Fintech
The Amdocs study shows greater benefits in terms of personalization
Amdocs’ Results Personalization and multigenerational banking investigation demonstrate that the more customers know about the possibilities for personalization in banking, the more they want it. It also shows a significant opportunity for multigenerational banking services through which financial institutions can build customer loyalty. Amdocs surveyed 1,000 working-age adults in North America; 500 live in a family without children or elderly people, 250 live with children under 21 and 250 live with adults over 65.
Global Head of Fintech Solutions, Bentzi Aviv, said that 82% were initially satisfied with their bank’s current level of personalization, but that this is a byproduct of people becoming accustomed to the usual menu of banking products. Ask a few more questions and gaps will appear.
- 38% have adequate resources to successfully plan for the future (31% of families with elderly people);
- 68% are interested in offers that help them manage their multigenerational family now and in the future;
- 78% are interested in tailor-made financial planning tools;
- Between 72% and 84% of all home setups want products to help them build theirs financial futures;
And that 82% starts to decline. By asking for information about one’s own finances and those of others, one imagines that the satisfaction rate decreases further:
- 55% have no visibility into the banking habits of elderly family members;
- 53% are interested in real-time personalized recommendations generated by artificial intelligence;
- 66% want to build better habits through tools that gamify personal finances.
Banks have the advantage of customization
Aviv warned that financial institutions will not start from scratch. He claims that the ability to customize is their most significant competitive advantage. No industry can provide end-to-end financial coverage for everything from accounts and mortgages to investments and insurance.
“We believe customization is their biggest advantage in this specific industry,” Aviv said. It’s the ability to serve customers the way they expect to be served.”
Multigenerational families reflect personalization trends
Multigenerational families represent an interesting starting point for studying the evolution of financial preferences. Especially the younger members have non-financial reference points for desired customer experiences, the older ones less so.
“Research shows that when it comes to multigenerational families, expectations are so different that even customization is no longer enough,” Aviv said. “Within the same family there are teenagers and parents and you can also have grandparents. (Everyone) has different expectations when it comes to financial requirements. How can you combine all of this and still create a personalized experience in the financial household?
This is the next level of personalization, where a greater ability to process data allows financial service providers to provide unique services to families based on each member’s past activities and current needs. Aviv said this shows that customer expectations are broader and more complex than many thought. Younger customers need to develop credit ratings, while older customers focus more on pensions, insurance and interest income.
The opportunity arises here. Since some members have savings accounts, others may receive a better interest rate for a loan. Aviv explained that while it is an individual benefit, the family’s collective financial output makes it possible.
The challenge of leveraging data
The main obstacle banks face in providing family-based personalization is access to the numerous data sets needed to achieve it. Aviv said this usually involves several major banking systems and languages.
“The way a mortgage system represents a customer is completely different from the way a deposit system represents a customer,” he explained. They have shared attributes, such as name and address, but the rest of the customer’s attributes will be different.
“It is a very challenging task to aggregate this information and treat it as a financial family. We all know how to manage segments; banks have been doing this successfully for many years. They know how to deliver within the segment, but how to finance your family? This concept is extremely challenging.”
Much has been invested in integrating these capabilities, but Aviv says it’s not yet a custom solution. People are still served based on the segment they belong to, defined by characteristics such as age and income. Banks know how to deal with students and seniors: they created the segments. But personalization, where you know the individual and the expectations of him?, That’s a different matter.
“Personalization is the segmentation of one,” Aviv said, adding that private banking has long offered this option to the wealthy.”
The primary benefits of effective financial literacy
It is notoriously difficult to provide effective financial literacy tools. However, it is worth it, as they position the financial institution as the trusted advisor who offers the customer exactly what he needs, even if it is not what he wants.
Returning to the family, these are different materials for each member. Aviv said it is not a technological challenge but a question of trust.
Because these are complex issues for all ages, gamification can provide knowledge in digestible quantities, whether it’s about mortgages or investing. Aviv says it’s a powerful tool.
Open data and personalization
Open data is a powerful component of personalization. Aviv said that while some initially feared opening up their core infrastructure and cannibalizing their customers, open banking further positions the financial institution as a trusted advisor.
No brand is best at everything. Recognize this and use open banking to offer options from across the ecosystem. Aviv said this is a multiplier, helping institutions be more unique by not limiting their offerings to what’s in-house.
“They don’t need to think who’s best at trading or who’s best at mortgages; they can go to a bank and expect the bank to already do the screening for them,” Aviv said. So when they get the package, they know that it includes the best loan, the best mortgage, whatever the package includes.
“This is the message: build it well because then you will become powerful; the capabilities you have are unlimited.
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Tony is a long-time contributor in the fintech and alt-fi spaces. Twice named journalist of the year at LendIt e winner in 2018, Tony has written more than 2,000 original articles on blockchain, peer-to-peer lending, crowdfunding, and emerging technologies over the past seven years. He has hosted panels at LendIt, the CfPA Summit, and DECENT’s Unchained, a blockchain expo in Hong Kong. Email Tony here.