The hyper-personalization of online banking

Efficient data handling and processing is an opportunity to offer users customized, flexible products

An impending

challenge for bank

s

is to

tailor their

product offering

to the needs of each customer,

drawing on

proper data analysis in order to identify the demands and provide hyper-personalized answers. 

Thanks to digital channels and their

extensive reach

, it has never been easier to

connect with

customers. But in the same

,

hyper-connected context of multiple financial players such as banks, fintechs and bigtechs,

assuring

customer loyalty is becoming more difficult.

As a result

,

the

personalization of experiences is critical to maintaining satisfaction levels. The good news is that

banks

now have a wealth of data

upon which to base

their user research. 

Consequently, one of the main challenges that the financial industry will have to address in the coming years will be to identify, filter and segment information efficiently.

ON DEMAND BANKING

The hyper-personalization of financial products suggests that bank

s

should provide

their customers with

relevant

,

flexible offers

. And th

at beg

s

the question

:

W

hy not have the customer build products at his or her convenience

, using

on-demand banking?

Under this premise

, the bank

can give the user

options

to choose from—

for example, which benefits to add to his or her credit card

—i

nstead of deciding between pre-established service

combinations

for each product. 

Last year,

Banco Santander introduced in Mexico

a credit card with digital

registration

that allows customers to customize the

related

benefits, insurance and assistance. In addition, it introduced six card designs

that each

support different social projects according to the user's preference.

In fact

,

choosing

flexible payment due dates, interest-free months

and

mortgages with double installments are some

of the options

that can

already

be configured

o

n banks' web sites nowadays.

But the strategy would be even more effective if,

thanks to

proper data management, the bank

was able to

s

uggest products and add-on

s, thereby

anticipat

ing

the customer’s needs and creat

ing

a better digital experience.   

THE POTENTIAL OF ALTERNATIVE DATA

Limiting credit evaluation or calculating interest rates based solely on credit bureau ratings is a strategy that ignores the complexities of the Latin American market, where

just

51% of adults have bank accounts,

and

of

those,

only 28%

use them to

make payments directly, according to

Deloitte

data published in August 2021.

And in the US, the numbers also show that at least a quarter of the population is underbanked while 10% are unbanked, limiting their opportunities to access student loans, mortgages or capital to start a business,

according to a study by Morning Consult

. 

In this context

,

digital

banking

emerges as an opportunity for institutions to adapt

to the market and expand

their

offer

ing by taking into account

other sources of financial information

that

show

a person’s

income and

outgoings

.

For example, Mibanco, the microfinance institution

belonging to

Peru

’s

Credicorp,

formed

a

partnership with Uber

to access the driving history of driver

s

and

turn

it into a database

with which

to evaluate

their

credit

worthiness

. 

User evaluations, driver punctuality and even the frequency

with which they

use the app play an important role in the assessment.

Customer data

allows the bank to

get to

know the

client

and therefore better meet

their

needs,

such as credit

.

E-wallets, which are

becoming

increasingly

popular

in the region, also play a key role here. They record users'

transactions

and

can potentially be

customized

to offer everything from

quick-approval loans to financial investment tools.

These e-wallets are a gateway

for

introduc

ing

a greater share of

the Latin American population to the financial system, especially considering

the region’s high

smartphone penetration rates.

HYPER PERSONALIZATION WITH OPEN BANKING

An emerging trend such as open banking

represents

a

nother

opportunity

for

offer

ing

users

customized and flexible products. 

If the

customer

allows it, the bank can access the

ir history of

financial

interactions

with

other companies

in order

to cross-check information and offer better

them

terms

for

financial products. 

In Mexico, the BBVA group has

partnered

with the employment platform Zolvers

so that,

through the use of APIs

,

thousands of domestic workers can open savings accounts on this popular site.  

Brazil leads the way

i

n the region in the implementation of open banking, followed by Mexico.

Some other countries, such as

Chile and Colombia

,

are close to approving their

own

legislative proposals. 

These open banking projects expand the amount of data available to banks as they serve their customers and

thereby

improve their ability to customize services.

Open banking and financial institution

s’

quest to offer better products

leads

to an

obligatory

next step: efficient data processing for hyper-personalization, where the bank

adapts

to its customers and not the other way around.