2023: The Year of Creating Segment-of-One Experiences
Finalytics.ai shares three areas CUs are focusing on to reach their digital capability goals this year.
Although 76% of all member interactions now happen online, according to Finalytics.ai’s 2023 Credit Union Digital Experience Report, most credit unions still need to work on humanizing the digital experience in order to maintain the secret sauce that sets them apart from big banks and fintechs. In 2023, we will see more credit unions invest in their digital capabilities to create segment-of-one digital experiences for prospective and current members that go beyond what they used to deliver in branch. Here are three areas credit unions will be focusing on to accomplish this goal.
1. Using multiple data streams to gain insights about members.
For the most part, credit unions only used their internal, likely dated, transactional data to attempt to predict what services and products a member may want in the future, leaning on the choices they had made in the past. This approach often led to suggesting products and services that their accountholders no longer wanted or needed, leading to frustration, dissatisfaction and members switching to other financial institutions. In fact, a Finalytics.ai study found that 40% of consumers say they are likely to leave their primary financial institution for digital banking that compares to an online shopping experience.
In 2023, with the help of modern technologies, credit unions will start analyzing multiple data streams, including internal data (e.g., transactional data) and external data (e.g., big data), gaining more insights about their members and prospects than ever before. This will enable them to accurately predict and deliver, in real-time, the content and services that their members and/or prospects are actually looking for, boosting both conversion and satisfaction rates. This isn’t a trend as much as it is a permanent feature that leading credit unions will adopt to retain members, boost automation and increase revenue streams.
2. Hyper-personalize the digital experience, especially in a recession.
According to Capco Institute, 72% of customers rated personalization as “highly important” in financial services. Consumers are looking for a tailored approach and credit unions need to deliver it to remain competitive. By leveraging multiple data sources containing a variety of attributes (e.g., location, age, gender, behavior, current products, relationships with other financial institutions, digital habits, intentionality, etc.), credit unions will increasingly be able to create experiences that speak specifically to the needs of a current or prospective member at that moment in time.
This high-touch approach to the digital channel is particularly important in a recession environment. Consumers are concerned about their financial situation and, more than ever before, need to know that their financial institution knows them, cares for them and can provide relevant guidance, products and services to help them navigate choppy waters. Delivering a segment-of-one experience will also attract new members from competing institutions that might be looking to switch.
3. Enhance the experience with artificial intelligence.
Classifying and segmenting thousands of people based on their transactional habits and big data is easier said than done. Plus, obtaining a myriad of big data points from web visitors is only helpful if you know how to apply them effectively. AI can enable credit unions to create valuable and accurate predictions about the needs of current and prospective members and provide them with an experience as unique as they are, showcasing the services they are most likely seeking at that point in time. AI’s presence in financial services is predicted to continue growing at a rapid pace in the year ahead. According to Allied Market Research, in 2020, the global AI in banking market was valued at $3.88 billion; by 2030 it is projected to reach $64.03 billion.
However, to be effective, credit unions should only apply AI in areas where it can have the most beneficial impact and not because it is trendy. AI is an expensive and complex technology, so credit unions should evaluate the needs of their institution and members first (e.g., increasing efficiencies, boosting automation, enhancing member service, etc.), before deciding what AI to invest in. Once the desired outcomes are identified, credit unions should also use return on investment models to consider the full scope of the technology’s impact, put together a strategy and budget, and analyze the AI vendor market to determine what provider best suits the institution’s culture and structure.
In 2023, the winning credit unions will be the ones improving how they engage with their members and prospects even before they log in to their digital banking, creating the segment-of one experiences accountholders and prospects have come to expect from their banking providers. To do so, they will use AI to analyze multiple data streams and gather more insights about their members and prospects than ever before, providing a hyper-personalized digital banking experience that surpasses anything ever achieved in the branch.
Craig McLaughlin CEO and Co-founder Finalytics.ai San Mateo, Calif.