The Challenges of Next Best Product Recommendations in Banking

by: EMS Consulting

Intelligent product recommendations are a must in today’s marketing practices, but in banking, that’s easier said than done. 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 designing banking product recommendations.

#1: Banks & Credit Unions Want to Cross-Sell to Existing Customers/Members Without Re-Pricing Existing Accounts & Loans

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.

Potential Solutions? Banks and credit unions need to be able to carefully segment their customers/members appropriately by account status, balances, and even occasionally transactional data — all of which is possible with the proper tech stack and data architecture. Salesforce CRM and Marketing Cloud integrated together makes this a much easier endeavor.

#2: Banking Customers/Members Don’t Shop on Banking Websites

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. My big takeaway was learning that car shoppers don’t even think about their loan or financing until halfway through their car 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 (unless they happen to have an Indirect relationship with the dealer).

The same challenge applies to Home Equity Loans and HELOCs. Consumers aren’t researching or shopping for the things that a Home Equity Loan or HELOC can help them buy, such as home improvements or college tuition.

Potential Solutions? Banks and credit unions have a great opportunity to invest in their website content and product research tools. Showcasing financial expertise around topics that really resonate with today’s consumers (like home improvements and growing a family) is a fantastic way to earn customers’/members’ trust and business. And once they’re shopping and researching on your website, you own those purchase and engagement signals which, over time, lowers your advertising cost.

#3: Purchasing Third-Party Data and Intent Signals is Expensive

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 — and act on those incoming leads quickly.

Potential Solutions? Let’s look at some of the places banks and credit unions can find the best first-, second-, and third-party data to use:

  • 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.
  • UTM Parameters from Paid Search, Display, & Social Advertising. These are affordable and effective ways to get website traffic and leads; 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.
  • 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, or once there is website content and research tools to attract top-of-funnel shoppers and researchers.

#4: Banking Intent & Cross-Sell Data Quickly Become Stale or Irrelevant

Bankers know that timing is everything. Alignment between Marketing and Sales teams is absolutely critical in ensuring that fresh cross-sell data is acted upon as quickly as possible. Sales teams must be trained and empowered to respond to incoming leads within mere minutes; and Marketing must be empowered with the right tech stack and near-time data to craft those automated cross-sell campaigns.

Potential Solutions? With the right tech stack and data architecture in place, that entire process could be automated and scalable. The financial institution would have an automated way of mining freshly obtained credit report data for cross-sell and refinance opportunities and then leveraging that data in their marketing platform to begin those cross-sell campaigns. Another instance where legacy system and data harmonization can save the day.

#5: Applying for New Accounts and Loans Online Is Still Difficult

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. Loan decisions can often take several hours or days, depending on staffing, business hours, and holidays.
  • Consumers want online applications to be easy. They are tired of repeating their known 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.

Potential Solutions? Banks and credit unions that have Salesforce already have a huge advantage because building loan applications in Salesforce has been done successfully time and time again. We recommend partnering with Salesforce certified consultants like us who’ve done this before so that you can focus on innovation while we work out the technical requirements.

Ready to Align Your Tech Stack With Your Customers’ Expectations?

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 align their tech stacks, unify their data, and ultimately transform the banking industry.

Contact us today – we’d love the opportunity to work with you.