Consumers in all walks of life are becoming increasingly picky about who they do business with, and wealth management is no different. Clients expect their wealth managers to be able to provide a holistic service and with levels of personalisation similar to in other walks of life; the Netflix user experience is often cited!

The benefits of the wealth manager in providing this are simple. Firstly, they are much more likely to retain their clients and even be recommended to others by delivering on service. They can also make more targeted approaches to clients that are more likely to be successful and add not just to the relationship but the bottom line as well.

“Micro-segmentation is about more than just having a few broad groups. It is about how we provide targeted information to people, so they are not being inundated with products and offers that are irrelevant or unsuitable. For the financial institution, this means that uptake is maximised. Research shows that personalisation generated by behavioural segmentation could increase total revenue by up to 30%. For the end client, it means they get a much better and more satisfying experience,” says Naufal Adeel, Marketing Manager at ABAKA.

This benefits the wealth manager and the customer alike.

In particular, the wealth manager can leverage personalisation techniques to better engage with the client and provide a service underpinned by the right products and services, over the channel of the customer’s choice at the right time. It is a more insightful relationship, that takes a holistic view, and hones the service and conversation around the client’s exact needs, taking into account where the client is in their lifecycle.

“Financial institutions can understand their consumers in a comprehensive manner if they investigate behavioural traits and demographic cohorts accordingly because it encompasses cultural, social, and historical factors. With this comes an opportunity to use the data to optimise customer experience and engagement by delivering personalised financial products and services through nudges,” says Adeel.

Obviously, the customer reaps the benefits too. Instead of being pestered by seemingly random communications, they receive relevant approaches over their preferred channel at a time when they are likely to be receptive to it.

Adeel explains: “It is more about getting deeper, more meaningful, and rich experiences. The wealth manager can more fully explain and thus understand how the client will benefit, how something fits into both immediate and life goals, how it fits into what else the client has, and whether it is a good fit in terms of risk and suitability. It is an empathy play; if the client feels understood on non-rational aspects such as personality traits, attitudes, beliefs and values, the engagement with the wealth manager is much more likely.”

This, in turn, adds value to banks and insurance institutions through increased customer LTV, increasing customer scale and reach, and reducing operating costs. Indeed, research shows that customer personalisation generated by behavioural segmentation can cause a 20% increase in net promoter scores. Other findings show that it can also increase total revenue by up to 30%.

“It is clear that a personalised experience for consumers can thus be beneficial in terms of customer satisfaction, trust and loyalty as well as adding to the bottom line. Wealth managers need to go above and beyond standard 2D demographic segmentation personas in favour of behavioural segmentation. Financial institutions must adapt and capitalise on this technology to grow their customer base in this rapidly evolving landscape,” says Adeel.

But how does this all work?
Using quantitative and qualitative data, behavioural personas can be generated automatically by algorithms that recognise patterns in online user interactions. Correspondingly, personas are made up of a detailed narrative including a name, pictures, interests, needs, reaction triggers, goals, biography, demographic information, and behavioural descriptions.

But this is not a once-only static process. Machine learning, a part of AI, can continuously take in data and add it to what it already ‘knows’. In doing so, the personas are continuously refined and enhanced. Thus, the persona evolves with the data set.

“Machine learning relies on having the maximum amount of data possible. The best way to do this is to have an extraction layer that takes in data from many places or financial institutions, anonymises it, and then adds it to the overall ‘pot’ to make for a more thorough and accurate output from the machine learning algorithm,” says Adeel.

“This means that instead of just using the customer data of one single entity, machine learning has much more to work with so that you get insights on a societal level and a sector level, i.e., insurance, wealth management, retail banking, etc. This is far more valuable and gives you a much more accurate and useful tool to identify personality and greater nuances,” he says.

He adds that this is a process that is carefully checked from both vendor and the bank’s side and is GDPR compliant.

“Organisations really need to effectively use available data and AI technology to accelerate results. If they embed AI throughout the customer journey and generate new levels of industry-specific customer insights and action, they can offer hyperpersonalised experiences to attract and retain loyal customers. At ABAKA, we harness the relevant data to construct precise behavioural segmentation and, as a result, deliver hyperpersonalised content, services, and products to customers, clients, and users,” concludes Adeel.

This article is from The Wealth Mosaic’s UK WealthTech Landscape Report 2022. Access the full report here.