(PoV) Personalising payment products without breaking (or changing) the bank
Enabling consumers to personalise all aspects of their card was once seen as near impossible due to the cost and time needed to overhaul legacy infrastructure. In our latest PoV, we look at how today’s technology, like Verrency, can bring personalisation to life leveraging existing platforms within the Bank
Personalisation within the banking industry is still in its infancy compared with other industries such as Netflix and Amazon. Banks understand they have in their possession a wealth of data about each individual customer and are on a path (albeit a slow one) of beginning to leverage data analytics for the benefits of their clients.
When it comes to personalization, banks can learn from other industries. In FMCG, 1 in 5 consumers who purchase a personalised product are willing to pay 20% more. Customers who personalise their own products are more engaged, and therefore use and recommend the product more than customers who haven’t personalised their products. Consumer behavioural psychology and business mathematics add up beautifully when it comes to product personalization.
“When cardholders are allowed to choose their benefits, they perceive their card value to be three times higher, and they stay loyal to that card longer”Mastercard
So, what’s holding the banking industry back from providing personalized products and services – and especially debit and credit card products that make up the bulk of interactions between a bank and their customers? The answer lies in the cost and time of managing such personalisation within the various legacy systems the banks have. Building card products (in Card Management Systems) is expensive and time consuming and commercial success of a card product can only truly be tested once the product is launched and is already in the hands of customers, when it’s incredibly difficult and expensive to change. As such, what banks find in consumer research may not always come to reality when products are actually tested in the market. Given the limited current technical ability and the limited technical ability to do AB testing in production it is little wonder why there is such minimal differentiation across card products today.
Forward thinking banks, however, have begun implementing new technologies to change this status quo without replacing their existing CMS or other legacy systems. These banks have plugged new technologies into their existing payments infrastructure that can manage individual card preferences right down to the features and benefits chosen. By orchestrating these services outside of the CMS or a bank’s existing legacy infrastructure, it allows these banks to:
- Enable consumers to toggle on and off the ‘formerly-static’ features, benefits, and services that are attached to their individual card product
- Leverage existing card portfolio ranges to launch new services to market, portfolio-by-portfolio, without needing to migrate portfolios
- Consolidate product portfolios down to essentially the basic scheme offerings based on card tier (i.e. platinum, gold, silver, etc) because everything else can be personalised – and to do so across existing portfolios even if those portfolios are managed by different processors, different CMSs, or different legacy switches
- Test and learn new card features, experiences, and services in the real world at minimal cost
- Accelerate go-to-market of new services consistently as work efforts are now focused on enabling and testing multiple new features and benefits over multiple cycles in place of building a new product from scratch
- Finally, become agile in terms of product development and testing in production.
The technology available to banks today allows them to deliver personalised services and to achieve these benefits, without the need for banks to invest in overhauling their legacy systems.
In the next blog, we will look into how this type of product personalisation looks from a bank customer’s perspective – ie, enabling consumers to build and manage their own card product – and how this enables a bank to truly differentiate its product offering in the market.
Deloitte – Made to Order: The Rise of Mass Personalisation: https://www2.deloitte.com/content/dam/Deloitte/ch/Documents/consumer-business/ch-en-consumer-business-made-to-order-consumer-review.pdf;