Personalization

Skeleton Key: Banks Can Use Cloud to Personalize Everything

By modernizing their cloud computing environments and capabilities, banks can enhance their ability to deliver personalized offers, experiences and campaigns.

The COVID-19 pandemic accelerated digital adoption throughout the banking industry – establishing new, irreversible behaviors among businesses and customers.

The last few years gave banks a renewed appreciation for digital transformation and caused many to revisit their cloud-adoption strategies. Forward-looking marketing leaders recognize that the cloud is far more than a storage method, but rather a skeleton key that unlocks the door to a more innovative and agile future. Indeed, success in the cloud starts with the right mindset.

Take personalization. As the previous articles in this series have highlighted, the cloud is the right environment for banks to house, explore and analyze their vast stores of customer data , deploy artificial intelligence (AI) tools for advanced segmentation , and develop true omni-channel capabilities . It’s no overstatement to say that the cloud is where personalization happens.

Why the cloud is so important today

Beyond marketing and customer engagement, the cloud promises to help banks address a confluence of significant threats, including low interest rates and loan losses. Banks must evolve rapidly because fewer people visit physical branches anymore and low interest rates undermine the profitability of deposit and loan-related products. The economic models that have underpinned the industry continue to erode, forcing more banks to consider consolidation or re-platforming.

As digital disruptors and non-traditional competitors seize market share, formerly autonomous, recently consolidated banks must quickly launch new business models and reposition in the market. Those that have fully adopted the cloud to digitize their businesses can do so in a matter of months, connecting with customers in new ways and delivering unique products and services.

In a time of market turbulence, banks that master the cloud will be best positioned to evolve successfully and emerge with stronger brands and customer experiences. The process starts with understanding the true scope of the cloud revolution.

Skeleton key for Industry 4.0

At its most basic, the cloud – a network of on-demand computing resources – is an extremely efficient method for storing information remotely so it doesn’t need to be saved or managed locally. More strategically, it’s a computing paradigm or approach that provides easier access to powerful technologies and data that companies can use to address a range of longstanding business issues and innovate more boldly than ever before.

Take data integration. Most banks struggle to integrate all the useful data they have across different platforms to generate customer insights, identify meaningful performance trends or support data-driven decisioning. That lack of connectivity prevents them from recognizing the same customers as they navigate across different parts of the business (e.g., a call center, mobile app) or engage with different product sets. Well-designed cloud environments not only help banks connect their data and establish omni-channel experiences, but also enhance it with third-party data. Further, they can explore and analyze that data with powerful AI-based tools and machine learning (ML) to uncover opportunities to reach out to customers with personalized messaging and offers.

The following are just six of the many doors cloud can unlock for financial institutions.

Streamlined Operations

The inherent benefits of cloud for banks and other financial institutions are threefold: cheaper storage, stronger computing power and greater access to information regardless of location. This trifecta empowers businesses to outsource important but non-differentiating or brand-specific operations and access leading-edge technologies.

A comprehensive audit can sort through which procedures need to be in-house, and which should be contracted (because other organizations can do it more effectively or efficiently) or eliminated altogether. As business partners build and operate more infrastructural components, banks can cut capital expenditures (maintaining physical equipment) and operational expenditures (running daily business).

Application modernization

The agility the cloud provides can free up banks to create more value and craft better experiences for customers. They can achieve this by turning to cloud once more to unlock the potential of other technologies.

Banks need to upgrade modern web applications quickly and frequently to stay relevant and competitive. Cloud can support modular design, which allows developers to modify or replace specific parts of an application or system without disrupting the whole, and also deployment automation, which results in faster feedback, increased collaboration and greater consistency across environments. Most importantly, it provides more time for engineers to focus on developing new software.

Publicis Sapient offers a Web Application Modernization solution that prepares organizations for rapid innovation at scale with cloud-native technologies.

Customer centricity

Thanks to the cloud, the exponential rise in data collection and computing power means companies have more information on customer behavior and more resources to make sense of it than ever before. Banks must assess the right cloud-native tools to analyze it and produce insights.

By deploying AI and ML-based solutions over the cloud, banks can extract relevant information through knowledge as a service (KaaS), synthesize multiple sources of data for a centralized view of the customer with a customer data platform (CDP) or create real-time models of behaviors and intent signals with the Identity Applied Platform (IAP).

Through these and similar solutions, the cloud enables and supercharges previously unavailable levels of data collection and analysis, which banks can use to strengthen customer relationships via personalized offers and seamless omni-channel experiences. The right contact time and method will be available to marketers and sales representatives for attracting prospects and financial advisers for helping current clients.

Security and compliance

Regulatory agencies carefully monitor the financial services industry to protect consumers from fraud and sustain trust in the banking system. Although some countries have stricter regulations than their neighbors, safety, transparency and customer data privacy should be top concerns for all companies in this space. Just as the cloud is the best place for banks to generate insights from their customer data, it’s also the best place for them to protect it.  

Although necessary for preventing irresponsible behavior, strict protocols and procedures can have the unfortunate side effect of inhibiting innovation. An abundance of caution can lead people to keep sensitive data off the cloud – fearing leaks and breaches.

Major cloud providers have much higher standards than the average IT department (especially for smaller banks) and need to demonstrate their track record of safety regularly. They provide around-the-clock support and can respond to problems straightaway. At the same time, cloud-supported AI can analyze vast amounts of data to support safety and provide real-time recommendations.

When implemented correctly, cloud environments can be safer than traditional storage systems and ensure compliance with industry standards. The same power and agility that gives banks unprecedented views into customer behaviors or market trends can also provide similar visibility into the institution itself.

Continuous transformation

As banks migrate more of their operations to the cloud, tap into ever-increasing computing capacity and access ever-growing data sets, they will have more time, resources and knowledge for their digital transformation journeys. The need to continuously improve and innovate is critical because customer expectations for personalized experiences and seamless integration across channels increase constantly.  

By prioritizing cost optimization and return on investment, banks can ensure that their cloud-enabled transformation programs are delivered with an agile and continuous-improvement mindset.

Cloud-supported measurement tools, such as KnowHow, can track key performance indicators to help maximize business value and reduce spending – all while improving tools and processes throughout the entire organization.

Composable banking

Cloud enables a new standard of core banking modernization, which is revolutionizing the banking landscape as we know it today.

Every financial institution has a system that powers its banking transactions. Historically, this core banking platform was on premise (i.e., in a physical office or data center) but banks still need one within the cloud environment.

Moving to the cloud is becoming more affordable thanks to the availability of both cloud providers (Amazon Web Service, Microsoft Azure, Google Cloud Platform, etc.) and startups that build core banking in the cloud (Mambu, 10x, FIs, etc.).

With plug-and-play application environments in the cloud, entirely new banks can be built in just six months. The German startup Mambu is pioneering a software as a service (SaaS) cloud banking platform it calls “composable banking.” Rather than locking companies into hard-coded integrations, composable banking lets companies build and change their banking products quickly and easily – essentially letting them compose what’s right for them entirely in the cloud.

To win in the age of personalization, banks need to be bolder and more creative in their innovation strategies and more digital and efficient in their operational environments. The cloud is the right place to achieve both objectives.