Backbase CMO Tim Rutten explains how banks can shift from reactive service to proactive engagement by unifying customer data, implementing AI-powered personalization strategies and transforming organizational structures to compete with digital challengers.
In an era where financial institutions face unprecedented competition, the banking industry must shift from reactive service models to proactive engagement strategies. Many organizations, however, remain hindered by fragmented customer data, disconnected channels and limited AI capabilities. On a recent episode of the Banking Transformed podcast, host Jim Marous spoke with Tim Rutten, chief marketing officer at Backbase, about how financial institutions can unlock growth potential in an increasingly competitive marketplace.
Breaking Free from Legacy Constraints
Q: What are the biggest obstacles preventing banks from shifting into growth mode?
Tim Rutten: There are a few parts that to me stand out. For over a decade, we’ve been talking about: “Hey, you have a whole range of siloed systems in your back office, in your infrastructure. You need to bring those together to be successful in the future.”
However, that story itself doesn’t really carry any urgency. If you feel that your application is four out of five stars today and you’re profitable across the board, why would you bother? Why would you make the move and risk your career? There’s no pain, or it’s not sufficient.
The problem behind it that you now see becoming more apparent is that you’re probably spending the majority of your IT investment on keeping the lights running while the actual innovation you’re able to bring to the table is limited.
Right now, the expectation is vastly different with the new paradigm of AI kicking in. On the home screen, where your banking application sits, all the other players are embracing AI. There’s even big fintech entering the domain, or challenger banks that are almost AI native or AI-first and they can bring that to life very rapidly.
Q: How are digital-first competitors like Revolut and Chime changing customer expectations?
Rutten: This basically results in players like Revolut, Chime and NEWBANK in Latin America, which bring a technology and execution base to the table that delivers something vastly different.
Their applications are becoming very dynamic, if not delivering the segment of one vision, meaning my retail banking experience is vastly different than yours. Beyond that, the reason they’re so successful is that they know the amount of money they can spend to acquire net new customers. Once they’re in the bank, they literally have a growth engine or a growth hacking capability to activate those customers and expand their wallet share.
They know exactly how they can optimize their relationship with Tim, given where he is in his life with his family and his work and his financial dealings. That mindset shift is almost amplified with the new age of AI kicking in because all of a sudden, you have the capability to truly deliver that at scale.
Unifying Customer Data for Growth
Q: The banking industry has talked about being customer-centric for decades. What fundamental changes are needed to truly deliver on this promise?
Rutten: I think the main thing to hone in on here is that I’m the customer, I’m just one person and I want to be treated in one way by a brand and that holds true for all brands.
The bank that I’m primarily banking with, I’d like to be treated that the bank knows me across my full life cycle — completely, front to back —and is servicing me front to back in a very easy and approachable way.
If I onboard on system A or through point solution number A, I get my daily banking through point solution B. If I talk to the call center, they’re servicing me through another solution C, like that complete flow is broken. That also doesn’t allow me as a customer to have the best experience because I’m basically entering all these different windows of apparently the same shop, but not really.
I have a customer lifecycle. I onboard net new customers to the bank. I’m acquired. I then need to be activated, retained and expanded. Those four boxes are typically being serviced by four different technology stacks or four different point solutions.
Unlocking growth mode literally means servicing the customer through one digital platform across all touchpoints, infused with data and leveraging AI to create a next-generation banking experience that is completely dynamic and completely personalized to get the maximum value out of the relationship.
Q: What practical steps can institutions take to transform their data from a passive asset into an active growth engine?
Rutten: If anything, I would say that this industry is sitting on a gold mine, literally, because you have all those customers, you have all that data. Just imagine bringing that together holistically and tapping into it.
Let me talk about the patterns or blueprint we see in the industry that works. First of all, you have an integration challenge because you need to bring all that data and capability together in one single layer with one domain model where all the data entries are mapped towards each other and made available to the rest of the ecosystem.
The approach that we typically see happening in the market that works very well is more progressive. You start with the biggest problem first. We have the integration platform as a service. From there onwards, there’s a need to make sure that this data is available appropriately.
On top of that layer, we would talk about this as the intelligence layer, bringing data and AI together in actual use cases. In the intelligence layer, I would expect data and AI capability to come together and power up large language learning models, typically from the hyperscalers. And on top of that, you want to have an agentic framework.
You basically have your integration in place, your intelligence layer, where data and AI are nicely combined, and then your engagement layer where you actually start to orchestrate all the capabilities to service your customers and your employee population.
From Personalization to Engagement
Q: While hyper-personalization sounds great, implementing it at scale remains challenging. Can you share examples of financial institutions successfully deploying personalization strategies?
Rutten: Specifically, in the U.S., I don’t have a personal relationship with any of the U.S. firms, so I couldn’t comment on that in detail. But I’ll stick with the example of Revolut.
They have completely tailored value propositions. There are dynamic value propositions where you combine certain products or choose a certain level of account and level of servicing, which combine many value-added services that are not, per se, banking-related.
One of the plans includes a WeWork subscription because you are a persona who may be a sole entrepreneur or proprietor, and there are combinations there that really connect with the individual, which almost makes it a no-brainer to pay the subscription fee.
The second thing that really stands out is how they drive product adoption. The moment you are net new to the bank, a 90-day plan runs that ensures that you have sufficient touch points to get into a pattern and into a mode that you open up the application, just like the dopamines in Instagram or other applications.
Those applications have a growth hacking mindset that ensures they drive you into the bank more and more while building credibility. They also bring holistic financial advice to your phone almost daily.
Q: How can banks balance personalization with risk and regulatory concerns?
Rutten: If you really think about unlocking growth mode, you will need to get to a model where you’re able to segment it out so far that it is so specific to the individual that it can become a little bit dangerous. There needs to be clarity on what you are bringing to the customer at what moment.
From the Backbase perspective, that can always be the human in the loop part. That is paramount, especially in private banking and wealth management. You need to have a human in the loop step before you send out a certain report or piece of advice.
For a long-tail customer base like retail, that makes no sense because the cost to serve will be way too high. You want to set up the system so that you are comfortable with the almost automagic campaigns that you’re running across the board.
What you position needs to be so in the moment and in context that it will never come across as abrasive or pushy. There are clear guard rails in all the elements of how you apply AI and agentic and smart workflows to ensure that nothing inappropriate can happen.
Leadership and Cultural Transformation
Q: What excites you about the near-term future in banking?
Rutten: What excites me is that for the past decade, we’ve been transforming banks, but mostly on the servicing side of the house. By now, you have better digital banking experiences that customers can use daily to do their self-service.
For the majority, that is lower cost, better experience. That’s what it is. You’re basically lowering your cost to serve and you’re delivering probably a significantly better experience. It’ll not unlock the full growth potential that you have as an institution.
The exciting thing on the short-term is that we’re adding something called the sales suite, where the servicing part is important, but that’s more of a cost driver. The sales part is where things get really interesting because that’s where you start properly onboarding and originating for certain products, and that’s where you start to activate and expand the actual customer base.
The final frontier that we’re now in with the whole data and AI wave entering the door pretty aggressively, you have to move. You literally have to, because big fintech and the challengers and neos have this by design — and they are picking up the pace. They are becoming full-fledged banks.
There’s more urgency than ever, there’s better technology than ever, there’s more mature vendors than ever. So, I think the answer is really, can we get into that mode in the industry that we can actually break through and literally fight back against the big fintech and the neos and the challengers.
Financial institutions that want to unlock growth mode need to move beyond simply upgrading their digital servicing capabilities. By creating unified customer data platforms, deploying AI-powered personalization, and transforming organizational structures, banks can build the foundation for sustainable growth in an increasingly competitive marketplace.
Source: The Financial Brand
Recent Comments