5 tips for banks to catch up with FinTech personalization strategies

The financial services landscape has dramatically transformed in recent years, with fintech start-ups and digital-only banks leading the charge in personalization. Unlike traditional banks, which have often struggled to offer customized experiences at scale, these digital innovators are leveraging cutting-edge technology to create financial services that feel tailor-made for each user. This blog explores how fintech and digital-only banks are redefining customer engagement, how younger generations are driving this shift, and what traditional banks can learn from these agile disruptors.

The personalization revolution

Personalization in banking isn’t just a trend—it’s a game-changer. While traditional banks often grapple with delivering custom experiences at scale, fintech and digital-only banks are setting a new standard with technology that crafts financial services to fit each user like a glove. 

Think about it: companies like Chime and N26 are harnessing the power of AI and machine learning to analyze spending patterns and provide real-time, personalized financial advice. These platforms don’t just react—they evolve with each user's behavior, making financial management feel intuitive and effortless.

But the innovation doesn’t stop there. Revolut and Monzo are pushing personalization even further with real-time budgeting tools and spending insights. They don’t just help users track expenses—they offer actionable advice, like smart savings tips based on spending habits. This high level of customization ensures that users get advice and alerts that are as unique as their financial behaviors.

Grasping how fintechs are reshaping personalization opens the door to understanding the role younger generations play in this evolution, and why they are driving the demand for hyper-tailored financial services.

Younger generations want it personal

Younger consumers are reshaping the financial landscape with their appetite for personalized, innovative services. Recent data reveals a striking trend: 82% of people aged 18-24 have switched to a new financial provider in the past year, while only 34% of those over 65 have. This generational divide underscores a preference for digital-only banks, which deliver the flexible, tailored experiences that younger users are after. And if they don't get that level of personalization, they're quick to seek it elsewhere.

Take neobanks like N26 and Monzo, for instance. They’re winning over younger customers with features like instant notifications, custom savings goals, and personalized financial insights. These offerings strike a chord with tech-savvy millennials and Gen Z, who prioritize convenience and a tailored touch in their financial dealings.

Seeing how younger generations are driving the push for personalization, it’s clear that expectations are being set high by non-banking platforms as well. Next, we’ll explore how giants like Netflix and Spotify are raising the bar for personalization in the financial sector.

Non-banking platforms setting new standards

The influence of non-banking platforms like Netflix and Spotify is crucial in the discussion of personalization. Netflix uses sophisticated algorithms to suggest content based on viewing history, while Spotify employs similar techniques to curate personalized playlists. These platforms have set a high bar for personalized experiences, which fintech companies are now striving to match.

Digital banks are drawing inspiration from these non-banking platforms by employing predictive analytics to offer personalized product recommendations and financial tips. Just as Netflix and Spotify tailor content to individual preferences, fintech companies use data to enhance user experiences and deliver relevant insights.

Given the insights from non-banking platforms, it’s crucial to understand how they stay ahead of trends and innovations. The secret? Their ability to stay agile.

Agility in action

One of the key advantages of fintech and digital-only banks is their agility. These companies are often able to rapidly iterate on their products and services due to their lean structures and strong focus on digital innovation. This agility allows them to respond quickly to changing consumer preferences and market conditions—something traditional banks often struggle with.

Traditional banks can learn valuable lessons from this agility. By adopting a more flexible approach to technology and customer service, they can better compete with their digital-only counterparts. For instance, integrating agile methodologies and investing in advanced technologies can help traditional banks offer more personalized and responsive services.

5 Tips to catch up with FinTech personalization strategies 

Now that we’ve set the scene, let’s put these insights into practice with 5 actionable tips to help your bank catch up with the advanced personalization strategies of fintechs and digital-only banks. 

1. Invest in data analytics

   Leverage advanced data analytics to gain deep insights into customer behavior and preferences. By analyzing spending patterns, transaction history, and user interactions, banks can develop highly personalized offers and recommendations. Investing in AI and machine learning technologies will further enhance these capabilities, enabling banks to predict customer needs and deliver tailored experiences. 

   • Optimizely Tip: Optimizely One analyzes and uses customer data to customize the experience for each customer. You can then deliver personalized content via multiple channels, including websites, social media, email, and newsletters, for a truly omnichannel experience.

2. Enhance mobile and digital platforms

   Focus on improving mobile and digital banking platforms to make them more intuitive and engaging. Incorporate features like real-time notifications, customizable dashboards, and interactive budgeting tools. A seamless and user-friendly digital experience will help attract and retain tech-savvy customers who expect convenience and personalization. 

   • Optimizely Tip: Watch “The art & science of what's possible: Omnichannel experiences with personalization at scale” to learn how to use Optimizely’s tools to create engaging mobile and digital experiences. Real-time personalization, dynamic content updates, and easy navigation ensure a seamless experience across all digital touchpoints.  

3. Adopt agile methodologies

   Embrace agile development practices to enhance responsiveness and adaptability. Agile methodologies allow for rapid iteration and continuous improvement, enabling banks to quickly respond to changing customer needs and market trends. This flexibility can help traditional banks stay competitive in an increasingly dynamic environment. 

   • Optimizely Tip: Agile CMS platforms like Optimizely exemplify agile methodologies in action. They offer flexibility, real-time collaboration, and modular content management, enabling banks to swiftly deliver personalized, cross-channel experiences. By integrating with existing tech stacks and allowing for rapid updates, agile CMS helps banks stay adaptable and competitive.  

4. Personalize customer interactions

   Implement strategies for personalizing customer interactions across all touchpoints. Use data-driven insights to tailor communication, offers, and recommendations based on individual preferences and behaviors. Personalized email campaigns, targeted promotions, and customized financial advice can significantly improve customer engagement and satisfaction. 

   • Optimizely Tip: Leveraging AI-driven learning, Optimizely’s platform delivers real-time content recommendations and a personalized experience as users navigate the website or mobile app. For example, if a user researching savings accounts visits the site today, they will see relevant products and information. When they return the next day, they will encounter a fully customized savings account experience based on their previous interactions. 

5. Learn from non-banking platforms

   Draw inspiration from non-banking platforms like Netflix and Spotify that excel in delivering personalized experiences. Study their approaches to content recommendations and user engagement, and apply similar principles to banking services. By adopting best practices from these platforms, traditional banks can create more engaging and relevant experiences for their customers. 

   • Optimizely Tip: Check out our "Big Book of Experimentation", where we showcase how leading companies use experimentation to innovate and personalize their customer experiences. Use these insights to elevate your own banking services and create engaging experiences for your customers. 

The future of personalization in banking 

Imagining banking without personalization is like navigating a city with a paper map – it's outdated, inefficient, and leaves you far behind in today's fast-paced, GPS-driven world.

It's the dynamic duo of fintech and digital-only banks that are leading this personalization charge, presenting us a blueprint of what the future of banking looks like – and it speaks to each user's individual needs.

But here’s the deal: weaving this personalization magic isn't exactly a cakewalk for everyone, especially when you consider the finance sector's thicket of regulations. Traditional banks might be left wondering, "How do we juggle between these strict regulations and the need for personalization?" 

Here's where the good news comes in. Traditional banks can still stride confidently down the personalization path, despite the regulatory hurdles. The secret weapon? Harnessing smart, compliant tech solutions like Optimizely, which combine innovation with regulation, providing tailored and lawful experiences. 

Today, the ticking clock grows louder for all traditional banks. Digital disruptors are not coming, they're here, setting a high bar, and forcing traditional banks to adapt or risk being overshadowed. It's a race against time to embrace the nuances of personalization from data analytics to agile practices. It's also about embracing, learning, and shaping alongside these digital trailblazers. 

The takeaway here is simple: The start of personalized banking is the end of a one-size-fits-all strategy. The goal post for the future of banking? Providing experiences that reflect each user's unique needs, all while staying fully compliant with the law.