Big tech is coming for your customers—here’s what you can do about it
Image credit: Sensibill
With tech giants like Google and Amazon moving in on customer data, your financial institution must be ready to respond—and in unique ways.
2020 was a rough year for, well, the entire world—but for tech giants like Apple, Amazon, and Google, a tumultuous year presented numerous opportunities to capitalize on new service and product offerings. And, in 2021, big tech is only continuing this trend. Not only are the GAFAs iterating on their existing products; they’re swiftly infiltrating other industries, offering customers more than just tech devices and next-day delivery.
In 2020, Amazon announced its Amazon Shopper Panel, a program that pays consumers for uploading their receipts for non-Amazon purchases. If that didn’t cause your financial institution to panic, perhaps this will: Google also relaunched Google Pay to become an all-encompassing financial app—including the ability for users to upload and interact with receipts, where the Google Pay app will crawl Gmail and Google Photos for receipts.
While the industry has speculated about big tech’s threat to traditional financial institutions for years, one thing is abundantly clear: your FI is no longer the only player with skin in the game as big tech encroaches on digital banking and spend solutions. In the words of Ross Geller: PIVOT!
Digital is no longer a differentiator
Most institutions had long ago recognized the need to digitize their products. Even pre-pandemic, going digital was not new, and today, it’s no longer considered a differentiator—it’s table stakes. For digital tools, solutions, and services to truly perform, they need to engage customers and offer something more than just the ability to check account balances or chat with a bot through a mobile banking app. Instead, the experience needs to be personalized to not only engage but help customers. That’s where personalization comes in.
Consider this: 45% of consumers feel the pandemic has changed the way they interact with their bank. Add to the mix the fact that 50% of millennials would consider banking with big tech like Google or Amazon, and nearly 35% of Amazon’s sales come from personalized recommendations. As a financial institution, that may keep you up at night, but it shouldn’t.
“We’ve been saying it for years: if FIs don't iterate to offer more robust solutions that truly help their customers (like expense and everyday spend management), the Googles and Amazons of the world will. And now they have. It’s time to stop watching from the sidelines and play ball.”
— Corey Gross, Co-founder and CEO, Sensibill
Customers don’t want just any product, nor do they want irrelevant financial advice or solutions that don’t serve them. Instead, they seek solutions that cater to their specific needs, helping them achieve their own version of financial wellness. For FIs, this means providing access to products and services that meet your customers’ needs right now, where they are at this stage, and where they’re headed.
It’s not all doom-and-gloom
For FIs, big tech’s move into receipts and finance management is actually a good thing. Here’s why:
As an FI, you already have a foundation of trust built with your customers—they know you, like you, stick with you, and you already have them in your ecosystem
Unlike big tech, your institution has established customer relationships you’ve had for decades, and those relationships give customers the impetus to share their data with you
You’re already practicing some level of personalization
The key to ensuring big tech doesn’t outpace you? Applying digital personalization on a deeper level with a human-centric approach. A human approach to personalization allows you to dive beneath the surface of customer data and offer products that actually matter to your customers. After all, you don’t need more data—you need better, deeper data.
Let’s take a look at an example of personalization at work.
Jane and Amanda are both customers of Awesome Bank, and both recently spent $100 at Walmart. Traditionally, Awesome Bank would offer Jane and Amanda the same or similar financial products, because the data they have access to doesn’t go deep enough to suggest that both customers are unique.
But what if Awesome Bank could extract data from Jane and Amanda’s purchases, right down to the SKU-level, that showed Jane is a new mother who recently purchased a new home with her partner? Or, that Amanda is a new grad student who travels for her thesis program and regularly purchases travel accessories?
Jane could benefit from a line of credit and robust savings account for her child’s future college fund. And Amanda? Well, she could probably use a points-based credit card or cashback rewards card for all of her travel purchases.
Personalize or perish: it’s that simple
How banks cater to customers like Jane and Amanda’s very real needs is by extracting and harnessing SKU-level data. But the why is in understanding customers on a much deeper level. If you consider that your customers are real people with real needs, personalization makes it possible to humanize the digital banking experience and truly nurture the financial health of your customers. When your customers see they can achieve financial wellness with your institution, there’s reason to stick around.
However, you do need to be prepared to personalize on a level far greater than ever before—or risk perishing in the face of big tech.
For financial institutions, there is no “second chance” at retaining customers once big tech has sunk their teeth in, but through personalization, you can offer more value and solutions that humanize your FI (and nurture your customers). You don’t have to start from scratch as big tech does—by partnering with fintechs that offer solutions you can leverage, you can become a disruptor and give the GAFAs of the world a run for their money (no pun intended...sort of).