Today’s marketing technology gives banks and credit unions more ways than ever to reach the right customers with relevant messages. When an economic or industry event creates an opportunity, institutions can develop an offer, identify an audience and deliver a campaign through email, digital banking or other channels.
The challenge is that these events rarely affect every customer in the same way.
A change in interest rates, the introduction of a new fintech product, an employer layoff or a change in federal student loan repayment plans may have a significant impact on some customers and very little impact on others. Financial institutions have an opportunity to account for these differences by using customer behavior to determine who may be affected and how best to respond.
This approach shifts the starting point. Rather than developing a campaign and then determining who should receive it, an institution can first identify an important economic, industry or life event and determine which customers are most likely to be affected.
Transaction intelligence can help make that possible.
Start With What the Customer Is Actually Doing
Demographic information has long played an important role in customer segmentation. Age, income, geography and household characteristics provide useful information about who a customer is. They do not, however, provide a complete picture of what may be happening in that customer’s financial life today.
Transaction behavior provides another perspective.
Changes in payroll deposits, payments to a new lender, transfers to another financial institution or increased activity with a fintech provider can reveal changes that demographic information alone cannot identify.
Two customers with similar demographic profiles may be experiencing very different financial circumstances.
Consider a hypothetical customer named Maria.
Maria has maintained checking and savings accounts with the same credit union for several years. Recently, she has begun using Klarna more frequently, and the amount of her payments has increased. Klarna then introduces a savings product. Maria now represents a different retention opportunity than a member who has never used Klarna.
How should you approach Maria? Her existing relationship with the company provides the credit union with useful context when evaluating the potential impact of Klarna’s new savings offering. The credit union could use that information to place Maria into a more relevant customer journey. It might reinforce the benefits of its savings products, present an appropriate offer or create an opportunity for a banker to contact her personally. The appropriate response would depend on Maria’s behavior and the value of the overall relationship.
The important insight is not simply that Klarna introduced a new product. The greater value comes from identifying which customers already have a relationship with Klarna and may therefore be more likely to consider its expanded services.
A similar approach can be used when an external event creates potential financial pressure.
Consider another hypothetical customer, David.
Transaction analysis shows that David receives a consistent employer-based direct deposit, maintains predictable positive monthly cash flow and pays $200 each month toward federal student loans. A change in federal student loan repayment requirements is announced that could significantly increase his monthly payment.
How should you approach David? A traditional loan promotion may not be the most appropriate first communication. Financial wellness information or budgeting assistance may be more useful initially. If David’s subsequent transaction behavior begins to indicate financial pressure, the institution could consider other appropriate products or services.
In both examples, observed behavior provides the context needed to determine what type of communication may be most relevant.
Think Beyond the Individual Campaign
This approach can be applied to many economic, lifestyle and life-stage events. A payroll deposit stops, a tax refund arrives, insurance premiums increase, or a customer begins transferring larger amounts of money to another financial institution. Each change provides information that may help the institution better understand what is happening within the customer relationship.
The appropriate response will not always be a product offer. In some cases, educational content may be more useful. Other situations may warrant a conversation with a banker or additional monitoring to determine whether the behavior continues.
Effective personalization depends as much on knowing when and why to communicate as it does on determining what to communicate.
Timing is particularly important. Financial institutions may not recognize meaningful changes in customer behavior until those changes appear in portfolio reports weeks or months later. By that point, the circumstances that caused the behavior may no longer be relevant, or the customer may have already acted.
Transaction intelligence can help shorten the time between an external event, a corresponding change in customer behavior and the institution’s response.
For many banks and credit unions, this represents an opportunity to expand the way they think about marketing. The process does not always have to begin by asking which customers should receive a particular campaign. It can begin by understanding what is happening in customers’ financial lives and determining whether the institution has a relevant reason to respond.
That shift can lead to customer journeys that are more timely, more relevant and more closely aligned with what customers are actually experiencing.
Where Insight Financial Marketing Can Help
IFM can help financial institutions put this approach into practice by turning transaction data into actionable customer intelligence. By identifying meaningful changes in customer behavior, outside financial relationships and emerging needs, IFM helps institutions determine which customers may be affected by an event and respond with timely, relevant outreach. The result is a more informed approach to customer engagement that begins with what customers are actually doing.
Rob Reale is an Associate Partner and National Sales Manager responsible for business development and sales at Insight Financial Marketing. Rob began working in the Mortgage Banking industry in 1990 and currently helps the financial service industry leverage unique and innovative solutions.
