How Customer Segmentation in Banking Helped Our Client Realize 45% Increase in Annual Growth

What You’ll Find in the Case Study

• Customer Segmentation in the Industry
• Customer Segmentation Challenges Faced by the Client
• Revolutionary Customer Analytics in Banking Solutions
• Broad Perspective on Banking Customer Segmentation
• Additional Solutions Offered by Quantzig
• Key-Takeaways

In the banking and financial services industry, there has been a shift from a traditional mindset to a more user-centric approach. This change is driven by the recognition that personalized services based on potential data are essential for meeting client needs and preferences. One key aspect of this shift is the understanding of technologically savvy users’ habits and interests. By analyzing consumer data, financial institutions can classify them into different life stages and lifestyles, allowing them to tailor their offerings accordingly. This helps in reducing the hassle of tracking relationships and ensures that services are aligned with customer expectations.

In the dynamic landscape of the banking industry, customer segmentation stands as a pivotal strategy, wielding the power to revolutionize how financial institutions engage with their diverse clientele. This nuanced approach involves categorizing clients based on shared characteristics, behaviors, and needs, allowing banks to tailor their services with surgical precision. As technology evolves and consumer expectations soar, effective segment strategy becomes not only a strategic imperative but a competitive necessity. By dissecting the intricacies of consumer behavior, preferences, and demographics, banks can unlock unparalleled insights, drive personalized experiences, ensure regulatory compliance, and ultimately secure a distinct advantage in the ever evolving and fiercely competitive financial sector. This case study sheds light on how Quantzig’s solution helped a client to increase annual revenue growth.

Banking customer segmentation Solutions

Amid the economic uncertainty, banking sector companies are mainly concerned about implementing decisive steps to optimize their businesses, change traditional mindset, and improve their financial performance. Also, with the recent decline in profitability, leading businesses in this sector are adopting new operating models and technologies to address challenges pertaining to improving user experience and compliance.  

In this Financial Services Industry, the consumer is the king, and in this era of heightened their expectations and new market entrants, it becomes pivotal for the banks to stay relevant in the marketplace. To address such concerns, leading businesses in this sector are leveraging these solutions.  

Customer segment refers to proactively profiling the individual client based on their preferences. Moreover, identifying the potential target audience can occur through three different ways; the customer needs, buying characteristics, and their value. With altering consumer preferences, the financial sector needs to clearly define and target their best prospects and satisfy their expectations. 

Any financial objective in life must be planned to be accomplished. Every objective necessitates a series of carefully considered and carried out decisions, whether it be saving, investing, building wealth, or guaranteeing a steady stream of income after retirement. Financial planning is a very dynamic activity, which is one of its most underrated characteristics. Consumers go through four stages in their financial lives: beginning, dependents, development, and retirement. The financial planning must follow the appropriate stages.  

Product developers of the bank employ a variety of data, such as information on previous purchasing patterns, test results and feedback, commercial performance, and acceptance of the new product portfolio, to provide them with the personalized services they need based on their stages of life. To find combinations that can be used to provide a better portfolio, this data can be evaluated using sophisticated machine learning (ML) algorithms.  

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Ways To Level Up Your Strategies

• Compliance-Centric Segmentation:

Align segment strategies meticulously with laws and regulations, exemplified by the Equal Credit Opportunity Act’s stringent provisions. Ensuring adherence to legal frameworks is imperative to preclude inadvertent discriminatory practices and foster ethical operations within the regulatory boundaries.

• Data-Driven Precision:

Employ a meticulous approach to segment by relying on factual insights rather than assumed or fabricated personas. Leverage robust solution to uncover nuanced attributes, eliminating personal biases and fostering a precise understanding of their behaviors and preferences.

• Discerning Lifecycle vs. Generational Dynamics:

Discriminate between life-cycle changes and generational shifts, acknowledging that age alone does not dictate behavior. Recognize that while technological advancements may alter circumstances, the divergence within generations is often more significant than the commonalities, necessitating targeted strategies for varying age groups.

• Dynamic Post-Pandemic Segmentation:

Acknowledge the transformative impact of the pandemic on consumer behaviors and reassess the validity of pre-existing segments. While retaining historical models, validate their relevance against recent behavioral shifts, ensuring alignment with the evolving financial landscape.

• Continuous Enhancement:

Treat segments as dynamic entities, subject to evolution over time. Employ real-time analysis and state-of-the-art technology to perpetually refine and improve segment models. This proactive approach ensures that pain points are addressed promptly, aligning strategies with current market demands. To achieve these goals, the commercial banking and financial services industry is leveraging business intelligence and technologies like Robotic Process Automation (RPA). These tools help in analyzing product performance, purchasers’ behavior, market trends, education, and revenue demographics. By capturing data with granularity and nuance, banks can make informed decisions and avoid assumptions based on homogenized groups.

• Optimal Segmentation Sizing:

Strike a balance between granularity and practicality in segment strategy. Avoid overly granular divisions that may impede operational efficiency and strain budgets. Instead, focus on right-sizing segments to facilitate personalized communication without overwhelming resources.

• Delineation of Segmentation and Personalization:

Acknowledge the symbiotic relationship between segmentation and personalization. Utilize segment strategy to discern patterns and comprehensively understand user behaviors, while reserving personalization for the strategic communication tailored to specific segments. This nuanced approach ensures a cohesive and impactful engagement strategy.

• Integrated Tech Stacks for Data Abundance:

Guarantee the adequacy of data by integrating comprehensive tech stacks. Ensure seamless connectivity between data-gathering and processing systems, optimizing the utilization of available data. This cohesive integration is indispensable for acquiring sufficient insights, enabling informed decision-making and fostering a competitive edge in the financial sector.

In amalgamating these strategies, banks can elevate their segment methodologies, navigating the competitive landscape with a sophisticated, compliant, and informed approach.

Why should your company opt for these services?

Strategic Precision in Targeting:

Leveraging these Services empowers your company to execute targeted strategies with surgical precision. By employing sophisticated market strategy, you can align your offerings precisely with the diverse needs and behaviors of distinct groups, optimizing your competitive position in the market. Another benefit of this approach is the ability to reallocate resources effectively. By understanding individual preferences and needs, banks can identify the next best action, such as cross-selling or upselling relevant products and services. This not only enhances client satisfaction but also drives revenue growth for the institution.

Regulatory Compliance Assurance:

Opting for professional services ensures that your audience targeting strategies adhere meticulously to regulatory requirements. Maintaining compliance with financial laws and regulations, such as the Equal Credit Opportunity Act, is not only a legal necessity but also a strategic imperative to prevent legal challenges and fortify your market reputation.

Data-Driven Agility in Response:

These services enable agile responses to rapidly evolving market dynamics. Through continuous analysis of segments, your organization can swiftly adapt to changes in consumer behavior, economic conditions, and competitive landscapes, securing a proactive stance in a competitive environment.

Enhanced User Experience and Loyalty:

Embracing segmentation services enhances the overall user experience, fostering increased satisfaction and loyalty. By tailoring communication and services to specific segments, your company can create a personalized and compelling journey, solidifying relationships and outshining competitors in the quest for retention of customers.

Resource Optimization for Maximum ROI:

Professional segmentation services empower your company to optimize resource allocation by concentrating efforts on high-potential segments. This strategic resource allocation ensures that marketing budgets are efficiently utilized, maximizing return on investment and providing a decisive competitive advantage in the fiercely contested landscape.

Adopting this service is an indispensable strategic move for your company in the competitive financial arena. From precise targeting and regulatory compliance to agility in response and optimized resource allocation, these services contribute significantly to elevating your market position, ensuring sustained growth, and securing a competitive edge in the dynamic financial industry.

Challenges Faced by Our Client 

One challenge faced by banks is the availability of insufficient data. While income, age, and geography are important data points, they may not provide a complete picture of a customer’s stage of life, attitude, behavior, and interactions. To overcome this, banks are investing in learning and monitoring systems that continuously gather and analyze data to improve the accuracy of user profiles.

A leading banking sector client wanted to understand target audience characteristics to clearly segregate them into need-based and value-based segments. Developing a marketing campaign and strategy to target specific segments is like taking a blind shot at the target. Therefore, they wanted to gain a deeper understanding of the company’s most profitable clients and adequately allocate its precious resources in a timely and efficient manner. The primary concern of the organization was to gain a clear idea of who wanted to buy the product and gain relevant insights to improve performance against the competitors. They were not just confined to delivering services to their clients but wanted to offer better support and professional services to enhance business performance. 

The company wanted to gain a deeper understanding of their clients’ preferences and needs to serve them better. By collaborating with Quantzig the client wanted to identify the key differentiators by compartmentalizing their client base into specific groups. They also wanted to group their existing users into different categories based on their habits, interests, classification, geography, psychography, life stages, lifestyle, and behavior. By making clear segments they wanted to further reallocate their marketing resources and efforts to maximize the up selling and cross selling of their services and enhance the bond they already share with their client base.  

The company intended to innovate, understand, and determine the potential success of financial planning by covering all expenses and creating a portfolio in line with age and risk tolerance. The product developers wanted assistance from Quantzig to explore and streamline their objectives and goals of wealth creation. Moreover, the team struggled in providing detailed information on managing the portfolio, insufficient data, hassle of tracking, and adopting strategies to handle various schemes.  

After attending one of our webinars, the client connected with our experts to leverage superior segmentation in their organization. 

Revolutionary Customer Analytics in Banking Solutions 

1. Customer Segmentation: Companies in the financial sector, who have employed these strategies, have realized the fact that every consumer is different and should be addressed through different marketing efforts. The solution offered by Quantzig helped the client gain a deeper understanding of their clients’ preferences. They were also able to discover the value of each segment, client monitoring, and accordingly tailor marketing efforts toward these segments. With an aim to tap untapped market segments, the company was able to maximize cross and up-selling opportunities across various channels and encourage them to subscribe to more services. 

2. Enhancing Security: By leveraging the solutions offered by Quantzig, the client was able to identify the segment with the highest potential and allocate the resources to target segments accordingly. Moreover, they also found ways to improvise services at comparatively lower costs, which helped them to meet their expectations at a larger scale. The payment card sector has always dealt with data security, Quantzig also helped in enhancing their payment card industry security standard. The solutions from Quantzig enabled the company to measure the segments based on their preferences, take next best action, and requirements which helped gain the front-liner benefits. In addition, the solutions offered also helped them to determine the profit potential of every segment and analyze the probable revenue and its cost impact. 

3. Customized Journey Platform: In the second phase of the engagement, our experts built a customized journey platform to integrate these data sets with interaction history to gain better clarity into the digital journey. A detailed analysis of these data sets using these solutions led to the discovery of actionable insights that helped identify the root cause of attrition. Quantzig’s solutions also helped the client deploy dashboards for interactive data visualizations which helped them uncover the root cause of the challenges faced by them. 

4. Insights: Our client was very interested in the ability to gain better insight into current customers and make lasting relationships. Demographics and current product ownership form the foundation of valuable insight.  

5. Business Strategy: This service proved to be highly useful for our client in the banking services companies for product and channel development as well as economic forecasting, business improvements, risk analysis, and financial modeling. 

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6. Managing Experience: Using tools for customer experience management (CEM), we helped our client deliver personalized, contextual interactions that assist them with their daily financial needs. It also enabled real-time delivery of product or service offerings at the right time, thereby ensuring better experience. 

7. Risk Management: One of the more common uses of ‘big data’ today especially for financial services companies is in the area of risk and fraud management. We implemented the applications of data mining well beyond internal purchase and balanced insights. It even includes transaction patterns and social media interactions that provide a leading indicator of potential losses or fraud. 

Broad Perspective:

Contact center AI can help banks raise customer lifetime value and lower operating expenses while also enhancing employee happiness. Employees can concentrate on more challenging and important initiatives as technology takes on repeated iterations of consumer requests and complaints. Additionally, their workload has been reduced. The time saved might also be used by retraining these workers for the upcoming demands. As a result, employees may have stronger mid- to long-term career possibilities. In cases where extraordinary issues or service requests are not covered by the default template, the staff can supplement the AI-based contact center. As a result, soon, the business will be shaped by humans and AI.  

In the rapidly evolving landscape of financial services, achieving a supercompetitive edge necessitates a strategic blend of cognitive technologies, financial acumen, and digital sophistication. Aspire Systems, in collaboration with EY, spearheads a transformative approach to this service that goes beyond traditional paradigms. Leveraging cognitive technologies, Aspire Systems meticulously analyzes product penetration, churn rates, and reallocation dynamics to craft a master version of user profiles. This nuanced understanding enables banks to not only predict but also proactively respond to clients’ needs with unprecedented frequency. The synergy between Aspire Systems and EY empowers banks to navigate the intricate terrain of digital finance, fostering a level of sophistication that redefines industry standards. In this era of heightened competition, this supercompetitive strategy places institutions at the forefront of innovation, ensuring a resilient and forward-thinking approach to this service.

Both commercial and retail banking sectors are focusing on relationship awareness to identify the root causes of purchasers’ behavior and preferences. This includes considering factors like inheritance, profiles, personas, and urban areas. Additionally, banks are taking into account income and credit spectrum, price sensitive, technological savviness, and social media presence to tailor their offerings and enhance self-service capabilities.

It is important for the banking industry to adhere to rules and regulations, such as the Equal Credit Opportunity Act, while leveraging useful data. Banking executives recognize the significance of information access, information location, and geographic location, as incomplete information can hinder the development of a comprehensive relationship view. By utilizing various channels, banks can gather data points and create an ideal profile to guide their marketing approach. Segmentation plays a crucial role in the banking industry. By understanding the average number of products per target audience and their goals, banks can develop targeted marketing strategies. This segmentation takes into account factors like industry sector, content disclosures, and competitive products to ensure effective communication and engagement with customers.

The functioning of the financial industry has transformed completely with the advent of emerging technologies such as big data, artificial intelligence, business intelligence, RPA (Robotic Process Automation), and machine learning. With time, the norms have changed and so have the customer expectations from the client’s product offerings. Quantzig assisted the client by offering the appropriate technology to collect and interpret data on user experiences with their products. Our technology and solutions helped the organization keep a check on the regulatory compliance and trends across global banking. This led to an increased user base and positive word-of-mouth advocacy. 

Additional Customer Solutions Offered by Quantzig Include: 

• Divided customers into measurable segments based on their needs, marital status, behaviors, gender, generation, attitudes, and demographics 
• Determined the profit potential for each segment 
• Effectively allocated marketing resources and maximized cross and up-selling opportunities 
• Improved customer service by 20% and enhanced loyalty and retention 
• Stay ahead of competitors and incorporated new services to meet user expectations 

Key Takeaways of Customer Segmentation:

• Segmentation Helped a Payment Card Industry Client Achieve a 2X Increase in CSAT 
• Achieved a 2X increase in user satisfaction rate 
• Improved client retention, leading to annual growth of 45% 
• Improve conversion rate by 13% 

In conclusion, the banking and financial services industry is embracing a customer-centric approach by leveraging potential data, personalized services, and advanced technologies. By understanding individual habits, interests, and life stages, banks can offer tailored solutions and reallocate resources effectively. Business intelligence, RPA, and segmentation are key tools in driving revenue growth and enhancing client satisfaction.