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Modern banking is becoming more personalized than ever, thanks to strategies like contextual banking and marketplace banking. This article explores how these strategies are changing the way banks help clients in different stages of their lives – from student loans and discounts to mortgages and business loans. Read on to discover how banking is becoming a partner in every stage of your life.
"Contextual banking refers to the personalization of financial products and services based on the context in which they are utilized. This may include offering various products or services based on the user's location, time of day, or other factors. Essentially, the goal of contextual banking is to offer the right product to the right customer through the right channel at the right time. The intersection of the 'bank's offerings' and the 'customer's needs' can be considered the zone of contextual banking services."
DeutscheBank - API Program
Welcome to the age of hyper personalization
How does contextual banking respond to clients' needs in various life stages? The user's life journey is full of transformations and challenges, and banking is becoming a significant companion in every phase. Each individual goes through different stages in life, bringing forth diverse needs and goals. The distinctiveness of each client's life cycle is particularly intriguing for contextual banking, aiming to adapt the banking experience according to the current context and client's needs. Let's dive into one client story to explore how banking services can evolve and grow with the user throughout their life journey.
Phase 1: Student era - Searching for student loans, discounts, and travel tips
In this initial phase, a young individuals finds themselves in the student life full of challenges and discoveries.Students often face financial challenges and seek ways to obtain student loans with favorable terms. Banks use contextual banking to identify these needs and offer suitable financial products. Additionally, students often seek discounts and benefits to save money on purchases of goods and services.
Banks already form partnerships with businesses to present students with offers relevant to them. Moreover, in this life stage, traveling is often on the agenda, and banks can provide travel tips and options for convenient currency exchanges.
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Phase 2: Career growth - Mortgages, leasing, and home investments
As the user progresses in their life and enters the phase of career growth, their financial needs change too. Banks can respond to this switch by offering mortgages and leasing options that enable them to achieve goals different from those in their student years.
In this phase, users focus more on investing in housing and building financial stability. Contextual banking allows banks to analyze the client's financial situation and propose strategies for efficient financial management. This includes monitoring expenses, categorization, suggestions for savings, and offering investment products and services that help clients grow and build wealth. This stage is a crucial moment in the user's life, and banks can play an active role in their financial success.
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Phase 3: Middle age - Local engagement and sustainable lifestyle
In the third phase of our user's journey, we find ourselves in mid-life, where the user already has their own residence, and their children go to school. In this stage, their interests and needs change, as they become the center of their local community life. The user shows increased interest in the surroundings and a sustainable lifestyle.
Banks can actively support this new focus by offering financial products and services that support the local economy and sustainable purchases. Contextual banking allows banks to identify when and how the client expresses interest in local businesses and provide relevant information about discounts and events in their area. This life stage may also involve investments in sustainable projects and energy-efficient technologies (e.g., solar panels, heat pumps, etc.), and banks can offer financial advice and products that support these initiatives.
Middle age is a crucial phase in the user's life journey when they begin to engage more in their community and create a sustainable lifestyle. Banks can be partners on this journey by providing financial support and advice that help clients achieve their goals, such as measuring the user's CO2 footprint for individual purchases.
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Targeting students may initially seem like a less lucrative business strategy. It is often said that anyone who marries is more likely to get divorced than to change their bank account. Original research from 2013 shows that the average duration of marriage was 11 years and 6 months, while the average time we stay with a bank is around 17 years.It's clear that the student era is the foundation of future banking loyalty.
Therefore, we should nurture students over the years, since they can grow into loyal users with long-term business relationships. Thanks to tailored contextual banking, we can respond to their changing needs and provide them with relevant financial products and services that help them achieve their goals. Banks that understand the life stages of their clients and actively adapt to them have the potential to create strong and long-lasting relationships that bring mutual value and growth.
