Today, consumers can access a huge range of products and services tailored to their needs, all with just a swipe on their phones. From ride-hailing and food delivery services to medical care and travel bookings, the hyper-personalization of products and services has found its way into numerous aspects of our daily lives.
Yet, those intuitive and personalized experiences still aren’t the norm across the financial services sector. Held back by legacy technology, stringent regulations, and outdated workflows, many financial institutions are still delivering fragmented CX journeys that rely heavily on paper-based processes, product selling, and repetitive Know Your Customer (KYC) authentication checks.
In this new era of intuitive Customer Experiences (CX) and personalization, financial services institutions are trailing behind the pack. To find out why and take a deep dive into the challenges holding firms back, we recently held a collaborative Thoughtworks knowledge session.
During the discussion, our experts revealed how financial services organizations can adapt customer journeys to meet new and rising expectations using an innovative approach, named ‘segment of one.’
Here are highlights from the discussion.
Neobanks are leading the way — and creating a path others can follow
While intuitive, hyper-personalized CX might not be the norm across the BFSI sector yet, there are a growing number of neobanks and fintechs delivering superior customer experiences today. These digital native organizations are actively demonstrating how a CX-first approach can help tackle several major BFSI challenges and customer pain points, including:
Accelerating complex customer journeys: Because the BFSI sector is so tightly regulated, customers often have to spend hours reading lengthy documents and going through complex identification processes before they can start using a service. Neobanks and fintechs have found new digital ways of accelerating those processes to accelerate customer journeys.
Simplifying product portfolios: Traditional BFSI institutions often have very complex product and service portfolios, which makes it difficult for customers to find and choose the right product for them. New market entrants are leading with far leaner offerings, which customers can navigate more easily.
Preventing overselling: BFSI sales tactics, used to achieve aggressive targets, can sometimes be overbearing and negatively impact the in-person customer experience. In contrast, many neobanks apply limited pressure on their customers, keeping them in control of any engagements.
The success of today’s leading neobanks and fintechs shows us that not only is it possible to create and operate a CX-first financial institution, but there are huge benefits to be gained when you do.
The thing that unites these digital-first neobanks is that their solutions and offerings are highly relevant and contextually appropriate for every one of their customers. Customers flock to those providers because they can get a service that’s uniquely valuable and relevant to them.
Or, to put it more simply, they appeal to a segment of one.
Segment of one: four principles ensuring stand out digital CX
Within the ‘segment of one’ strategy, every customer is recognized as a unique individual, whose environment, lifestyle, personality, preferences, needs and wants are appreciated as different. The strategy improves the digital customer’s journey by following four principles:
Simplification
Hyper personalization
Data-driven segmentation
Digging into customers’ mindsets
Simplification
The challenge: Because there’s so much information to collect and verify, financial services customer journeys can be very long and complex. Firms must maintain detailed digital and physical records of new customer onboarding and activity, which for the customer means lots of signing papers, scanning documents, and constantly moving documents between physical and digital processes. Across those opportunities, there’s often a lot of duplicated effort. Identities may be captured and verified multiple times through multiple methods as customers access different products and services. From an operational point of view, that’s inefficient. And for customers, it’s extremely frustrating.
The solution: The ‘segment of one’ approach aims to connect multiple engagements — such as opening a bank account and buying an insurance product — and remove duplicated customer effort between them to create simpler journeys that reward and encourage loyalty.
Hyper-personalization
The challenge: Today, most financial products and services are generic. They’re built around what banks have on offer, rather than what customers want to achieve and gain. Digital-first customers expect banks to comprehend their pain points and address their needs through tailored product and feature offerings — all while offering seamless banking experiences.
The solution: By using analytics, banks can start to better understand their customers and build products around them. They can combine their offerings in unique ways for each customer, giving them exactly what they need, when they need it.
Data-driven segmentation
The challenge: Many organizations in the financial services industry have failed to create a single KYC journey for their customers. As customers buy new products, they have to go through identification verification multiple times. Customers are forced to provide different pieces of information when engaging with insurers, banks, and fixed-income asset sellers, causing frustration and dissatisfaction.
The solution: To solve this challenge and unite these experiences, organizations will need to work on removing data silos and create a robust data strategy to view the customer as a unique individual that has relationships with different business lines. The ‘segment of one’ approach shifts focus to individual customers, rather than the products they’re accessing. Using the right analytics and digital personalization techniques, organizations have the potential to create connected experiences for customers accessing different classes of assets offered by the same service provider.
Digging into customers’ mindsets
The challenge: Today’s customers want value-driven experiences. Speed, accessibility, and the convenience of digital experiences are all important. But beyond that, modern customers want to be able to engage with and relate to the purpose a product conveys. Through their daily interactions, and the data they provide to BFSI firms directly, customers tell their financial services providers a lot about them and what they want. But many organizations still aren’t connecting the dots between those data points to build a clear picture of what’s important and valuable to their customers.
The solution: BFSI organizations must find new ways of bringing their data together, and turning customer insights into appropriate and timely actions. With the right data captured and processed at the right time, firms can proactively offer customers new services that extend their loyalty. As a customer goes through their financial lifecycle, organizations can track where they are and how their needs are changing. Through that, BFSI firms can evolve beyond simply being service providers. They can become true partners to their customers that add and deliver value throughout their lives.
Putting the segment of one into practice
Ultimately, the success of the segment of one approach comes down to the effectiveness of the data strategy — one that eliminates silos among their teams, and considers every customer as an individual with social, cultural, and technological context.
When the financial services industry adopts the ‘segment of one’ approach across the board, its organizations will be able to use data to draw powerful insights on customers, offer them meaningful value-adds, simplify their journeys, and tailor services to individual needs.
The excerpts and ideas discussed in this blog were shared during a Knowledge Session hosted by Thoughtworks. The session saw participation from Karshit Dawadiya, CIO at BSE, Hari Nair, Head of Engineering & New Initiatives at HDFC Securities, Sandeep Ranjan, CDO at Shriram Housing Finance, Nilotpal Gupta Head of data science at ICICI Securities and Muralikrishnan Puthanveedu, Head of BFSI for India at Thoughtworks.
Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.
