3 Reasons Why Financial Institutions Need to Create (Even More) Personalized Experiences

Financial institutions must foster personalized digital experiences to stay competitive. A robust multi-layered identity verification process is an essential piece of the personalization process.

With each passing year, the competitive landscape becomes more challenging for financial institutions. In addition to maintaining compliance with changing industry regulations, they face growing competition from digital fintech challengers. At the same time, household names such as Amazon and Netflix have perfected the digital experience, essentially leading consumers to expect the same level of personalization from every brand they engage with, including financial institutions.

Recent research shows that rising above the noise and taking back market share will require financial institutions to meet consumer demand for personalized experiences that rival those offered by digital disruptors. With nearly endless choices, ninety-one percent of consumers said they would be more likely to shop with a brand that recognizes them and provides relevant offers.

However, consumers show discomfort over how their Personal Identifiable Information (PII) is collected and what companies do with that data. Our 4th Annual Consumer Digital Identity Study revealed that 70% of American consumers believe companies collect personal information without customer knowledge. Additionally, those surveyed are “extremely to very” concerned about companies collecting personal data without their permission. These findings show growing skepticism, if not distrust, and highlight the importance of personalized, transparent policies for collecting and using customer data.

While personalization offers the potential to forge a stronger connection, financial institutions can’t overlook consumer concerns about how organizations handle personal data. Balancing the need for data to support personalization with digital privacy concerns is a growing challenge. As a result, a robust digital identity verification process is essential for kicking off the personalization process, here’s why:

1. An effective verification program can help quell consumer concerns over digital privacy:According to our Digital Identity Study, security is most important to 70% of Americans when they sign up for a new account online. Eighty-eight percent noted that they will discontinue a helpful personalization service if they don’t understand how their data is managed. This shows consumers are serious about data security and they’re willing to prove that point with wallets.Our white paper Getting Personal: The Role of Identity Verification in Customer Personalization Programs continues this point. The paper explains that when consumers know a financial services provider uses more advanced identity verification methods it impacts their preference for that company. In fact, 75% of Americans said that the use of a robust solution would influence their decision-making process.
2. Consumers who trust a company to handle their data are willing to give more:Personal information is what allows financial institutions to create and operate personalized programs. However, consumers must be willing to provide their personal information in the first place, which takes a level of trust.The Getting Personal white paper explores this point. The white paper reports that 207 million Americans believe it’s extremely important that they can trust a company to securely verify their identity. Building trust has lasting benefits to personalization. Our Digital Identity Study found 83% of consumers are willing to share their data with a company they trust in order to enable a personalized experience.
3. A properly embedded verification program doesn’t cause friction:Another vital tenant of personalization is managing friction. Onboarding can be a stumbling block for financial institutions, with the collection of PII being where most get tripped up. It may not come as a surprise that most Americans dislike additional steps during a verification process.Unnecessary friction during onboarding has immediate and downstream effects. Our digital consumer study found that 93 million Americans have abandoned signing up for a new online account in the last 12 months because the process was too difficult, too time-consuming, or did not seem trustworthy. Those that did sign up are less likely to engage in other downstream desirable business practices.

As consumers spend more time online, the expectations for seamless digital experiences skyrocket. Financial institutions must look at ways to create enhanced customer journeys that build trust. As trust deepens and the customer supplements the data in the financial institution’s possession, personalization becomes easier to deliver and more insightful.

Learn more about how IDology’s ExpectID digital identity verification platform can help your journey to personalization that rises above the noise and connects with customers on a deeper level in our latest whitepaper, Getting Personal: The Role of Identity Verification in Customer Personalization Programs.