Data-driven subscriptions along with digitalization for personalized services

Venkatesan Dhivya

Advancement of crypto-currencies, big data and fintech innovations have captured the attention and imagination of customers. Roughly one in four Gen Zers and millennials now call a checking account from a digital bank their primary account. That is about double the percentage it was just nine months ago, according to a Forbes article published in 2021. This data shows that the preferences and expectations of customers from financial companies have transformed.

Financial experts like Jim Marous have pointed out this predicament and warned financial companies about their dire need to enrich the platform during the burgeoning of digital platforms. Financial institutions must be able to deliver an easy-to-navigate, seamless digital platform that goes far beyond a miniaturized online banking offering," he said.

In that sense, a data-driven, subscription-based business model and digitalization for personalized services are the next steps for financial companies to enrich their platform to lure the MZ generation.

Introducing subscriptions to financial companies will allow them to provide all services, such as banking, advisory, wealth management, mutual funds and insurance, in multiple packages and combinations with tiered pricing to meet their unique needs.

As in South Korea, where almost anything can now be purchased by subscription, it will be easier for Gen Z and millennials to adopt subscription habits with the financial sectors quickly. Moreover, the subscription model has already proven to gain loyalty and increase customer engagement among significant companies like G Market, Shinsegae and CJ Foodville in Korea. In light of this trend, incorporating a subscription-based business model in financial companies will enable them to increase customer loyalty and richer customer data. In this model, the more companies engage with the customers, the more they learn about the customers' needs, habits and behaviors. This data can be a key for financial companies to provide personalized service and insights customers crave to help improve their financial well-being.

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To utilize the full potential of the data-driven subscription model, financial companies should incorporate digitalization in their services to analyze their subscribers' behaviors and activities across different channels. Such will enable the financial companies to provide customer-tailored service offerings, which are most needed to lure the MZ generation. For example, if a subscriber of an insurance service enters a car dealership, the financial company can offer relevant insurance services for purchasing a car.

Along with providing the right product at the right time, data-driven digitalization will also reduce the processing time of the services offered by financial companies. For example, processing a loan application of a subscriber can be done in a concise duration owing to the credibility of the data collected about them. It will also help exclude unnecessary bureaucratic steps as the financial companies store the data. Time ostensibly being the primary concern of the MZ generation, which does not prefer to wait to receive the product, they will significantly enjoy such service.

The MZ generation does not want to spend their time adjusting to the bank way of communication either. Instead, they expect vice-versa. The data-driven digitalization will enable financial companies to find their subscribers' preferred communication methods and address their queries accordingly. Such an approach will ease the consumers' usage of financial services and strengthen their bonding with the company. The data-driven subscription will also facilitate providing promotional gifts to its loyal customers. Recognizing subscribers based on their level of usage of the financial services, from a piggy bank to premium gift boxes, will cherish their contribution to the company. Such compliments will increase the bonding between existing subscribers and encourage more customers to subscribe to different plans.

In addition, data-driven digitalization will bolster the future goal of financial companies to incorporate VR technologies in their services. As South Korea is an early adapter of Virtual Reality technologies, financial companies have a stupendous opportunity to attract customers by incorporating VR technologies. Collecting precise data about their subscribers will allow the advisors of financial companies to have an easier interaction with customers through data visualization in the VR platform. As virtual reality will enable customers to manage their accounts and interact with advisors from any physical location, data-driven digitalization will help advisors and companies navigate the appropriate time and place for their customers to use their services. In this instance, data-driven subscription is crucial for preparing financial companies for their future goal of entering the virtual reality platform.

Seth W. Godin, a former business executive, said, "Don't find customers for your products; find products for your customer." This statement tells us that financial companies need to refurbish their services to cope with the evolving technological advancement and consumers' requirements. Therefore, data-driven subscriptions will allow financial companies to know the unmet needs of their customers and deliver their services with the support of digitalization.

Venkatesan Dhivya is a student at Ewha Womans University.