On October 22, the Consumer Financial Protection Bureau (CFPB) finalized the Personal Financial Data Rights rule. In a nutshell, the ruling is to empower consumers with a more competitive choice to find lower lending rates and higher deposit rates. Customers are given control of their data in two ways. One is the movement of data and financial history to the new provider for free. The second is revoking data access immediately at the customer request.
The new rule will require new challenges to the already silent attrition problem in financial services with a renewed effort of driving the most exceptional service. When customers can transfer their financial history to competitors easily and faster than ever, sophisticated retention strategies that go beyond fundamental service improvement will be imperative for banks, credit unions and fintechs of all sizes. Financial Institutions will need to make a stronger effort to preserve their existing customer relationships and dissuade attrition.
A long-standing hinderance for consumers to change financial providers is the pain of switching. The task is arduous and needs to be exact while money is in play between two organizations. Historically, consumers have felt the pain was not worth the better experience due to this coordination and loss of banking history after closing accounts, which this new rule changes. Customer expectation is driving customer experience. The current economy has been particularly difficult, causing increased spending on everyday needs. This is affecting the way consumers view their relationship with finances and their primary financial institution. For those reasons, combined with this new ruling a newfound trust and affinity between Financial Services and customers will be imperative. There will be fierce competition for superior customer service with a renewed focus on customer engagement strategies that ignite customer loyalty and offset silent attrition.
Silent attrition is very complex with hard to identify warning signs. A customer goes through small micro-shifts that are hardly recognizable to the financial institution as part of quietly leaving. AI is being introduced to understand the unrecognizable small early signals that customers take as they are quietly leaving. As companies are using Master Data Management to create golden records, stitching together advertising and marketing data together is an imperative for AI efficacy.
Having a stronger focus on sticky relationships through value-added services, and personalized experiences that make customers want to stay, despite more accessible switching options, will be necessary. Financial Institutions will need to make every customer interaction; sales, service and marketing coordinated and relevant regardless of channel. Confidence in data becomes an even stronger marketing imperative. This is the time to ensure all data is stitched together at the individual level to quickly pivot marketing messages. If a customer has a service issue, marketing needs to immediately change course and provide a “level of satisfaction” message instead and suppress any marketing offer that was scheduled. Marketers will require tools that give them the confidence for accurate customer communication for retention.
A 2023 BAI survey found new customer acquisition to be the number 1 priority. The survey explains the shift of customers willing to move. BAI recalls, historically, customers would keep their money in checking accounts rather than move to higher rate deposit accounts or CDs, rather than switch, because they didn’t see a strong enough incentive.
Of those surveyed, nearly 25% indicated they would be willing to move from traditional banks to online banks offering better rates. For mass market customers, paying the least amount of fees is a primary driver to make a switch. It will be interesting to see new survey results that take into consideration the ease and no cost transfer of data from the new rule.
Customer experience will be more pronounced in financial services than ever before. This will also require an acquisition strategy that involves truly knowing who the individual is both online and offline. Targeting and nurturing prospects, where and when they want to interact, has been a combination of art and science that is still complicated. An appealing message of digital simplicity, better products, and exceptional service must be consistent across every channel. By reducing switching costs for the consumer, we could see a higher impact to acquisition costs as this will need to be factored into overall conversion costs. Having the ability to dial up and down the data elements across digital and name-based channels will be vital.
One of the most profound call outs in the Personal Financial Data Rights rule is for the revocation of data upon consumer request to be immediate where data deletion can happen up to one year. When data is disparate across AdTech, Martech and operational systems, this sort of compliance becomes a challenge. A Financial Institution needs to be able to disconnect a consumer’s data with confidence. Developing a persistent ID that utilizes the same business rules as Master Data Management and feeds into that golden record, provides a convergence of IT and Marketing that assures the consumer data access has been revoked and disconnects them from the brand include marketing communications.
An Identity Spine owned and controlled by the brand (Financial Institution) should be a priority for Financial Services organizations to uphold these new regulatory rules on consumer data while taking into consideration new marketing strategies that improve engagement and offer better new customer acquisition.
Your on-brand message across every customer interaction is possible by bringing all data assets together. The collection of digital data combined with name-based data assets will be crucial for analytics teams to reshape engagement and new customer acquisition strategies with better test and learn methodologies. Being able to quickly sift through data to find the right elements that resonate with prospects and customers has always been a critical component to marketing. Taking it to a level where you can stitch online and offline data together to quickly drive the right customer interaction empowers a new way of marketing.
Now is the time to stitch data together at the individual level with business rules managed, owned and controlled by your brand. Marketers have relied on IDs owned by MarTech, AdTech, Publishers, Advertisers and activation partners providing Financial Institutions more than 5 IDs. Building a Persistent ID across all Federated Marketing IDs based your distinct business rules is a game changer. Getting it right is to verify that the solution is interoperable across AdTech, MarTech and Master Data Management technologies. This makes possible the complete 360-view of the individual digitally across owned and paid media IDs together with name-based IDs.
Data Axle empowers brands with tagging that captures data at the granular level, where the customer is consuming data, enabling each brand to apply their rules in a way that upholds your unique privacy compliance. We assure wherever the customer is residing at that moment, be it in the state of California, Maryland or internationally in the country of Turkey, you can apply rules that assure you are privacy compliant by geographic location.
According to Marketing Scoop, 10 Challenges Marketers Face When Implanting AI in 2023, the number one challenge is integrating AI with existing Martech Stacks where a survey conducted by Accenture indicated 74% of companies report difficulties integrating AI with their current tools. Challenge #2 sights poor data quality being a major barrier to successful AI implementation where a referenced Experian study found 69% of companies believe inaccurate data is undermining their ability to provide an excellent customer experience.
Data Axle is at the forefront of advancing high-quality utilization by helping organizations stitch data together across AdTech and Martech. We are at the forefront of advancing high-quality data utilization which is imperative for AI usefulness. Overcoming these two challenges, set Financial Institutions Marketing programs to utilize AI that drive better customer experiences, reduce silent attrition and improve new customer acquisition strategies assuring data privacy compliance with an Identity Spine that gives you Intellectual Property.
About Data Axle: With 50 years of Marketing and Data Services, fundamental business is bringing disparate data together at both the household and individual levels. Data Axle’s interoperable Audience360 solution empowers Financial Services organizations with a brand managed and controlled Identity Spine. The Intellectual Property becomes yours by building a Persistent ID owned and managed by you, eliminates being held hostage to 3rd party owned black box solutions. From a technological level of effort perspective, interoperability is at the heart of its product development. We have purposefully built the solution to be technology agnostic and inclusive.
Beth Merle, Vice President, Enterprise Solutions for Data Axle, has over 30 years of experience supporting the financial services industry. Currently serving as Vice President of Enterprise Solutions, she has a proven track record of helping financial institutions craft and execute growth strategies that drive customer acquisition, retention, and deeper engagement.
This content is made available for educational purposes only. The content should not be used as a substitute for competent legal advice from a licensed professional attorney in your jurisdiction.