovative solutions to achieve the personalised content that customers are coming to expect from all of the brands that they interact with. As author Seth Godin suggests, “don’t find customers for your products, find products for your customers”.