There is a disparity between the level of personalized experience consumers expect and the actual personalized engagements banks and credit unions deliver.

According to a Deloitte Consumer Review, “Consumers’ power is consolidating with improving access to information, ever widening choice of goods and services, and opportunities to share their experiences more widely.” As the study so accurately describes, consumers have become critics and creators and, as a result, demand more personalized service.

However, many financial institutions struggle to deliver such personalization. They have not equipped themselves with technology that provides the insights to fully understand the needs and financial activities of their customers and members. And because of this, they are not able to quickly identify when their accountholders seek fulfillment of those needs elsewhere, resulting in missed opportunities.

How can financial institutions bridge the gap between consumer expectations for a unique experience and their current struggle to extract relevant insights from accountholder data? Let’s explore three options to use available data to deliver the personalization consumers expect. 

Look for the Consumer Narrative in Transaction Data

Banks and credit unions have a foundation of knowing the products accountholders have with them and the intrabank transactions processed. However, those transactions provide only a sliver of the overall view of their full financial profile.

To obtain a more holistic view of an accountholder’s unique financial narrative, banks and credit unions should analyze the entirety of their transactions: online bill payments, ACH payments, incoming fund transfers and debit/credit card payments. From this aggregate view of transactions, the institution can begin to reveal the accountholder as a financial entity – not only with their primary institution but with other institutions as well, including retailers and service providers that help manage their lives.

When analyzed properly, transaction data identifies a consumer’s life priorities, depicts patterns in spending behavior, and predicts current life stages, such as having children, buying a house, sending kids to college, enjoying retirement and even signaling financial changes during the COVID-19 experience.

While Raddon worked with Pacific Service Credit Union in California, the data analysis of held-away credit card payments revealed an interesting trend during the pandemic. Leveraging just a single month of data, Kristin Dove, chief marketing officer and senior vice president of Member Acquisition and Engagement, and her team identified a unique opportunity to help their members. Reviews of the data identified members who previously were making uneven dollar payments to their held-away credit card accounts but had replaced those payments with even dollar payment amounts, and sometimes only the minimum payment amounts.

With a focus on providing personalized member experiences, the credit union began an outreach program to offer these members a highly competitive credit card coupled with a balance transfer option. Without the deep dive in data, Dove said, “We would have missed the opportunity to help our members in this time of need.” 

And this is how consumers want – expect – their financial institutions to engage with them. They want their institutions to know them in a way that will make a difference in their financial well-being. They expect their institutions to understand their motivations, financial needs and, most importantly, financial concerns.

This shouldn’t be surprising. Companies such as Amazon, Pandora and Netflix have demonstrated that customers respond to personalized interactions, and, not surprisingly, these organizations have outperformed their industry peers. Similarly, consumers expect their financial institutions to use available data to help them secure the right products, reach their financial goals and master their finances.

Curate Personalized Experiences With Transaction Data

According to a KPMG Advisory study on customer insights, “knowing your customers clearly, concisely and holistically is what will separate the winners from the rest.” The banks and credit unions that focus on understanding their customers and members will likely develop more meaningful relationships and, subsequently, curate relevant and personalized experiences. In turn, these institutions can realize strong growth and performance results through accountholder retention and product adoption.

In the battle for growth, understanding the accountholder is a prerequisite. And a critical dependency to this knowledge is transaction data. “It has currency; it has value. With it, institutions can target and craft deeply personalized experiences, execute quickly, and shape the relationships of the future. But without it, ‘institutions are left in the dark, relying on outdated assumptions and imprecise generalizations,” wrote Julio Hernandez, customer advisory lead, KPMG in the US.1

Develop Institution-Wide, Data-Informed Strategies

The data an institution stores about its accountholders’ financial transactions is filled with valuable and actionable insights that identify patterns of merchant spend, trends in lifestyle activities and interests, life events, usage of held-away products and services, and more.

This type of transaction data is available and plentiful within financial institutions. However, the data is often messy, cluttered, cryptic and infrequently standardized.

And the effort to analyze this data is significant. But so is the value. Condensing the billions of deposit account transactions processed into a distinct set of competitors and retailers is a mind-boggling task that banks and credit unions just don’t have time to take on.

However, when used appropriately, the data a financial institution has about its accountholders can influence every interaction the institution has with them. These insights feed data-informed strategies that power an ever-evolving engagement approach, which can result in increased profit and growth for an institution.

What will you do with the accountholder data you have? Learn more about Predictive Analytics from Raddon.

1KPMG International Global Customer Insights: Me, my life, my wallet 2020