Over the medium term, banks’ vertically-integrated business model faces disruption, as evolving customer needs are increasingly being met by innovative newcomers that are picking off some of banks’ most profitable lines of business, like payments and foreign exchange. Due to the evolving needs and new innovations, consumers expect a highly-personalised service from their banks, that is determined by their individual requirements. That’s where hyper-personalisation comes in….

What is hyper-personalisation?

Hyper-personalisation can be defined as using real-time data to generate insights by using behavioural science and data science to deliver services, products and pricing that are context-specific and relevant to customers’ manifest and latent needs (i.e. those needs which, due to a lack of information or availability of a product or service, cannot be satisfied).

Banks are particularly suited to adopting hyper-personalisation, as they enjoy both large customer bases and high volumes of customer data.

Why is hyper-personalisation an imperative for retail banks?

In our Future of retail banking: The hyper-personalisation imperative report, we are addressing this medium term challenge. We believe that hyper-personalisation is an imperative for banks, enabling them to respond to customers’ manifest and latent needs. Indeed, hyper-personalisation is the software equivalent of the mass customisation that emerge from supply chain re-engineering in the 1990s.

In particular, we believe that banks must become more like corporates. In the past, banks’ success rested on mastering a small number of capabilities, namely credit allocation, capital management and operations. There was limited differentiation between various banks’ product offerings, and limited understanding of customer needs. We believe that, in future, banks will have to understand customers much better, and to develop the marketing and branding skills that are commonplace in other sectors, such as fast-moving consumer goods and retail industries.

By adopting hyper-personalisation, banks will differentiate their brand, boost their revenues, and improve financial inclusion.

To help banks adopt hyper-personalisation, this report outlines the three building-blocks banks must have to achieve these objectives – data science, behavioural science, and ethnographic research capabilities – and how these can be applied to innovate, in terms of both product functionality and product design.

Join our webinar

We are holding an exclusive webinar on Tuesday 24 November at 13:00 GMT, where we will further explore the findings of this report and discuss the topic of hyper-personalisation with leading figures in banking and customer experience.

If you have any questions, or would like to discuss what hyper-personalisation means for your business, please reach out to one of the authors.

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[i]HSBC Sees Hyper-personalization in Banks’ Future”, CDOTrends, November 14, 2019.

[ii] Jim Marous, Power of Personalization in Banking 2018, Pega, August 2018.