Hyper-personalization in banking, finance, insurance, and investment (BFSI) is quickly becoming a key differentiator with a high impact on the bottom line. In a market where competition is intense and customer loyalty is increasingly challenging, offering personalized experiences can be the deciding factor for success. Hyper-personalization utilizes UX, CI, real-time data, artificial intelligence (AI) and other approaches and technologies to provide highly personalized products and services that meet customers’ specific needs, improving customer satisfaction and loyalty.
Digital transformation in the BFSI sector has enabled financial institutions to embrace hyper-personalization more effectively. By utilizing big data, advanced analytics, and AI, these institutions can gain deep insights into customer behavior and preferences.
In this article, we will explore the importance of hyper-personalization in the BFSI industry, detailing the key components and benefits of this approach. We’ll discuss how open finance enables a more integrated view of customer finances, the importance of accurate, high-quality data, and how advanced analytics, including AI and machine learning, provide valuable insights to anticipate needs and personalize offerings. We’ll also look at the importance of effective targeting, creating and delivering personalized content, and ensuring a seamless omnichannel experience. In addition, we will address the need for real-time interaction to improve customer satisfaction and increase Net Promoter Score (NPS), and the implementation of these strategies with robust security and compliance measures, ensuring the protection of customer data and regulatory compliance.
Use of Open Finance for customer knowledge and principality
Open Finance allows financial institutions to access comprehensive customer data, providing a holistic view of their finances. This makes it easier to create more relevant and personalized offers, increasing customer centricity with the financial institution. Through data interoperability, institutions in the sector can offer integrated and innovative financial solutions. A combination of analytical techniques and historical data on top of a more comprehensive base of information from open finance, can be the differential of a better result about the competitor in terms of achieving a high level of personalization as the market demands today. A recent study found that 50% of digital banking consumers expect their bank to provide a highly personalized experience. And that’s how hyper-personalization helps banks deliver that experience. Open finance allows for the processing of a greater amount of data and a better and broader view of the market in the context and for the benefit of the customer (Global Business Outlook and Instituto Propague).
Accurate use of data
To achieve hyper-personalization, accurate use of data is essential. Data from customer transactions, interactions, and behavior are analyzed to generate insights that enable meaningful personalization. Data quality and integrity are critical for analytics to be accurate and effective. The maturity and robustness of the organization about data is one of the main indicators of a company’s ability to achieve results with hyper-personalization, since data works as a foundation, a basis for AI and for customer knowledge through analytical and machine learning models that can indicate personalization paths. Tracking customer behavior through historical and analytical data allows you to create and modify strategies and actions in real-time and improve the customer experience (Deloitte).
Importance of advanced analytics for insights
Advanced analytics, which includes techniques such as machine learning and big data analytics, is crucial for extracting valuable insights from customer data. These analytics allow you to predict future behaviors, identify unmet needs, and suggest personalized actions. According to Experian®, the application of advanced analytics can automate data collection and analysis processes, saving time and money, as well as identifying more complex relationships in the data, which traditional methods may not capture. Financial institutions that use these models can improve the accuracy of credit behavior prediction by up to 15%, expanding their customer base without increasing risk (BankingHub). In addition, these technologies allow for the creation of new personalized products and services, enhancing customer interaction and increasing operational efficiency. The implementation of advanced analytics is seen as a strategic factor driving innovation and competitiveness in the financial sector (BankingHub).
Working with segmentation
Effective segmentation allows financial institutions to divide their customer base into more manageable groups with similar needs and behaviors. This makes it easier to create targeted campaigns and offers, increasing the relevance and effectiveness of marketing initiatives. Advanced segmentation techniques allow you to identify different consumer profiles and create highly targeted marketing campaigns, resulting in a higher conversion rate and audience satisfaction. According to Gartner®, segmentation based on behavioral data can significantly increase the effectiveness of marketing campaigns.
Working with custom content
Personalized content, such as recommendations for financial products and services, significantly increases consumer engagement and satisfaction. Analyzing behavioral and transactional data allows you to deliver content that resonates with users’ individual needs and preferences. Using behavioral data to send personalized notifications and offers can increase consumer engagement and loyalty. A study by McKinsey & Company® shows that personalization can increase marketing revenue by 5-15% and marketing efficiency by 10-30%.
Ensure a real and complete omnichannel experience
The omnichannel experience ensures that consumers have a consistent and integrated interaction with the financial institution through multiple channels, such as mobile apps, internet banking, and face-to-face service. This is essential to maintain consistency and improve user satisfaction. Implementing an omnichannel strategy that integrates all service channels provides a unified and efficient experience for consumers. Without the use of an omnichannel service, the difficulties of implementing a hyper-personalization process increase significantly, given that the customer will experience different levels of information and service standards in different channels, and may not have a satisfactory overall experience.
Enable real-time interaction with a high satisfaction rate and NPS
Real-time interaction, facilitated by chatbots and virtual assistants, improves consumer satisfaction by providing immediate responses and quick solutions. This contributes to a higher satisfaction rate and a higher Net Promoter Score (NPS). Intelligent chatbots can interact with consumers in real-time, offering fast and efficient support, resulting in a significant improvement in NPS. The arrival of Generative AI and the great maturity of AI in chatbots now allows the adoption of real time service standards that were previously impossible – the speed of intelligent adoption of these technologies can be the key factor in beating a competitor, keeping a customer, attracting a lead and increasing conversions into highly personalized experiences.
Security and compliance implementation
The implementation of the above topics must be carried out with strict security and compliance standards in line with the General Data Protection Law (LGPD), among others in Brazil and worldwide. Ensuring the privacy and security of consumer data is crucial for maintaining trust and avoiding legal penalties. Communication should be transparent, ethical, and adaptable, with two-way feedback mechanisms and integration of emerging technologies. Strict security and compliance measures must be put in place to protect consumer data while ensuring compliance with the LGPD and other regulations.
Adopting these practices not only improves the customer experience but also strengthens the competitive position of financial institutions in the market. As more banks and insurers embrace hyper-personalization, those that don’t risk being left behind.
*The opinions posted here reflect my personal opinion and not necessarily the opinion of Compass UOL.
