If Data Is the Fuel of Personalization, Why Aren’t Banks Leading the Charge?

Many financial institutions (FIs) are eager to reap the rewards of personalization, such as increased revenue and deeper customer loyalty. However, the needle-moving personalization unlocked in industries like eCommerce has been hindered by a slew of common data-related issues for those in FI. In fact, an April 2023 Mastercard report finds that keeping pace with the exponential growth of data is estimated to cost financial institutions an average of $12.9 million annually in missed opportunities.^[1]

Whether it’s: 

• Overestimating the amount of data needed to achieve meaningful personalization 
• Struggling to streamline and integrate data across channels and teams 
• Difficulty actioning a cohesive data strategy that aligns with personalization goals
• Ensuring compliance with strict privacy regulations around personal data

… the path to more tailored, relevant, and fruitful digital banking experiences has left most FIs resigned to the status quo – until now. In this article, we’ll unpack the critical data woes pervading FIs and how a new and simplified solution is helping teams bypass them through a hands-free approach that offers instant, impactful results. 

Data availability, usage, and accessibility

It’s not surprising that given the complexity of data issues, banks are often so overwhelmed that they haven’t even started on their journey with personalization. Further, common misconceptions about the practice 1) requiring a ton of data and 2) it being synchronized across channels out-of-the-gate are preventing teams from taking their first steps. For example, first-party data collected directly from consumers (with their consent), can serve as a solid foundation for personalized experiences that are both relevant and privacy-compliant.

Though, advancing efforts through the addition of data (including from multiple channels) is where it gets even more daunting. With different teams responsible for data that lives in different, often disconnected technologies, data becomes largely inaccessible for collection and use. This is exacerbated by stringent privacy regulations, especially given the sensitive nature of the data banks hold, with teams worried about finding the right balance between personalization and not making their customers feel intruded upon. 

Audience strategy, alignment, and adoption

In cases where data is available and accessible, teams may go on to find themselves putting the cart before the horse by trying to deliver effective personalization without the right data-based FI audience strategy. Even simple deployments of personalization based on first-party data should live among a larger strategy of how the bank intends to impact the end-user experience. For while banks can share common personalization goals, such as fostering customer loyalty or increasing card usage, the key is understanding when to apply different strategies per channel and audience for those particular outcomes. 

Motivated by another misconception that personalization is only valuable when delivered on a 1:1 basis, banks often adopt the strategy of creating micro-segments for every scenario. While useful in some cases, these micro-segments are hard to scale and inefficient, with minimal reach and impact. Instead, a few key segments representing most of the customer base should be identified, allowing banks to maximize personalization outcomes and continually optimize experiences for these groups – getting more granular as they go. 

Most importantly, for this approach to work, it should be adopted uniformly across teams to create cohesion in personalization activities and avoid fragmented or disconnected experiences. Unfortunately, most decision-makers in personalization across issuers report a lack of alignment on audience strategy. In fact, research from Forrester commissioned by Dynamic Yield by Mastercard in 2024 found that while most banks seem to have an audience segmentation strategy in place, organizational-wide adoption is low: 

• Less than 50% in EEMEA (Eastern Europe, the Middle East, and Africa)
• Only 21% in AP (Asia Pacific)
• Only 20% in LAC (Latin America and the Caribbean)
• Only 21% in EU (Europe)

With different teams managing different aspects of the digital customer experience, a shared approach can combat siloed channels and ensure valuable information from each can be used to inform the next.

Breaking free from data issues and embracing seamless personalization

Data challenges within FI persist across all levels of personalization maturity, but a solution like Personalization Breeze is here to level the playfield for issuing banks. Backed by the expertise of Dynamic Yield by Mastercard, the hands-free solution leverages cutting-edge personalization technology for financial services and compliantly activates existing proprietary predictive data for the cardholder portfolio and channel of each bank’s choice – all without tedious implementation or ongoing maintenance. This makes it effortless for the industry to deliver the tailored experiences consumers crave while also helping teams reach their aggressive revenue goals and sustain growth in an increasingly digital banking landscape. 

Reach out to your Customer Success or Account Manager to learn more about how we can make personalization a breeze for your financial institution. 

¹ Data Strategy: Effective Data Management and Analytics for Business Success – Mastercard Market Trends Report