Why “one-size-fits-all” banking is over: it’s time for tailored value propositions

Banks have successfully digitized core services, making it easier than ever for customers to check balances, transfer funds, and open accounts from their phones. But with that shift has come a new challenge: digital sameness.

Most banking apps today deliver a similar experience — standardized, functional, and increasingly interchangeable. For customers, that means few reasons to stay loyal. For banks, it results in low engagement, high churn, and missed opportunities to deepen relationships.

Retail banks face a new challenge: creating digital experiences that are not just functional, but genuinely relevant. Tailored value propositions offer a way to meet this challenge by aligning digital banking with the real needs and expectations of different customer segments.

According to Forrester, more than half of banking customers feel that their bank’s app is about the same as any other. Meanwhile, BCG reports that nearly 70% of digitally acquired customers never fully activate their accounts.

These are not just user experience issues. They point to a deeper structural problem: most banking apps have been designed for transactions, not relationships. The result is a disconnect between what banks offer and what customers actually need.

Tailored value propositions offer a way forward by helping banks move away from uniform experiences and toward meaningful differentiation. The goal isn’t simply to segment marketing campaigns but to redesign the entire digital journey around the unique needs of each customer group.

At its core, a tailored value proposition is a segment-based banking experience. Rather than serve all customers through a single, generic interface, banks define specific user plans — such as Young Professional, Family, or Mass Affluent — and configure the digital experience to reflect each segment’s priorities. 

This means more than cosmetic changes. From the layout of the dashboard to the types of products displayed, from support options to the tone of content, every element of the experience is shaped by a customer’s segment profile.

For instance, a young professional might see tools that promote savings and financial independence. A family might have access to features that support allowance management and shared goals. An affluent customer could be guided toward premium services and investment opportunities.

This level of differentiation helps banks stand out in a crowded market. More importantly, it allows them to build relationships that go beyond transactions.

Segmenting for relevance

Tailored value propositions are only as strong as the segmentation behind them. And modern segmentation goes far beyond traditional categories like age or income, meaning:

• Demographic and life stage: Groups based on age, income, or occupation often align with specific financial needs. Younger customers may focus on building credit or managing student loans, while older segments are more likely to seek retirement planning or wealth management.

• Behavioral patterns: This approach is based on transaction history, product usage, and channel preferences; someone who frequently transfers money abroad might be offered a multi-currency account, while consistent savers could be introduced to investment tools.

• Psychographic traits: Goes deeper into values and lifestyle. For example, environmentally conscious customers, identified through spending patterns or content engagement, could be offered green financial products like ESG portfolios or carbon footprint tracking.

• Value-based segmentation: Prioritizes based on total value to the bank — including balances, product holdings, and profitability. High-value customers can receive access to exclusive products, faster service, or dedicated financial advisors.

The most effective strategies layer these segments to create hyper-targeted profiles. A "high-net-worth retiree who prefers in-person service" has vastly different needs than a "digitally-native young professional saving for a first home."

 The method enables banks to serve not just individuals, but households and small businesses — adapting to the real contexts in which customers manage their finances.

Tailored value propositions align with how customer relationships actually evolve — enabling banks to support each stage with greater relevance and precision.

Here’s how that plays out across the lifecycle:

• Acquire: During onboarding, customers are matched with the most relevant products and plans for their segment, improving conversion from the first interaction.

• Activate: Personalized dashboards, features, and prompts help new users take meaningful first actions — such as setting up budgeting tools or linking accounts.

• Expand: Banks can surface tailored recommendations as customer needs emerge — from savings goals to investment products to family banking setups.

• Retain: With a clear view of each segment’s behavior, banks can deliver timely, contextual support that strengthens loyalty and deepens engagement.

By moving beyond generic engagement strategies, tailored value propositions allow banks to act with greater intent — supporting customers at key moments with relevant, segment-specific guidance.

Delivering tailored value propositions doesn’t require rebuilding your banking infrastructure, only the ability to orchestrate differentiated experiences from a single platform. Backbase enables this with the AI-powered banking platform, which equips banks with the capabilities needed to deliver relevance at scale:

• Plan Manager governs segment-specific plans and entitlements

• Remote Config dynamically adjusts themes, dashboards, and navigation per segment

• User Lifecycle Manager manages customer transitions across segments in real time

This setup allows banks to tailor the digital experience for each user, from the first login to ongoing engagement, without fragmenting the tech stack or increasing delivery overhead. 

Crucially, it also empowers employees. Frontline teams gain visibility into each customer’s assigned segment, allowing them to personalize their service approach accordingly. High-value customers can be routed to dedicated advisors or receive priority support, while lower-touch interactions are managed efficiently via digital channels. 

This way, banks focus human effort where it delivers the most value, strengthening relationships at every interaction.

The shift from digital sameness to tailored value propositions is the defining strategic challenge for modern retail banking. Embracing deep customer segmentation and leveraging intelligent technology platforms gives banks the possibility to move beyond simple transactions and build lasting, profitable relationships. 

The data is clear: the institutions that know their customers best will be the ones to win their loyalty and lead the market.