Transcription:
Jody Bhagat: (
You know, it's a proven technique in the media industry that you pair your highest rated shows with your lowest rated shows to create that halo effect. So we're done with the keynote and you're all still here. I'm not sure how well that bodes for the people after me, so I'm sorry about that. I am with Personetics. We are a global leader in data driven personalization and customer engagement. Our vision is one of self-driving finance and we operate in 30 countries and have over 120 million end consumers on the platform. We are in a very exciting period of transition for the industry. There are multiple forces competing forces on regional banks today. Challenger banks are now winning 15% of new checking accounts. Fintech's are offering point solutions and picking off profit pools and retailers and big techs, such as PayPal and Square are offering different customer engagement endpoints.
Jody Bhagat: (
It's overlaid with a movement to open banking, which is putting more control and choice in the hands of customers. During this period of transition, I expect that we will see a greater disparity between leaders and laggards in terms of performance and it'll be amplified by some additional themes as well. One is in a rising rate environment. We will see more money in motion. The second is the continued acceleration of the digital shift, is causing more and more investment in the digital channel. The third is there are legacy technology stacks for some banks, which are really gonna hamper the pace of innovation. And then lastly, the new distribution points for engagement as a result of this, we believe that we know that "Customer data is the most valuable asset for banks, but transitioning that data into actionable advice is what truly creates advantage and not just for your best customers, but for all of your customers."
Jody Bhagat: (
We believe that data driven personalization will be the new basis of competition. And there's three stages in this maturity path to this outcome. So the first one is analyzing customer transaction data and delivering personalized insights and advice. What should I be aware of at this point in time and what should I take action on? The second stage is helping customers with jobs to be done through journeys. And that's a combination of products, insights, and programs. The last stage is what we call connected channels that is propagating intelligence across channels. So you're delivering unified advice.
Jody Bhagat: (
Now, while this is fairly innovative, we're gonna go into personalized insights and advice, and we'll go a little deeper on this at Personetics, we offer 300 or so personalized insights across 11 different categories, and it spans the gamut from understanding the subscription payments that you have coming up to identifying, multiple subscriptions in the same category to monitoring your transactions, to look for anomalies and calling it out for customers when there's deposit anomalies or payment anomalies using transaction data to identify when is a customer better suited for a different product. Then there's also a set of insights around proactive balance forecasting. This helps customers anticipate when they may have a cash flow issue. So while this seems relatively innovative and forward leaning, there are many banks that are embracing this capability. Tomorrow, you'll see Tim Welsh, the vice chairman at US bank. US bank just received the number one mobile ranking last month from Key Nova. Specifically they called out US bank is leading in personalization, serving up more than 2 billion personalized insights to proactively help customers in their financial health.
Jody Bhagat: (
Huntington bank is another great example. They're actually using this capability to amplify their brand promise of looking out for customers. In their capability called digital hub, they branded the experience called heads up and money scout. They've been called out as quietly becoming a digital powerhouse by financial brand and their number one mobile app amongst regional banks actually just last week for 2022 as well. So many banks are using this kind of capability of course, to communicate with their current customers to deepen relationships. But some of the forward leaning banks are also using the capability to attract new customers and drive organic growth. DBS, which is one of the leading banks in Singapore has been called most innovative in digital bank globally and one of Asia's best banks, and they're using this capability to promote to new customer and drive organic growth. Let's take a look.
Speaker 2: (
What if banking could be more intuitive and it could learn what matters to you? So when something looks unusual, it lets you know fast, it keeps an eye on things. So you can just exactly! Because an effortless day is living more and banking, less tap into a world of effortless banking.
Jody Bhagat: (
So they branded the experience, effortless banking, pretty catchy. And while these are examples of very forward leaning banks, we believe that in the next two years that a basic version of personalized insights and advice will be ubiquitous, will be delivered by all banks and demanded by customers. But, the forward leaning banks will use it as a way to continue to differentiate their experience and that the way they engage customers. Please focus on personalized insights as a first phase. Look to accommodate it, as part of your 2023 roadmap as well. So insights are great in terms of actions to take at that moment, but customers have a variety of different financial jobs to be done. They may be interested in managing spending over time or establishing emergency savings or paying down debt or saving for a goal and this can be supported by journeys on behalf of banks to do that effectively need three things.
Jody Bhagat: (
One is recognizing the need to initiate the journey. Second is deliver the journey through a combination of products, insights, programs, and the third is reinforce positive behavior and acknowledge progress. So let's take an example here where this is a customer that we see in their transaction data that they've got increased, external debt, it's revolving debt, and we verified their income as well, they're credit worthy. So we're gonna offer two solutions to this customer. One is they can take out a debt consolidation, loan, and immediately improve their savings. The second is an automated program where the bank can act on your behalf. We will intelligently evaluate the capacity and cash available in your checking to cover your expenses and move money on behalf of customers to pay down the high interest debt in an automated program. Most importantly, we're gonna acknowledge progress and congratulate and recognize that customer for achieving that goal.
Jody Bhagat: (
Now here's a customer with a different example, which is we'll recognize in the transaction data that this customer has had a 15% income boost, or maybe they have a secondary source of income. More of the cash is leaving the bank, going to an external investment house, and they've got excess capacity in their checking account, more than enough to cover their expenses. So again, two options here. We're gonna tell that customer, look, you can save $600 right now, move it to your savings and investment, but we'll also offer that customer, the ability to set up and save for a goal or enroll in a program where your, the bank's analytical models will identify how much cash is available. So let's say the customer wants to save $600. Every paycheck when that paycheck comes in, the bank can have the analytics capability to evaluate, can they save this $600 or has something changed in their behavior, either income inflows or outflows, and either move that $600, or maybe it'll just be 300 or maybe we'll inform the customer that there's been such impairment that we can't move anything today.
Jody Bhagat: (
So the ability to start the savings program help in terms of assist in the program and then reinforce the behavior is very powerful as part of delivery of that journey. Now, one of the most, I think interesting applications because it's so timely and relevant is how you apply that to overdraft experience. And there's three pillars around this. The first is to recognize the customer profile. The second is a prediction algorithm for those customers that are likely to overdraft. And third is treatment or tailored advice in the first one, as part of our testing, we've recognized four personas that are prevalent in overdraft situations, not surprisingly. One is the paycheck to paycheck customer. The second is a customer that has recently had a financial hardship. Let's say they've had a, a medical expense or some kind of auto repair expense. The third is customer that has that just mismanages a sloppy around the timing of their finances.
Jody Bhagat: (
And the last is an affluent customer. That's made a mistake on the predictive side, we've back tested the model and can anticipate accurately 70% of overdraft conditions that occur. Now, why is this important when you can combine these two elements, understanding who that customer is and their likelihood to overdraft or have a cash flow liquidity issue in the near term or medium term, you can unleash the creativity of the bank. You can offer overdraft protection or emergency savings, or a short term installment loan, or helping them manage to a budget or credit score improvement. But the key is that you can improve not, you can not just ameliorate the customer's situation. You can improve their financial wellbeing as well. So let's move to the third stage, which is connected channels. This is propagating customer intelligence across channels. There's enormous richness in the transaction data. You can tell primary versus secondary relationship activity, the monthly income and monthly expenses, the stability of that, their ability to save money and where that money is going, their, whether they're transacting or revolving on the card side and dig a little deeper, you can see here's the trend over time in terms of their assets, their cash flow and where their sensitive periods may be.
Jody Bhagat: (
Then information about their income, the stability of their income last 12 months of income, the sources of those income, and this can be applied both at the portfolio level where you can see the top providers and the top trends, but most importantly, at the individual customer level, where in the transaction data, you're revealing certain opportunities. Now this customer let's say, has been shopping at home Depot and Lowe's, and we can see we've cleansed that data and categorized it as part of home improvement category. And we know that's a disproportionate spends. So we know this customer is just embarked on the home improvement cycle. So let's see how we can use that today. So here's the customer high spend at home improvement merchants. They have an external mortgage, no home equity payments and high branch propensity as well for this customer. So in the digital channel, what we'll do is deliver educational content about home improvement and home equity options. Perhaps, we'll offer them the ability to set up an appointment with a banker, but even more important, we'll deliver this informed content to the banker because we want them to make an informed outreach in a helpful way to discuss home equity options with customers. Lastly, propagate this intelligence to the customer data platform or the audience management platform for the purposes of improving audience targeting across campaigns.
Jody Bhagat: (
So this is the power of data driven personalization. It can impact and improve enhance the customer experience, the digital experience. It can drive value in terms of banker sales and productivity, sales and service productivity. And it can also improve marketing conversion. Our clients share with us that they say they see rapid gains around digital engagement and NPS. Those are more leading indicators and then on a lagging basis, improvement around digital sales, as well as retention. Now, data driven personalization is not just a way to sell more stuff, right? It is a capability that can help customers better manage their day to day banking and improve their financial wellbeing. So during this time of transition for the industry where we know there's going to be separation between leaders in laggards, one of the fascinating elements is that the sweet irony that advanced analytics and data can help banks deliver on the most fundamental and actually simple tenants, which continue to endure for customers to know me, to value me and to advise me, thank you very much.