Solving the personalisation paradox
We live in an age of personalisation.
The battle for attention is fierce, and brands everywhere are embracing new forms of digital engagement in order to attract and retain customers. In a 2018 survey of more than 600 business executives conducted by Harvard Business Review, 47% said their organizations were already executing tailored customer communications successfully across all channels.
For financial services firms, personalising the customer experience is no longer a nice-to-have. Customers have come to expect individualised experiences both on and off-platform.
It’s no exaggeration to say that brands which fail to engage with customers on a deeply personal level risk losing business to competitors with a more sophisticated understanding of what people want. At the same time, firms must remain cognizant of issues surrounding consumer privacy, treading the fine line between personalisation and intrusion. Call it the personalisation paradox.
A shot at redemption
Where there is reward, there is risk. Personalisation comes with huge commercial upside, but it’s a complex issue that poses serious questions about data ownership and privacy. Many firms are too busy trying to engage customers and grow their bottom lines to consider these complexities and the risks – both operational and reputational – they pose.
In the aftermath of the Global Financial Crisis that began in 2008, banks have worked hard to regain the trust of consumers, with mixed results. The Coronavirus crisis offers firms a chance to put the past behind them – it’s a once-in-a-lifetime opportunity to reinvent themselves by restoring relationships with individuals, families and businesses by offering them the service they deserve. After all, banks are the transmission mechanism for government stimulus, funnelling capital to the “real economy” where it is desperately needed. It’s an awesome responsibility – one fraught with risk.
Personalisation to the rescue
We’ve previously written about data ethics in some depth. The ethics of automation and personalisation are complex, but we are yet to agree upon a universal ethical code for avoiding unintentional bias coming into algorithms and tainting the legitimacy of machine learning as a force for good. Negative headlines regarding data malpractice risk slowing the progress that’s being made across the financial services industry.
In the absence of a robust regulatory framework, organisations must proactively engage with the ethics of how data is gathered, managed and monetised. Here at Mudano, we believe that a robust ethical framework is essential in order for the data industry to move forward and achieve long term sustainable growth. And as long as ethical guidelines are adhered to, then data can be a powerful tool in financial services – not just for marketing, cross-selling or upselling, but providing the level of service that customers deserve.
The great stress test
Banks must tread carefully here. They will inevitably rely on personalised data and analytics to ensure effective channelling of financial support to those who need it most and facilitate the broader economic recovery in a way that is both targeted and even-handed. But they must not compromise the ethics of data management in their pursuit of growth.
Initial signs are promising. The pandemic blindsided most organisations, who are still scrambling to work out what it means to them and their customers. But for some, lockdown and the disruption that it’s caused has provided an invaluable testing ground for innovative new tools, techniques and frameworks, long in development.
As lockdown disrupted the economic fabric of normal life, forward-thinking firms were able to leverage machine learning to help customers in need. Through progressive use of data and analytics, they highlighted financial vulnerabilities – for example, problems paying mortgage obligations – and stepped in to assist. Data tools and techniques developed in the good times were stress-tested and revealed as robust and effective, clearly demonstrating the benefits of using data in a personalised way.
Starting a conversation
Now the initial panic has subsided and the industry is gaining visibility on winners and losers to emerge from this first phase of the pandemic, a great debate is underway around how to navigate the opportunities and pitfalls of personalisation.
Data is clearly critical to providing compelling customer experiences, but how far should you go? For Chief Data Officers and their teams, it’s an opportune time to broach the personalisation challenge, in all its daunting complexity.
Personalisation is a topic that goes beyond banking. It’s something that touches every aspect of society since technology is now so deeply embedded in our lives. It promises great things – and carries massive risks. So it’s essential that financial services firms engage with this topic on their own terms. And there is no better time than now.