Hyper-Personalisation: How Banks can tap into neglected customer niches

By Lynda Clarke (pictured), Chief Operating Officer of Tribe Payments

In an era where consumers expect tailored experiences in every aspect of their lives, the banking industry is undergoing a seismic shift. Hyper-personalisation, powered by Artificial Intelligence (AI), big data, and advanced analytics, is revolutionising the way financial institutions engage with customers. What do we mean by ‘hyper-personalisation’, and how does it go beyond the traditional understanding of a personalised experience?

Putting the hyper in personalisation in banking 

Hyper-personalisation isn’t just another industry buzzword, it’s a fundamental shift in how banks and financial institutions should be engaging with customers. Like retail, at its core banking is about the customer experience, ensuring clients receive the best possible service. That’s why I constantly challenge my team to think critically about why customers choose us and what problems we solve.

Traditional personalisation – common in banking and industries like retail for many years – relies on historical data to predict future preferences. It’s about using past behaviour to tailor future interactions. Hyper-personalisation takes this a step further. Defined as ‘very precise messaging in close to real time,’ it draws from a broader data pool, integrating real-time insights to anticipate customer needs, sometimes before they even recognise them.

Unlike instances where ‘hyper’ is just a flashy prefix, hyper-personalisation is delivering real impact. When applied effectively in banking and customer experience strategies, it doesn’t just enhance engagement – it drives measurable business growth. In fact, 86% of companies report tangible improvements from hyper-personalisation approaches.

Meeting customers on their terms is a growing priority for banks, and while that may sound simple, implementing it effectively requires banks to navigate a range of hurdles – and fast.

Playing catch-up 

With 76% of consumers frustrated by a lack of tailored experiences, hyper-personalisation is now essential for banks to stay competitive. However, the sector still faces challenges, from stringent data regulations to conservative risk appetites. Many banks are also still grappling with AI, big data, and execution strategies, but success lies in seamlessly integrating these technologies to identify patterns and predict customer needs effectively.

Hyper-personalisation starts with high-quality data, so banks must assess their data collection tools and ensure they have skilled data scientists to extract valuable insights.

But it’s important to remember that striking the right balance between personalisation and privacy is critical. Banks must avoid crossing into invasive territory while overcoming legacy systems that hinder efficient data integration.

Consumer expectations are shifting rapidly, especially among Gen Z, the most investment-savvy generation yet. With 80% of Gen Z investors starting before age 21, they demand personalised, intuitive financial experiences.

Retail has already embraced hyper-personalisation, using it to transform customer experiences by delivering tailored recommendations, offers, and seamless interactions. This has set a new benchmark for customer engagement, and now banks must rise to meet this challenge.

Organisations that embrace hyper-personalisation are already seeing significant growth. Companies with above-average revenue growth generate 40% more revenue from personalised marketing. For banks, the message is clear: adapting to this new landscape isn’t just about keeping up, it’s about unlocking competitive advantage through meaningful, hyper-personalised engagement.

Implementing hyper-personalisation effectively 

Now is the time for banks to shift from a model where customers seek out products to one where products find the right customers. To create the unique experiences future generations will expect, several key considerations are crucial.

First, data is important, but its value lies in how it’s used. Establish data lakes, invest in analytics, and build teams who can turn insights into predictive capabilities. If your organisation lacks data scientists, that’s where to start.

Next, define clear goals and identify where personalisation can have the greatest impact. In doing this, remember that privacy and security should be a priority – customers value knowing how their data is handled, and proactive transparency is key. Invest in technology that enables real-time targeting; advanced analytics tools can help develop the predictive capabilities needed for hyper-personalisation.

Understanding your target markets and use cases is essential, but often overlooked. Knowing who you’re selling to and why they’ll choose you is vital for success.

Maintain an agile, cross-functional team. Customer needs evolve rapidly, so flexibility and collaboration across marketing, product, analytics, and tech are critical.

Finally, embrace A/B testing as part of an iterative process. Test, measure, and refine to ensure that you’re consistently meeting your goals and improving your strategies.

Financial institutions have historically been slower to adopt agile marketing and service approaches compared to non-regulated entities. While banks are increasingly automating both front-end and back-end processes, these efforts often fall short of true hyper-personalisation, offering only a more personalised experience instead. But there are success stories out there.

Real-world examples

In some countries, real progress is being made in embracing hyper-personalised customer experiences. Bank of Ireland, for example, uses data to enhance customer experiences, combining online and offline data to personalise messages and services. This has led to a dramatic increase in digital applications. HSBC employs AI to offer personalised credit card rewards, resulting in higher customer satisfaction and engagement.

Nubank’s approach is also noteworthy. By using AI tools like Precog to predict real-time customer needs, its has improved its ability to anticipate customer intent during service interactions by more than 50%.

These examples, while impressive, remain exceptions within the broader banking industry, and the sector still has a long way to go before hyper-personalisation becomes the standard.

In today’s competitive landscape, many businesses focus on selling features rather than delivering true value to their customers. While catching up with other industries may require significant effort and a delicate balancing act, the case for hyper-personalisation is undeniable, and banks that master this approach will not only meet rising customer expectations, but they will distinguish themselves in a crowded market.