Banks are hearing it again and again – personalization is a necessity amongst consumers who have come to expect seamless, relevant, and valuable experiences from brands. Research from Forrester shows that 61% of customers are unlikely to return to a brand that does not provide a satisfactory tailored experience. And while over 4 in 5 financial institutions (FIs) acknowledge that personalization is a clear priority, only 21% of bank customers receive personalized advice or guidance when it comes to financial decisions. While there are some notable edge cases like Synchrony, most banks haven’t overcome pervasive industry challenges to reap the rewards of personalization.

In this article, we’ll put a spotlight on the major barriers to entry with banking personalization and answer the question about whether a simplified path even exists. (Hint, it does, and it could significantly change how banks digitally engage with consumers.)

The misalignment between vision and execution is due to challenges in data, internal resources, compliance nuances, and technological integration. Let’s dive into each challenge below:

Data is the fuel of personalization, allowing brands to understand customer preferences and deliver relevant content and offers. FIs, like many businesses that have unique data sets, often lack efficient integration and curation processes to share data across tech stacks and siloed teams and effectively deliver tailored experiences. In fact, 80% of banks report that they collect so much data that they cannot seamlessly integrate it into their engagement systems.

Successful personalization efforts need dedicated owners to manage these robust processes and coordinate efforts across teams, but 63% of banks globally say they operate without a primary business resource wholly devoted to personalization. In a world with rising customer acquisition costs, most banks just can’t justify dedicating headcount to projects with anything more than a quick time-to-value.

Lack of internal resources:

Just as securing headcount is a pervasive issue, so too is the challenge of hiring. In fact, 42% of financial institutions report that internal resources and workforce training are their greatest challenges in implementing effective personalization. The expertise needed to drive successful personalization programs is not yet developed en masse for FIs, making it even more difficult and costly for banks to hire these positions. The candidates who fully understand the requirements are hired at a premium, while less-experienced program hires need increased onboarding time and more opportunities for trial and error.

Additionally, the portfolio-centric organization of banks means that personnel are more likely focused on making sure the whole program thrives rather than whether customers click on a personalized email. With other opportunities competing for time and attention, most banks haven’t invested in growing personalization’s progressive edge.

Compliance challenges:

Even so, banks that do invest resources in dedicated programs are swiftly met with the extra time and attention needed to comply with stringent legal and regulatory requirements. 37% of FIs say these requirements are their greatest personalization challenge. Personalization teams must work to constantly verify how their strategies adhere to current highly matrixed data protection and privacy laws while also anticipating future requirements.

If a bank has placed personalization as a clear, visible priority of the company and the overall digital strategy, it can be easier to navigate compliance challenges due to a more mature awareness of the discipline’s nuances. However, only 29% of banks report that personalization is part of their DNA. Largely, legacy systems and hierarchical structures within banks prevent the agile and collaborative approaches needed for cultural change.

Integration complexity:

Those stringent legal and regulatory requirements also prevent banks from onboarding proper personalization software in the first place. Often banks are locked into legacy technology. Even if a bank can “turn on” personalization as part of a larger suite, it’s unlikely that these existing technologies offer purpose-built machine learning models that analyze and predict intent throughout the banking customer lifecycle. For the lucky few banks that can onboard a new technology, it’s an uphill battle connecting it to the rest of their tech stack due to compliance concerns, creating data-integration issues and preventing banks from scaling omnichannel experiences.

While banks have historically been shut out from personalization, a simplified path to personalization fortunately does exist. Hands-free solutions like Personalization Breeze enable banks to deliver tailored messaging and offers to customers through preferred channels like email, in-app messages, push notifications, and mobile content blocks – rendered at open time to ensure real-time relevancy. They help teams overcome the challenges above by:

Circumventing data challenges: Partnering with a personalization provider not only frees banks from the task of activating their existing in-house data but also unlocks insights and patterns beyond their own consumer base. For example, Personalization Breeze’s predictive spend insights analyze billions of dollars’ worth of transactions across thousands of issuers to predict where cardholders are likely to spend next. These AI models can target cardholders according to their historic and predicted spend and deliver specifically curated incentives and benefits to individual customers, increasing relevance and optimizing card spend and engagement.

Increasing resources: A personalization provider handles campaign execution, allowing banks to focus on their core business while also benefiting from personalization. Additionally, solutions like Personalization Breeze provide monitoring of campaign performance across key digital and spend KPIs, such as click-through rates (CTR), engagement, spend, transaction count, and active card percentage. Plus, these insights are leveraged to continually optimize the program and provide recommendations for additional use cases, unlocking even greater value from personalization.

Remaining compliant: Personalization solutions adhere to regulatory standards by using models trained on non-GDPR data and fine-tuning with anonymized, customer-consented Issuer data to enhance personalization while maintaining privacy.

Sidestepping integration issues: Purpose-built solutions require minimal implementation, meaning Issuers can quickly onboard and integrate new personalization technology through a trusted provider.

With a simplified way to invest in the right personalization solutions, banks can more easily reap the rewards of deeper customer relationships, optimized card spend, and a competitive edge in an ever-evolving market.

Learn more about how Dynamic Yield by Mastercard is making personalization a breeze for banks here.