Canadian financial institutions (FIs) need to embrace hyper-personalization to “boost Open Banking potential” and can capitalize on the trend for data sharing to do so, according to EY Canada.
Abhishek Sinha, partner, technology consulting at EY Canada, identified three ways that hyper-personalization can help FIs maximise their Open Banking “potential” in a recent article.
Sinha wrote that “customers expect data sharing to be secure and easy”, urging FIs in Canada to “make it so”.
He also wrote that with retail banking clients expecting personalized experiences “more than ever”, it is up to FIs to “embrace that shift”, warning that client loyalty is “waning” for some service providers.
Finally, Sinha said that with medium-sized businesses “more willing” to engage in sharing data, SMBs will be “better served with increasingly granular personalization”, adding that FIs must “develop strategies accordingly”.
The conclusions in the article, which is co-authored by Cormac Leddy, a senior manager in EY Canada’s technology consulting practice, and Nathan Lautens, a senior consultant in the practice, are drawn from recent research by EY Canada conducted among Canadian personal banking and SMB clients.
“In this year’s survey results, security maintained its title as the attribute personal banking customers care most about when they consider sharing data,” EY Canada’s Sinha, Leddy and Lautens wrote.
They also reported that “ease of sharing data” is a priority for banking clients.
In the article, Sinha and his co-authors wrote: “Personal banking clients prefer to opt in and select data attributes. This approach is 85% more popular than other models.
“SMB clients demonstrated a similar preference for controlling what data they are agreeing to share. To that end, they ranked ‘opting in, but all data is shared’ as the least popular approach. FIs should take this as a clear signal: your clients are interested in sharing data but want the opportunity to control what data they’re agreeing to share.”
The research by EY Canada also revealed a “strong degree of loyalty” among Canadian retail banking clients to their existing service providers, with personal banking clients 275% “more willing” to share data with an existing provider than a new one.
However, Sinha pointed out that clients expect a “significant incentive for what they consider more sensitive personal information”, with this expectation having increased since 2020.
In terms of next steps for Canadian FIs, Sinha and his co-authors wrote that they must “hyper-personalize value propositions with specific clients in mind” and urged FIs to invest in data and analytics capabilities be able to achieve this.
Read the full article here.