In a continuously evolving financial environment, customers are demanding solutions that, in line with capital management needs, can provide simpler products where benefits and risks are easy to understand. This demand forces financial institutions to choose: accompanying clients in a traditional model or seeking the orientation towards a model of personalized and simplified products and services.
When carrying out a customization-oriented model, financial institutions should consider a set of barriers that must be taken into account when focusing on personalized services model:
- Personalization can add complexity from the customer's perspective.
- Surplus in personalization can negatively reverse customer perception; when facing to a large number of choices, he may tend to avoid making decisions.
- Not all customers want or need the same degree of personalization, so financial institutions must be able to segment their customers effectively, to provide just the right degree of personalization.
- As there is no automated procedure in "opportunity generation", personalization process is expensive in relation to large segments-mass distribution.
- Lack of flexibility of current systems does not allow the creation of new products without costly initial investment.
Keeping these barriers in mind, companies must use personalization in order to create competitive advantages and offer personalized options in order to:
- Reduce customer churn by strengthening the perception of added value.
- Improve customer attraction through the word of mouth method derived from the satisfaction of existing customers.
Better knowledge of customer needs through the collection and adding of information from each singular customer will enable the creation of new personalized products and do it more efficiently.