We are living in an age where we find that many items can be personally curated. People tinker with Netflix or Spotify daily, and we can feel that the movies and songs they suggest are all customized to the preferences of the customers.
It makes these apps relevant, and people keep coming back to these apps for content and songs, thus developing value and building a moat around their product by developing high customer retention value.
The same can be applied to financial products, and through the personalization approach, a lender can create more nuanced products that will keep customers attracted to its financial tools.
In this blog, we will discuss the benefits of product personalization in the financial industry and how it can help both the lender and the borrower simultaneously.
Understanding the Value of Product Personalization
Each individual’s financial needs are separate, and a lender cannot get access to the wider market when they don’t cater to the people of the lower strata or people from Tier-2 or Tier-3 if they don’t keep a personalized approach in the product classification.
Previously, a loan agent who used to offer loans was only looking for clients who wanted to have high-ticket customers. Now, there are certain types of people in our country who don’t need loans of large amounts but rather require something that can make them deal with their latest worries.
Financial product personalization helps to reach out to those segments of the population where the traditional banking system was previously not there. For that reason, it’s a great way to get into the broader market and make footfall.
Increase in the Return on Investment
When we are considering the process of product personalization, it’s obvious to check the ROI of the business and find whether this approach towards an innovative banking system is suitable or not.
The product personalization process can be broken down into three stages, and in all these three, one can trace the progress in ROI in the process.
- Foundational Personalization
In the foundational stage of personalization, a person can witness that there are certain classifications of products. There are certain archetypes, and for each of those similar problems, the products that were offered were unique and fell under certain archetypes.
In this personalization process, a financial institute can find that there is an increase of 5%-10% in revenue based on the personalization.
- Accelerated Personalization
In the accelerated phase of personalization, a company focuses on research and development. It starts to break the products into more sub-groups and starts to go into niche behavior, and through that, it can increase revenue by 10%-20%.
Finance is a personal and private topic for the majority of individuals, and a lender needs to understand that and create a solution where they can solve their perils. It can achieved through accelerated personalization of the financial products.
- Transformational Personalization
In transformational product personalization, a financial company invests in technology heavily so that they can automatically customize a plan for the person regarding certain financial products, and through that, one can avail help through these financial products in one form or another.
A person who has done ICICI bank DSA registration or from some other banks is the one who works collaboratively with the banks as it allows the bank to have some individual who can help to curate the product personalization and helps the lender to get a foothold in this unorganized market.
The Trends in the Consumer Market
As per the consumer data people put out and based on certain reports, it can be confirmed that roughly 65% of the customers claim that the products can be further curated. There must be certain financial tools that are useful for salary or regular income earners. According to 72% of customers, the products are more useful when they find that they have been personalized for the individual’s needs and work.
How Product Personalization Gives Maximum Engagement
Product personalization gives people a factor in which they want to put money and use it for future purposes. A financial tool now needs to be created by keeping in mind the loyalty of the customer and will offer products to serve the best purpose of their clients.
It is the benefit a lender can enjoy when they aim for the route of product personalization, and through that, they can have a greater presence in the market.