Will Personalisation Be The Secret Sauce For Next-Gen Lending?

“Ma’am, I am calling from ABC Bank. We are giving a personal loan at X% interest rate for an existing customer. Are you interested?”

“Dear Customer, this New Year avail a Home Loan with XYZ Capital & enjoy ZERO processing fees*. Avail NOW! TCA”

Who hasn’t received a call like the former or an SMS/WhatsApp message like the latter in the recent past? How many times has the person receiving such a message been genuinely interested?

Lenders have typically resorted to time-tested traditions of outsourcing lead generation to third-party selling agencies. Such direct selling agents (DSAs) are incentivised on the number of calls made first, and the number of closures second. Due to woefully outdated privacy-related regulations, they are given only phone numbers and names to work with and therefore lack the context of the customer, often forgetting the fact that the customer is a human being going through the daily trials and tribulations of life.

The typical customer, at best, ignores such reach outs, feels irritated by the constant pestering, and switches off from such brand associations. What makes matters worse is that in some cases, the customer has probably already signed up for a credit product of the same type from the same institution!

Privacy Preservation Is Becoming The Norm

India is at the cusp of introducing its own customer data privacy regulation. Some countries and regions are more significantly ahead in their implementation of the same. As a result, some privacy-related decisions are being taken at the foundational level in the consumer advertising space, which have far-reaching implications.

Take, for instance, Apple’s App Tracking Transparency (ATT) policy and the default choice of “Do Not Track” in newer iPhone models. Prior to this policy, behavioural profiles of customers were updated with information about conversions and ad platforms then go on to target the same customers on behalf of their clients. With this one change, the world of digital advertising, and especially those that rely on social media, has been upheaved. So much so that most ad-revenue-dependent companies have now declared quarterly results showing revenue impact citing disruption caused by the ATT.

Note that such tracking and reselling of customer data is at the level of data collection that is referred to as a third party. Mechanisms that rely on segment-based or keyword-based retargeting are therefore prone to lasting impact due to changes in the efficacies of such third parties.

General-Purpose Data Analysis Tools Are Too General In Their Actionables

Coupled with the above trends, there is also the growing realisation amongst banks that they are themselves sitting on a treasure trove of data collected assiduously over many years. Most fintechs are relatively newer entrants to the ecosystem and would love to have access to the data that banks have.

The mechanisms used to exploit the data thus collected that is both privacy-preserving and at the same time revenue-generating are still being developed. Common-ground technologies are not cut out to serve the regimented needs of regulated entities like banks. It is true that the cloud is an enabler, but no cloud platform by itself singly addresses the needs of the typical bank retail asset marketer.

Purpose-built software systems are rare. While technologies that process large data and personalise customer interactions exist, they are not built keeping banking (and lending, specifically) in mind.

Conclusion 

Hyper-personalisation using a comprehensive understanding of the customer, including especially their privacy choices, is the way forward for banks to continue to stay relevant in the minds of the customer. Financial services organisations will need to consider solutions that can help deliver more personalised customer experiences while maintaining compliance and upholding the public trust. With the proper technology deployment in place, organisations can shift their focus to the customer and remain competitive in the industry.