Financial Industry Wake-up Call: Lessons in Personalization

Client lifecycle management (or CLM) is a concept made for the age of the customer in a time when it’s no longer enough to merely support a client during the onboarding phase.

Clients now want, expect, and demand to be supported across every phase, from prospecting all the way through to offboarding. With CLM, businesses measure how well they’re performing at every client touchpoint.

Even though the idea of CLM isn’t exactly a new one, wealth management firms and private banks are still struggling to provide cohesive, personalized experiences that measure up.

The truth is, financial institutions have found it hard to keep up with customers’ quickly evolving expectations. According to Scorpio Partnership, there are three main areas that pose the biggest challenges for the industry as a whole:

  • Adaptation to New Delivery Channels – especially in identifying the best technology for the support of “service by segment”
  • Changing Behaviors of the Customer Base – transitioning along with new generations
  • Personalization – empowering customers to have control over their decisions with tailored services

Want to get more details about these challenges and how to address them? Then check out our recent webinar, Think Forward in FSI: Continuous Onboarding as the New CLM.

Another study (Epsilon, The Power of Me) found that 59% of consumers found financial institutions are doing personalization “very” or “somewhat” well, whereas the online retail industry (think Amazon and Netflix), for instance, scored way higher at 81%. And overall, the numbers showed that there’s a 10-20% gap between how the financial industry scored compared to other industries!

This topic is clearly important to clients, because the same study found that 89% of consumers are more likely to do business with a financial institution that does do personalization well. It’s a proven method for raising profitability, and companies that miss out on it are missing out on lots of growth opportunities.

In the past, it was the norm for clients to do business with one primary bank for most of their lives, but this has changed with the shifting customer base. Today’s clients have a constellation of different needs, and they’re choosing service providers based on their current goals and life circumstances.

Alternatives such as intermediaries, family offices, and external office managers are slowly replacing the primary bank, in big part due to the fact that these other options have personalized offers.

Personalization is certainly needed, but is it enough to succeed in the age of the customer? Is the financial industry ready to scale personalization in the way that other industries already have?

Providing personal experiences on a large scale is key to increasing business predictability and sustainability over time, and carefully evaluating which technology is the right fit for scaling personalization could be one of the best ways forward for the FSI.