How To Win in the Race of Hyper-Personalization in Credit Cards Business?

By Ajay Wadbudhe . December 20, 2023 . Blogs

“There is a strong revenue and valuation argument to be made in favor of hyper-personalization,” stresses Deloitte in its Future of Retail Banking report. The consulting giant also dives deep into the personalization maturity curve, highlighting how it’s time for financial institutions to move from rule-based segmentation and leverage behavioral recommendations, omnichannel optimization, and predictive personalization to drive exponential revenue.

We’re seeing the adherence to this personalization maturity curve in the credit card space, or at least an inclination towards the same. For example, SBI is already testing the waters of hyper-personalization and looking to make it a more pervasive endeavor in the times to come. 

“Right now, our capability is only to look at broad customer segment or small set of customers segment and make a blanket offer,” says Rama Mohan Rao, MD & CEO at SBI Cards & Payments Services. He adds, “We want to have the capability of customizing the offering at the customer level itself.”


What Does It Take to Win in the Race of Hyper-Personalization?

Hyper-personalization of credit cards is a method that involves gathering information about customers to develop personalized offers, promotions, and rewards that are more pertinent to their spending patterns and financial objectives.

The key is using client information and turning on personalization across channels. For that, however, brand managers need to review their customization tactics. They must ensure that the customers are approached in a way that makes their experience seamless and keeps them engaged with the services.

Of course, much of the prominence of hyper-personalization can be attributed to the soaring digital technology landscape. Credit card businesses can leverage this opportunity to tailor their offerings to customers’ unique needs, and rightly so. Here’s how they can do that:

Understanding the Customers Better (Analytics and AI)

Financial institutions must profoundly comprehend consumer activities, behaviors, and preferences across the entire banking ecosystem in order to realize hyper-personalization. Everything from regular account payment information to more contextual and transactional data must flow into analytics initiatives. This information would prove viable in discerning interactions across different touchpoints and understanding the financial stability of their customers.

Using data analytics, financial institutions can gather and examine consumer data, including transaction history, spending habits, and more. This data can be used by banks and credit unions to learn more about the requirements and preferences of each customer, enabling them to offer tailored services.

Of course, today, a great sauce to your recipe of hyper-personalization could be employing AI in your workflows. The traditional systems lack the ability to meet every customer’s needs — something that can be efficiently handled by AI algorithms. 

For example, financial institutions can use AI to personalize marketing campaigns and better equip virtual agents to resolve customers’ issues. In fact, AI can handle a lot of legwork on the backend by helping with fraud detection, risk assessment, investment analysis, compliance, etc. All these, albeit not directly associated with consumer-facing interactions, can work wonders to create a seamless, personalized experience for cardholders.

Customizing Card Features

Financial institutions can design credit cards that go beyond standard offerings and successfully appeal to their target market by utilizing customer insights. Instead of providing generic credit card rewards and benefits, issuers can customize every element of the credit card to each customer’s specific needs. 

This might take the form of specially created reward categories based on their buying habits, special discounts on goods or services they frequently use, or extra points for certain activities they find enjoyable in their daily lives. Customers are more likely to remain loyal to a brand when credit card offerings are personalized to reflect their hobbies or affiliations.

In fact, this focus on customization is why we’re seeing the rise of credit cards explicitly designed to serve interests like shopping, rewards, cashback, travel, etc. Different organizations (such as food companies, clothing brands, etc.) are partnering with core banks to launch cards serving a specific audience. This allows institutions to cater at the consumer level instead of creating a blanket for an extensive user base with vaguely similar interests. The recently launched Swiggy-HDFC credit card partnership is an excellent example of the same.

Putting Personalization in the Hands of Consumers

It’s not only about the rewards associated with the card but also the design it espouses. A host of organizations like American Express and Wells Fargo allow customers to personalize their credit card designs.

Of course, such capabilities do not directly tie into the choice of credit cards because there are more important factors to consider, including credit limit, interest rate, etc. However, on the customer end, they do serve to create a sense of connection with the brand.


The Final Word

The key to success in the credit card business is to build invaluable relationships with consumers. That happens when financial institutions pursue hyper-personalization and drive tailored tactics to foster a 1:1 experience, propel the users’ devotion to the institution, and get them closer to their financial goals.

At Verinite, we help banks, financial institutions, and fintechs to evolve their card offerings with time and cater to customer expectations and changing regulatory landscape. We’ve got you covered when it comes to creating a roadmap for winning the hyper-personalization race. Connect with us today!

Ajay Wadbudhe

Ajay is a Project Manager in Verinite. Associated with BFSI domain from the start of the career. Believes in "Do what you like". Big cricket fan and loves cooking.

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