Hyperpersonalization is becoming an increasingly important trend in the financial arena. By using data to identify customers’ preferences, they can be offered specific products, sometimes before they have even expressed an interest in them. To do this requires the availability of data, which is made possible through open banking and open finance tools.
We have a situation where there is plenty of supply, and where financial services consumers are not necessarily loyal to one brand—often having both bank and fintech accounts. It is estimated that consumers worldwide have on average 2 to 3 relationships with different companies to meet their financial services needs. Let us take a look at some of the numbers on adoption by type of financial services provider in LatAm as of 2021, compared to the global average:
Each bar shows the percentage of financial consumers who are customers of an international or national bank, a local or regional bank, or a neobank. The percentages add up to more than 100, demonstrating the multiplicity of relationships that, on average, each user often has.
By analyzing this graph, we could expect the proportion of people who prefer national or international banks in LatAm to grow smaller over the next few years, opening the play to more innovative proposals.
More trade relationships means more competition, which means more product offerings. Consequently, if they see a better offer, they are likely to go for it.
Here are just a few examples of different products based on hyperpersonalization:
- After a user has made certain purchases, Ualá sends them a notification asking whether they would like to pay for a particular purchase by installments, and makes them a specific offer:
- Front offers investments in accordance with the user’s objective and investor profile:
- Wibond allows each user to choose between different payment plans, under the Buy Now Pay Later modality, according to their profile:
- BBVA offers users a loan for a personalized amount at a personalized rate when they log in to their home banking app:
The big challenge, then, is the relationship to and knowledge of users, which is based on the overall experience they have when contracting the products and services each company might offer them.
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There is a lot of talk about listening to the user, but is it enough?
Today, an attractive offer is defined not only by what the product is, but also by the how, the when, and the how much. To offer this the right way, we need to listen to users and get to know them, even more than they know themselves!
Keeping this in mind, I would like to mention something simple yet striking: the main problem for end users is that they want to have more money and a better life, ideally without effort. It is not enough to simply create a solution or product that helps resolve this issue; the end user also needs to find it easy, understandable, and above all, be aware of its benefit.
The more automated the solution is, and the more the user sees its benefit—almost without doing anything—is when they will see the penny drop to become a regular user, in a context where loyalty is now ephemeral. What could be better than, for example, to see your purchases spread out in instalments, or your savings grow, almost without lifting a finger? A clear example is the daily depositing of interest earned through Mercado Pago: once you invest the balance of your wallet in their immediate liquidity fund, all the money you put into it follows that rule, and you can watch the money coming in daily, generating a sense of satisfaction even if it is less than inflation.
It is estimated that 40% of financial app installations are generated through marketing actions within Latin America. Can you imagine being able to redirect some of that invested money into marketing to create a better product? When a product is good, the recommendations happen by themselves.
UNUSED ACCESS IS NOT INCLUSION
In Latin America, there were 1.5 billion downloads of finance apps recorded in Q2 2021 alone, so the focus is perhaps beginning to shift more to usability, to solve the real problem: wanting to have more money and a better life, ideally without making an effort. By iterating with a focus on this problem, generating new products and identifying how and when to offer them, we will generate more adoption and an more inclusive world that makes financial management easier for all, and possibly more profitable too.
What do users think?
All of this means changes for companies, and also for users. In order to better understand users, it will be necessary to understand their data, so we need to ask people what they think about sharing their data.
From social media surveys of mostly Argentines between the ages of 25 and 44, who are interested in improving their finances, we were able to observe that:
- Of the 234 people who answered the first question about whether they knew the term “open banking,” 93% said they did not know what it means.
- They were then given information about it and asked whether or not they liked the idea of open banking: Of the 143 people who answered the question, 73% said they like it. The other 27% said they would think about it.
- Lastly, 98% of the 207 respondents said they wanted more information about this trend.
What we can take away from these surveys, among other things, is that many people are interested about the subject, and many more are at least curious. For companies, this offers a new opportunity to approach users of financial services from another angle, opening up a range of opportunities to engage with and get to know more about their users, and so offer them more and better services.
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- Hyperpersonalization is a trend that seems to be here to stay.
- Working on innovation, we have to be able to create products that maybe the customers themselves were unaware they needed, which is possible if we have the necessary data.
- To bring about adoption, we need to not only have a good product that generates benefits for the user, but also to find ways to communicate this and to offer it when, where, and in the way they need it, and to hasten the arrival of the moment when that penny drops and the customer sees the benefit.
- Automation becomes key, and that requires open banking and open finance.
- Knowing the users is necessary, but it is not enough: we need an in-depth understanding, and anticipation, to create the best offer possible.
- We should always keep in mind the real underlying issue: people want to have more money and improve their lives, with as little effort as possible. Giving them solutions that generate adoption and retention, that make this task easier for them, will depend on how much information we have about them, and how we use it.
- Financial users seem open to finding out more about the trend of open banking, and about how it could be profitable to them. This creates opportunities to establish a new type of mutually beneficial relationship between companies and users.