Personalised financial services with zero-party data: Beyond traditional approaches

/ 20 November 2023

The days of generic, one-size-fits all financial service experiences are over. Today, customers expect – and demand – personalisation.

Just think: How frustrating do you find it when your bank seems to view you as account number #72956, rather than Joe Bloggs with unique financial goals and circumstances?

This leaves you feeling like another faceless customer. And you expect more – particularly as other sectors seem to be nailing tailored communications. So, what can financial services do to be better? To provide customers with what they want.

Enter: zero-party data. ✨

Simply by asking customers directly: What do YOU want, you can uncover an individual’s personal preferences and intentions. It takes you from customer #72956 to tailored content and product recommendations and proactive advice and incentives, directly related to you (in this instance, Joe Bloggs).

Sounds intriguing?

Let’s get into it. 

How zero-party data boosts financial services profits

Let’s be really blunt here. The cookie-cutter approach just doesn’t work anymore. With so many options available in the market – from traditional lenders to fintechs and Big Tech – financial services need to stand out to gain customers, and keep them.

It’s too easy to switch and there’s plenty of choice out there.

So, what can you do?

🔍Research shows that 91%* of consumers are more loyal to brands that get personal with targeted offers and recommendations. While this may be based on data related to all industries, the thirst for personalisation extends to the financial services sector too.

Generic jargon-filled websites, reams of irrelevant products, and robotic advisors just don’t cut it. To achieve this and gain a competitive edge, you need to deeply understand individuals. And this is where zero-party data comes in.

You may ask: What actually is zero-party data? Here’s a quick definition 👇

What is zero-party data?

Unlike other types of data – first, second or third-party data – zero-party data comes straight from the customer. Think of it as the customer raising their hand and saying, “This is what I want, and this is what I like”. They willingly volunteer their information – which is invaluable for personalisation.

For example, if a customer indicates that they’re planning a large purchase like a home or car, you could proactively offer relevant loan or savings products. Or if a customer explicitly shares their retirement plans, you could tailor specific pension products or investment options that align with those goals. This data is gold… And simply something you cannot buy. This is what makes zero-party data so unique and powerful – it is data willingly shared by customers.

Suddenly, financial services have a direct feed of each customer’s unique preferences and goals. No more guessing games or assumptions.

Armed with zero-party data, investment advisors can create tailored portfolios aligned to a client’s specific objectives and risk appetite. And banks can provide custom lending options based on what customers have directly told them they want to achieve.

It allows you to deliver content that engages, rather than falls flat. With zero-party data, you can engage and build understanding and trust with consumers.

You’re probably thinking, so how do you capture zero-party data? Here’s how…

How to collect zero-party data

Unlike other traditional data collection methods, zero-party data requires a different way to capture data and insight. Think interactive polls, ‘Choose your own adventure’ scenarios and even financial personality tests.

These entertaining formats make customers excited to share information about themselves. It replaces the tedious form-filling and tiny print that is traditionally used in financial services. The new formats inject a level of entertainment that the financial service sector has often lacked.

By letting customers actively shape their own experiences through polls and questions, financial firms gain high-quality, relevant insights. This intel is all volunteered willingly so accurately reflects their current mindset… Unlike third-party data which is gathered indirectly, using public records..

On this note, let’s look at a popular strategy for capturing zero-party data. Enter: gamification

Gamification takes the data collection process to a whole new level of engagement – making it an invaluable tool for any financial institution serious about personalisation. Read on to learn more 👇

Zero-party data strategy: Gamification

As the name suggests, gamification uses game-like elements to add an element of fun and boost engagement. There are lots of reasons for this. You can delve into them here.

But essentially, it’s because gamification makes the data collection process far less intrusive and tedious – and a lot more engaging. 

By turning surveys, for example, into interactive experiences, customers are more likely to engage willingly. They don’t just mindlessly click through. They become an active participant. And this makes the accuracy and relevancy of the data you collect more likely.

🔍In fact, our clients experience 50-90% completion rates with gamification – a 10x higher engagement compared to traditional surveys (typical response rate of 5%).

And the benefits extend beyond data quality.

For financial services, gamification enhances the customer experiences and allows for more revenue-generating campaigns. Because when customers engage more deeply with your services, they’re more likely to use additional features, recommend your services to others, and become long-term, loyal customers.

Let’s look at a real-life example with first direct…

Zero-party data in action: Financial services use case

Managing personal finances can be dull and even daunting, but first direct turned to gamification and made engagement and capturing zero-party data fun… In turn, earning them the golden nuggets of insight needed to tailor customer experiences.

Here’s what they did…

Partnering with YouGov, first direct ran a Money Type quiz. Through this, they identified 6 common financial personalities – Spontaneous Spender, through to Cautious Saver.

Instead of feeling like drudging through a bank’s website to find a suitable solution, this lively quiz made it irresistible to find out. And with the results, consumers discovered their unique money management style, along with tips to manage finances and the relevant product for them.

Going beyond fun, first direct was able to understand spending habits on a deeper level, which they could use for future campaigns.

👉You can see the quiz here.

Financial services future outlook: It’s with zero-party data

Zero-party data is the future. It isn’t a perk but a necessity in financial services. Actually, it might even be the only way financial service brands can compete. Especially with Big Tech. 

With the abundance of competition and low engagement with traditional communications, zero-party data taps into what customers really want right now. Investing in a zero-party data approach means you can capture deeper behavioural insights and level up your personalisation game and make engagement irresistible.

But more importantly, you can avert a data crisis. With data privacy rules tightening, zero-party data may be the only way to get more valuable insight. 

Ultimately, it empowers hyper-personalisation and better experiences, but also future-proofs your compliance.

Just don’t settle for playing catch-up. Get ahead of the curve and make the most of the potential of zero-party data and start wowing and delighting customers today.

📕Further reading:


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