It’s increasingly clear that digitization and digital-centric services are a critical part of the customer journey for any community bank. Banks must now consider exactly how to embrace digital-centric services while staying true to their credo of helping local communities and developing strong relationships with their customers.
How can they achieve this? Through providing personal, human-touch interactions with their customers and the convenience of digital services.
Note I did not say personalized interactions. The distinction between personalized and personal is often misunderstood; understanding the difference is key to providing customers with the service they expect from their community bank.
Why Personalized Isn’t Personal
Personalization is about changing a service or product to adapt to certain aspects of customer history or behavior to increase the likelihood of a desired outcome. It can mean using templating for customer information, like changing the name and title in marketing emails, or employing customer data modeling. An example of personalization in banking is sending customers emails containing personalized credit card offerings based on their FICO score or recent activity.
When personalization is executed correctly, it is beneficial. Customers get recommendations for products and services they actually need, and they buy or use more. Nonetheless, personalization carries serious risks and shortcomings — and isn’t appropriate for all situations. Personalization often uses prior history data to model possible future purchases, but that can backfire when suggested products or services can be considered creepy, intrusive and unexpected — like in the notorious example of Target Corp. figuring out a teenager was pregnant before her family found out — leading to negative experiences and frustrated customers.
More importantly, personalization is one-sided. While the customer benefits from personalization, it might be invisible or interpreted as unique or custom. It doesn’t create or deepen the relationship with the brand or promote loyalty. And it works best when there is a significant amount of data to create models that drive personalization.
A personal touch, on the other hand, reflects a deeper understanding of customers as human beings and allows financial institutions to create unique, custom experiences that forge a bond and promote reciprocity, often leading to intangible business benefits. A great example of personal service is the time employees at a Ritz-Carlton Hotel went out of their way to create vacation photos for a stuffed animal left at their hotel.
A personal touch requires perceiving something about the customer, not in terms of digested numbers or data, but from a conversation or visual interaction. It requires somebody to pay attention and think about timely and appropriate action. Personal requires humans to drive it, not by just following a prescribed template but by adding their own flair and twist to adjust to the circumstances and timing. This requires effort but doesn’t have to be hard. We all know how to do it, given our relationships with family and friends.
While personalization can beneficial, being personal is crucial — especially for community banks whose competitive edge and pride is in building and maintaining close relationships with their customers. This kind of personal service is very possible in a digital-centric world. It comes down to making customers feel they are dealing with humans, not a faceless company or brand, by showing empathy and the desire to help. Here are just a few ideas of how to enhance your digital service by enabling a personal approach:
Allow your employees to communicate with their real name and picture, enabling customers to see them as humans.
Allow employees to express emotions using emojis in written communication.
Enable continued engagement with single or few points of contact to allow deeper relationships to form.
Allow for casual and open communication with the customer, and listen when a customer opens up.
Adopt biometric and/or similar tools for reducing the need for repeated authentication in initial customer interactions.
Personalization is useful and has its place in an increasingly digital-centric world, but it is important that financial institutions understand the requirements and pitfalls of technology-driven personalization. Rather than hoping technology will provide the desired outcomes, it is better for community banks to double down on what traditionally made them so great: providing personal and high-touch service in physical and digital channels.