Customers willing to share personal data in exchange for personalized services

There is ample opportunity for financial institutions to harness the power of AI to build more meaningful connections and experiences with customers — vastly improving both retention and acquisition, according to research findings released by NTT DATA.

In the global study, customers provide striking testimony about what they would like their financial institutions to provide for them:

• 53% of customers say they would like their financial institution (FI) to proactively send them reminders on upcoming major payments
• 49% of customers want their FI to anticipate products and services they might need or be interested in
• 47% of customers want their FI to connect the dots between their income, expenses and savings providing proactive guidance to help them reach their financial goals
• 46% would like their FI to act as a conscientious advisor (voice of reason) on major spending decisions
• 39% of customers want their FI to intervene and prevent purchases to help them stay on budget and reach their financial goals

“Customer needs are changing, and so are the ways in which financial institutions need to interact with them,” said Wayne Busch, President Financial Services and Insurance, NTT DATA Services.

“Advancements in artificial intelligence, machine learning and data intelligence are giving banks vast capabilities to deliver what customers want — hyper-individualized, relevant and timely financial guidance to achieve their life ambitions.”

Real-time data must be at the core of every customer interaction

To meet these customer expectations, accurate, real-time data must be at the core of every customer interaction. Better data — and the ability to act on its insights through AI — enables FIs to anticipate customer needs, provide personalized financial counsel, improve data protection, automate manual transactions, and power proactive alerts.

“Futurists are the most important customer segment for financial institutions to understand as they pose a substantial opportunity for growth and customer retention,” said Kaz Nishihata, Executive Vice President, NTT DATA. “We believe over time that technological progress will turn the customer segment that today says they will not pay for personalized proactive services into Futurists.”

To explore how AI can enable FIs to attract and retain customers in a digital world, 4,807 consumers and 476 senior executives in banking, brokerage, capital markets, wealth management, and cards and payments across the U.S., UK, Germany, Spain, Italy, Japan, Brazil and Mexico were surveyed in December 2020.

Key study findings

The top five reasons customers leave their financial institution center around price, access, and trust (ranked in priority order):

• High fees
• Poor customer service
• Data breach
• Unattractive savings and loan interest rates
• Competitive offers

Trust is most important to customers:

• 66% of customers tell banks “be honest with me” — if you make a mistake, be honest with me about it, and correct it.
• 59% say “deliver on your promises” — if you promise to deliver a payment in two days, make sure I can access the funds in two days. If you promise to protect my data, don’t fail.

Gen X and Millennials are willing to pay more to receive personalized recommendations to improve their financial well-being:

• 35% of survey respondents are willing to pay for and share personal data for personalized proactive services
• These “Futurists” tend to be younger (majority are Gen X and Millennials in the 35-44 age group), have higher incomes, have many banking relationships, are extremely comfortable using technology, and prefer using digital products and services
• 66% of Futurists agree personalized proactive services are an important feature for their primary bank to offer

Customers are willing to share personal data in exchange for personalized proactive services. 61% of consumers are motivated to let go of their reservations around privacy and security in exchange for managing their individual spending budget and getting online individual advice to save money. For example, customers said they would:

• 41% share online retail purchases
• 37% share geo location details
• 36% share airline programs information
• 36% share credit card information