A R T I C L E
The end of one-size-fits-all banking: towards tailored value propositions
Exploring the “what now, where next and how” when designing and delivering tailored engagement banking at scale
Digital banking has upended customer expectations of what a bank can be. Slick, secure and at our fingertips 24/7, digital has profoundly disrupted branch and telephone banking to deliver a new era of convenience from which there will be no return.
Yet digital has also squeezed the human touch – and the personalised experience – from the banking relationship. Research has found a majority of customers think digital banking apps all look the same, with just one-in-three saying their primary provider offers unique value and is different from other banks, while other research finds the majority of log-ins are to check account balances.
Tim Rutten, CMO at Backbase, says digital banking has become transactional. ‘Banking used to be about relationships, but something got lost along the way,’ he says. ‘Banks have made great progress in digitising processes and customer journeys, but digital banking has become commoditised and it’s becoming harder for banks to differentiate, even between incumbents and challengers.’
This commoditisation has eroded loyalty, with customers more prepared than ever to capitalise on an increasingly fragmented market to secure cash incentives or preferential savings rates by switching providers. This behaviour comes at a cost to banks, both incumbents and challengers, with almost 70 per cent of digitally-acquired customers not activating their accounts.
“Convincing these ‘savvy switchers’ to stay means going beyond the transactional and connecting with customers on a more personalised level to earn trust and build loyalty”, said Rutten.
Raising the bar: the advantage of incumbent banks
The return to a more personalised banking experience means moving away from one-size-fits-all digital banking and giving customers tailored experiences, products and advice. It is here that the incumbent banks hold a unique advantage. When it comes to big life decisions, whether buying a first home or planning for retirement, many customers still want the reassurance of talking to a professional from a trusted institution.
‘Customers still tend to come to us when their needs become more complex, and we are well-positioned to receive them when they reach these life stages,’ says Søren Rode Jain Andreasen, Head of Digital Customer Engagement Hub at Nordea.
This dual approach – reinventing and scaling personalised digital services, while offering human advice for nuanced needs – gives traditional banks an edge. By leveraging their vast repositories of customer data, these banks can personalise services on a level that digital-only competitors struggle to match without a significant increase in costs. And AI offers new opportunities for banks to offer the level of personalised service once delivered through branches, right within digital channels.
"We have reached a tipping point… more customer enquiries are resolved using our chatbot than the phone."
‘We have reached a tipping point now where more customer enquiries are resolved using our chatbot than the phone,’ notes Andreasen. He credits Nordea’s investment in enhanced capabilities, which means a chatbot can not only recognise the customer to deliver a slick and personal experience but can also execute recommended actions to resolve queries. ‘It means we can scale much more quickly than would be feasible using people,’ he says.
Improved digital capabilities are being rolled out in different areas, with new technologies like generative AI starting to accelerate personalisation and self-service capabilities at scale. The Nordic bank has, for example, developed a savings robot – ‘Nora’ – that helps customers find an investment fund tailored for their financial situation, risk appetite and investment horizon. Customers can start investing with as little as ten euros a month. This tool widens the accessibility of tailored personal financial advice and investing, bringing a new audience to both the bank and the concept of investing – without piling on costs.
‘We’re seeing capabilities that are superior to what we can do with people, and we can do it at scale, 24/7, whenever the customer has a need,’ says Andreasen.
Back to the future: building meaningful customer relationships at scale
The next generation of banking isn’t about using digital to strip costs, however. Banking executives are clear that digital works best where it adds value, rather than driving out cost. To survive in a highly fragmented and competitive marketplace, banks need to focus on transforming their digital channels into a growth engine that helps them build those long term, life-of-the-customer (and beyond) relationships.
It’s about banking that feels more human (even if delivered by AI) and that can connect meaningfully with customers and help them achieve their financial goals, wherever they are on their journey.
Vanquis Bank, for example, is already doing this by delivering highly personalised services for its customers, who typically have lower disposable income, little to no savings and consequently lower financial resilience. Having undertaken extensive research into its customer base, Vanquis has developed a range of digital tools and apps that are focused on making life better.
“We’re here to help customers borrow healthily, build a financial safety net and to feel in control of their day-to-day finances,” explains Genevieve Kangurs, Customer Director at Vanquis.
Digital tools can make a real impact with this segment of customers by sharing data insights and helpful nudges to improve their financial wellbeing. Snoop, the bank’s open banking mobile app, for example, claims to help customers save £1,500 a year by sharing tailored money saving tips and switching them to lower cost providers.
‘It’s putting the customer at the heart of what we are doing and helping them achieve their goals,’ says Kangurs. ‘Everyone wants comfort, stability and peace of mind, and the ability to make the most of life opportunities.’
This only works when the bank has a really good understanding of its customers. And this is a challenge for most organisations.
‘Life today is super complex, and you have to be able to understand that complexity in your customer’s life and help them navigate it,’ says Søren Rode Jain Andreasen at Nordea. ‘It’s never just about one individual, but about their family, their job, do they have a business, who do they share their household with, do they have other financial relationships, such as with nannies or carers?’
This complex web of inter-related financial connections, motivations and challenges, which may span different generations and product lines, can be difficult to track and make sense of but it is key to understanding the customer, and the journey they are on – and the opportunities that different life moments may present.
Again, incumbents can have the edge. ‘This complexity is something the neobanks hate, because you need scale for it all to make sense,’ says Andreasen.
Banks already hold vast stores of data about their customers, and they are widely trusted, which means customers are likely to share more data if they can see a value exchange in return. ‘By design, banks are good at managing data and keeping it safe,’ says Andreasen. ‘For us, the challenge is about opening up data unlike other industries, where the focus is on trying to make it more secure. We are always struggling to balance this and will never compromise on data security.’
Delivering tailored value propositions by blending technology with customer empathy
This data advantage is one that banks can do more with – if they have the technology in place to use it to deliver highly tailored services.
For traditional banks, however, this is easier said than done as they must carry the weight of a customer base that spans multiple different segments, with vastly different preferences and lifestyles, from those firmly wedded to in-person branch banking to those who prefer a 100% self-serve digital experience.
‘Delivering this level of personalisation using traditional banking technology is simply impossible’ says Tim Rutten. ‘Legacy banking systems are difficult and expensive to customise and they perpetuate channel and product siloes, resulting in a fragmented experience. And banks cannot afford to build multiple different applications from scratch to cater to the unique needs of all their different customer segments”.
To meet the rising demand for personalised, meaningful customer engagement, banks are increasingly turning to composable engagement banking platforms that give them the ability to orchestrate interactions across channels. These platforms offer pre-built components that banks can dynamically assemble to create segment-based applications without the need to build every app and component from scratch. This composable approach allows for efficient reuse across applications and channels, enabling them to deliver tailored experiences at every step of the customer journey by simply adapting modular elements to fit different customer needs and preferences.
‘It’s about augmenting and extending in-house capabilities rather than building everything from the ground up so a bank can focus their limited development resources on truly differentiating capabilities and services,’ he says
“An engagement banking platform can unify data and processes, integrating advanced analytics, AI, and customer insights to provide a consistent, tailored experience, whether a customer is engaging through AI chat, a mobile app, or face-to-face with an advisor.”
The human factor
Despite the profound changes wrought by digital technology, banking will always be a people business. Current accounts, loans and interest rates are just enabling products that let us live our lives, and, when it comes to big life moments, humans look to other humans.
AI offers new possibilities to ensure those interactions are as smooth and efficient as possible, by sifting data and surfacing insights to augment bank employees with next best action suggestions and tailored product recommendations. This digital assistance allows the human agents to do what they do best: be empathetic, and apply human judgement to understand nuance, identify vulnerability and respond with care.
This blend of human and technology requires a mindset shift so that the technology is embraced, rather than feared, and its transformative power is deployed effectively.
‘People and culture are the most important things,’ says Genevieve Kangurs at Vanquis. ‘It can be driven from the top but that’s not enough on its own, it needs to be at every level of the organisation.’
Good leaders show the art of the possible. Roger Bannister famously smashed the four-minute-mile barrier – and was soon joined by other sub-four milers who followed in his very fast footsteps once that psychological threshold had been broken.
"Change doesn’t happen linearly but takes big jumps forward…The banks that succeed will be those that are able to be open, curious, fluid and adaptable"
‘Change doesn’t happen linearly but takes big jumps forward,’ says Kangurs. Disruptive technologies like generative AI or black swan events like COVID-19 can act as catalysts for mass innovation. And it is those organisations that can flex and adapt that will thrive. ‘The banks that succeed will be those that are able to be open, curious, fluid and adaptable,’ she says.
This very human people management and culture change piece needs as much attention – if not more – as the coding and systems configurations of the digital arena. After all, technology is ultimately the tool through which the values and culture of the bank will be communicated to customers. Even a fully digital, robo-enabled banking proposition is one designed, tooled and deployed by humans to deliver the personal relationship banking that was the hallmark of the past but now re-imagined for new generations, whatever the future may hold.
Genevieve Kangurs,
Customer Director
Vanquis
Genevieve is the Customer Director for Vanquis Banking Group. She is a customer experience and digital specialist with ~20 years’ experience in designing and delivering strategic transformation in financial services across brands including Barclays, Barclaycard, TSB and Wesleyan.
Søren Rode Jain Andreasen,
Head of Digital Customer Engagement Hub
Nordea
Soeren Rode Jain Andreasen has held various senior leadership roles in the financial sector and is known for his expertise in digital transformation and driving the adoption of new technologies in the banking industry.
Andreasen’s professional journey includes working at prominent financial institutions where he has played a pivotal role in leading transformative change and innovation. He spent over a decade at Denmark’s largest bank Danske Bank, where he served as the Chief Digital Officer and was responsible for the bank’s digital transformation efforts in the United Kingdom. During his tenure, he played a crucial role in implementing innovative solutions, launching Open Banking, and improving the frontend and backend systems of the bank. In 2024, Andreasen joined the Canadian Imperial Bank of Commerce (CIBC) as the Enterprise Digital and Innovation Officer. This appointment came after CIBC signed a multi-year agreement with Microsoft to migrate many of its operations to the cloud. Andreasen’s role at CIBC involves leading the bank’s digital strategy and driving innovation in the organization.
Notably, Andreasen currently heads Digital Customer Engagement at Nordea, the largest bank in the Nordics. In this role, he oversees a dynamic agile organisation responsible for Digital Channels, Onboarding of clients, the origination and servicing of everyday banking products, digital money transfers, and the optimization of the retail payments experience.
Andreasen’s influential presence extends beyond his professional achievements. He is a sought-after speaker at prestigious conferences and events worldwide, where he shares his valuable insights on key topics such as open banking, customer experience, legacy modernization, and the paramount importance of enhancing backend infrastructure and operations in the banking sector.
Tim Rutten,
CMO
Backbase
Tim discovered his passion for entrepreneurship and FinTech while at Backbase. He dedicated the first half of his decade-long Fintech career to advising C-suite executives on future-proofing their technology stack. As a board member of Backbase, and currently in the position of CMO, Tim is the overall driver of the Marketing strategy and execution. He is also a passionate thought leader, sharing valuable insights on the digital banking space and how to make real progress in business transformation and progressive modernization efforts. As an alumni of the Kauffman Global Scholarship (Harvard University, Stanford GSB and MIT), Tim holds a BSc and MSc in International Business & Entrepreneurship from Maastricht University.
About Backbase
Backbase enables banks to break free from the constraints of legacy IT systems and embrace a new-generation engagement banking platform.
Our whitelabel platform enables banks to gradually replace or decompose disparate legacy systems and construct a modern journey orchestration architecture around customer needs. These incremental changes allow banks to streamline business critical customer journeys across all touch points while eliminating silos and empowering both customers and employees at their unique pace and priority.
Furthermore, a unique “buy plus build” operating model enables banks to gain speed and flexibility, allowing them to accelerate in their modernization journey. Adopting powerful out-of-the-box platform features and customer journeys into their existing tech ecosystem, enables banks to start delivering immediate value. At the same time the platform’s capability to coexist in open polyglot architectures gives developers the freedom and flexibility to build unique, differentiating value, rather than building the basic functionalities from scratch.
With Backbase, banks can truly unlock the potential of customer-centricity and lead the way in shaping the future of banking. We help banks re-architecting banking around their customers through omni-channel engagement orchestration.
For more information please check out https://www.backbase.com/
