Data Activated Personalization in Internet Banking

Internet banking enables banks to perform many functions that are much more expensive to perform using the traditional banking channels. Most of the tier 1 and tier 2 banks have made significant investments in making the Internet Banking channel available to its customers. To make the investments in alternate channels good, banks worldwide have realized the importance of migrating customers on the self-service channels and are making considerable investments in channel migration campaigns. Most of the banks view and measure channel migration in terms of traffic, number of new registrations and number of active accounts. Although these parameters offer a quantitative view of channel penetration, they fail to provide an insight on ‘channel maturity’ – the degree of adoption of services offered.

For banks to realize full set of potential benefits offered by Internet Banking, the scope of channel migration campaigns must be broadened – from acquiring customers on channels to include ‘channel maturity’ – maturing customers on channels.

Enhancing ‘channel maturity’ is an ongoing process that works to improve two key aspects – awareness and adoption of services. It aims at improving customer awareness about tasks that can be performed on self service channels and maturing customers from performing basic informative functions to more advanced transacting functions.

An effective ‘channel maturity’ strategy can be devised by monitoring and measuring level of channel awareness and channel usage. This knowledge of user behavior, when viewed in light of a behavioral segmentation approach will help banks apply an appropriate strategy for each customer segment to achieve precision in channel maturity efforts rather than adopting a “One Size Fits All” approach.

Understanding Customer Behavior is the Key

Currently, the potential of internet banking is underutilized by most banks. The efforts to improve adoption rate fall short to achieve the desired results; primarily because of untargeted generic campaigns. Let alone the channel maturity, even the channel migration efforts by most of the banks lack a well defined approach. This leaves banks with high migration costs and unpredictable and low conversion rates.

The process of building a successful channel maturity strategy must begin with a focus on:

  1. Thorough analysis of customer behavior by monitoring the usage of services offered and understanding the channel awareness levels.
  2. Customer segmentation based on customer activity on internet banking channel.
  3. Identification of offerings that can improve stickiness and motivate customers to mature to performing more advance functions
  4. Designing targeted campaigns customized for each customer segment
Figure 1: Segmenting customers based on channel awareness and services used

Given the evolving state of internet banking, the degree of channel awareness varies and includes awareness about speed, technology, convenience, ease of use, services offered, security of online transactions etc.

The ‘services used’ parameter measures transaction-centric functionality used by customers. The classification of channel offered services that each of the four segment use assumes inclusion and adoption of lower level services and is a measure of growing awareness as well as channel maturity.

Segment Description and Strategy


This is a customer segment that relies more on the traditional offline channels primarily for a strong need for human assistance in performing banking tasks and hence is more comfortable with human interactions. Customers in this segment are infrequent user of online channels and are unaware of the variety of tasks they can perform on internet banking channel. For reasons such as security, trust in technology etc., this segment is uncomfortable moving beyond the basic level 1 channel functions like view account balances, view recent transactions, generate online account statements etc.


  • Educate about array of services offered and convenience of Internet banking over traditional banking channels.
  • Educate about security of online transactions, privacy policies, limited liability in fraudulent transactions, additional user authentication measures, data encryption techniques etc.
  • Training and handholding is the right first step to move them to the next level of channel usage.


Customers in this segment are frequent users of selective services offered on self-service channels. The primary drivers for these customers are speed and convenience. In addition to informatory services, customers in this segment are most likely to engage in the transaction-centric functions such as funds transfer within and between banks, bill payments, setting automated periodic money transfers etc.

Although active users of selective services and potentially aware of more advanced services, they do not perceive any compelling benefits in moving beyond the tasks they often engage with.


  • Offer incentives – monitory (e.g. discounted processing fees) as well as non-monitory (e.g. quicker loan approvals).
  • Offer multiple touch points to facilitate completion of transaction and create capability for effective handling of online – offline crossover interactions.
  • Create a seamless experience between offline and online channels.


Customers in this segment are mostly forward looking and affluent who is time and service quality conscious. This is an effervescent customer segment where loyalty towards any particular bank is low and any lapses in service quality and unavailability of timely / accurate information can be a huge disappointment.

In addition to adoption of level 1 and level 2 services, customer in this segment often engage in utilizing the potential of internet banking to deliver automation driven straight through processes.


  • Focus on artificial intelligence driven automation to deliver straight through processes.
  • Provide an error free online experience.
  • Introduce and educate about advanced investment planning and wealth management services.


Experts, the forward-looking segment, are early adopters of technology introduced. The customers in this segment are those who have achieved considerable expertise while demonstrating their ability to perform complex tasks using self-service channels. They are extremely comfortable and enjoy banking online and are proactive users of most of the online services. In addition to other service offerings, they tend to utilize the power of internet banking to consolidate multiple bank and investment accounts, investment planning and avail wealth management services.


  • Engage to Retain: Create clear channel differentiation and offer distinguished value preposition to improve stickiness and retain online.
  • Offer more advanced financial planning services like those offered by exclusive personal finance management portals such as
  • Introduce technological advancements and migrate to more cost effective channels like mobile banking.

Channel Maturity Continuum to Make the Right Offer to the Right Customer

Banks that understands their customers’ needs and act proactively and effectively to deliver tailored treatments stand the best chance to engage and retain customers. Banks that wish to improve the effectiveness of their channel maturity campaigns must develop capabilities to segregate areas that demand generic mass communication from the ones that demand personalized and targeted content appropriate for each customer segment.

Figure 2: Aligning service offerings to customer needs

When a customer logs on to internet banking channel, beforehand knowledge of segment the customer belongs to presents an opportunity to engage and drive the customer to relevant subsequent levels of functionality. Each successful login thus provides an opportunity to enhance channel awareness and induce channel usage, thereby enhancing the channel maturity.

The channel awareness – channel usage based segmentation offers a deep insight into customers’ behavior and technology adoption cycle. This knowledge when translated into actions can help banks achieve precision in formulating an appropriate and targeted channel maturity strategy – thus improving the RoI.

This article was first published by Anand on Indiabanks

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