The Challenges of Next Best Product Recommendations in Banking
by: EMS Consulting
Intelligent product recommendations are a must in today’s marketing practices, but some industries have it much easier than others. For example, if I’m a retail marketer for an online clothing company, it makes sense for me to target “blue shoes” purchasers with complimentary belts, bags, and probably even more shoes.
The banking industry, however, does not have the luxury of using their own internal purchasing signals to cross-sell to their customers in a straightforward way. For one, banking purchase decisions don’t happen the same way as retail purchase decisions; just because a customer opens a new checking account doesn’t mean they want more of them. Similarly, banking customers do not wake up in the morning craving a new Home Equity Loan; they want a new kitchen, fresh landscaping, or a new swimming pool, none of which are products that the bank or credit union offers directly.
Welcome to the challenge that financial services marketers have been trying to solve for more than a decade: Next Best Banking Product recommendations. Let’s take a deep dive into each of the challenges that need to be considered if you’re wanting to perfect your banking product recommendations.
#1: Banks and Credit Unions Want to Cross-Sell to Existing Customers/Members Without Re-Pricing Accounts & Loans Already on the Books
Having solid system integrations and near-time data flow can help financial services marketers have more access and control over this strategy, but they are still at risk of irritating customers by offering them a great rate on a new loan or deposit account that does not necessarily apply to the customers’ existing loans and accounts. Financial services marketers without the proper data access are forced to ‘do the best they can with what they have,’ often resulting in a marketing email with long disclosures sent to a very small group of customers that clear a dozen different criteria. Banks and credit unions want a better way to do this.
#2: Banking Customers/Members Don’t Usually Make Their Purchase Decisions at the Branch or On the Website
There are countless studies on this, and my favorite is one that Google did a number of years back on how people use Google searches to purchase new cars. I highly recommend checking it out but in case you don’t have time, a big takeaway is that consumers buying a new car don’t even start to think about affordability and financing until halfway through their purchase journey. And by then, the dealership has been hitting them with amazing financing offers like 0% and cash-back.
That means if banks and credit unions wait for consumers to visit their Auto Loan page in order to recognize a purchase intent signal, they are most likely going to miss their opportunity to get the loan.
The same challenge applies to other banking products. Consumers are doing a ton of external research before making their way to the website or physical branch to open an account or apply for a loan.
Don’t get me wrong – financial services marketers do their best to combat this challenge by launching strong Paid Search & Display strategies, SEO/ organic strategies, content strategies, and even doing some amount of social listening. And while these strategies do work, there is still a massive set of consumers that can’t be reached because big box stores or dealerships did a better job of earning their trust and attention when they were more top of funnel.
#3: Identifying and Capturing (Accurate) External Banking Purchase Intent Signals Costs Money
This challenge is really the consequence of #2; because purchase intent signals are happening externally, it means that a bank or credit union will need to likely mine or purchase that data elsewhere.
So where can banks and credit unions start looking for these signals?
Credit Bureaus. Banks and credit unions can purchase fresh credit and/or persona data on their customer base to help liven up their marketing and segmentation abilities. The cost and level of effort depends on the organization’s technical infrastructure and data architecture.
Fresh Credit Reports. When a banking customer/member applies for a loan or opens a new account, a fresh credit report is usually pulled. This presents a great opportunity for the bank or credit union to uncover cross-sell and external refinance opportunities. A strong CRM can help account managers do this efficiently; a more automated and scalable solution could be built with the right data and integrations.
DMP. A Data Management Platform gives marketers the ability to leverage second- and third-party data (alongside first-party data) to create powerful advertising segments, talk to customers the same way across their many devices, and ultimately reach consumers who are more top-of-funnel. Banks and credit unions that really want to master multi-channel marketing may want to consider a DMP and working with their online banking vendor to implement and take full advantage of the authentication pixel.
UTM Parameters from Paid Search, Display, & Social Advertising. This was already mentioned as being an affordable and effective way to get website traffic and business; but in order to leverage those signals across all advertising channels, UTM parameters need to be fed to a centralized location (such as a Salesforce Lead record) where a marketing automation platform (like Marketing Cloud) can easily leverage that data. This strategy is a great first step toward the DMP.
The Financial Institution’s Own Website. These signals are an important part of a holistic and comprehensive digital strategy. But unless the bank or credit union is drawing top-of-funnel traffic, these signals often occur late in the purchase journey and are more reactive than proactive. In other words, these signals become much more useful once there is a top-of-funnel advertising strategy like display.
#4: Banking Purchase Intent & Cross-Sell Data Quickly Become Stale or Irrelevant
And by quickly, I mean within a matter of days, or even a month. Here are some examples.
Customer visits the Auto Loans page from an ad.
Customer is shopping for a car and looking for an auto loan calculator. They do an online search and click on an Auto Loan ad for a credit union; they use the calculator to determine affordability. Customer then calls the dealership back to finish making their purchase. The dealer offers them a cash-back incentive for financing with the dealer. The credit union has already lost the loan, but the financial services marketer just started re-marketing their 2.99% APR to them, resulting in wasted spend.
Credit report data expires.
Customer opens a Checking Account at a bank and gets set up with all the standard fixings. During account opening, a fresh credit report was pulled in order to help verify their identity. It shows all of the consumer’s trade lines like their Car Loan with a big bank, and their HELOC – all of which are ripe for a refinance and may even be able to leverage this fresh credit score (without having to re-pull credit). But the account manager got busy this month and didn’t have time to pick up the phone to cross-sell. What a missed opportunity.
In a more successful scenario, a financial institution would have a more scalable way of mining the fresh credit report for cross-sell and refinance opportunities and leveraging that data in their marketing platform to begin those cross-sell campaigns.
#5: Opening New Accounts & Applying for Loans Online Are Still Awful Experiences and Almost Impossible to Track Internally
Even if a perfect Next Best Product engine were to be created, there is still the issue of the poor online application experience at many small to medium sized financial institutions. Today’s consumers have been Netflix’d and Amazon’d by almost every industry except banking, mostly due to being bogged down with technical debt and disparate systems. If the bank/ credit union has a long and repetitive online account opening/ loan application experience, consumers aren’t as likely to tolerate it today as they would’ve been 10 years ago.
Consumers want fast loan decisions. You might even be thinking, “Wait, I thought all online loan applications gave decisions at the end of the app,” but that is rarely the case. Most applications push the application data to a loan officer to internally review and give a decision on. That means loan decisions can take several hours or days, depending on staffing, business hours, and holidays.
Consumers want online applications to be easy. It would be an understatement to say that they are not. Consumers are tired of repeating their information over and over when they don’t have to. They’re also tired of confusing language on apps, and they’re even more annoyed when you allow them to open the account online but still make them come into a branch to provide their ID.
Consumers abandon long applications. Unfortunately, banking regulations and compliance burdens make it challenging to streamline loan applications. Even worse is that most banks and credit unions rely on third-party LOS’ that do not allow full access to application data; that means banks and CUs can’t easily market to their own customers/members who’ve abandoned an application.
Ready to Conquer Your Next Best Product Recommendation Challenges?
EMS Consulting in Tampa, FL has been helping banks, credit unions, mortgage companies, insurance groups, and wealth management firms with their Salesforce implementations and complex system integrations for over 20 years. Our team of developers and solutions architects are certified across a number of core systems including Salesforce, Marketing Cloud, Symitar, nCino, Encompass, MuleSoft, and more. We are committed to helping banks and credit unions transform the banking industry and put their customers and members at the center of everything they do.
Contact us today – we’d love the opportunity to work with you.