How AI can deliver a personalized banking experience that drives customer devotion

The rise of digital banking has led to fewer opportunities for person-to-person interactions with customers, and banks are setting the bar high for their non-human ambassadors. According to Goldman Sachs, machine learning and artificial intelligence (AI) will enable $34 billion to $43 billion in annual “cost savings and new revenue opportunities” within the financial sector by 2025. In January, the Royal Bank of Canada announced it would be exploring how to better integrate machine learning, and JPMorgan Chase recently hired a global head of machine learning from Microsoft.

The explosive growth of structured and unstructured data and the availability of new technologies such as cloud computing and machine learning algorithms, have created the perfect conditions for the expanded use of AI in banking. However, the shortage of trained data scientists and the existence of data silos across organizations, remain key challenges for banks to build AI solutions. With more accessible data, banks can collect the information they need across the organization for machine learning.

The increased use of AI, however, does not have to mean a less personalized experience for customers, and for banks trying to maintain customer loyalty, it is important that it does not. We recently researched the banking motivations of the affluent middle class, the top 10-15 percent of earners, in Brazil, China, India, Italy, Singapore, the United Arab Emirates, USA and UK.

When it comes to this highly desirable segment, nearly two-thirds expect greater recognition and reward from banks for their loyalty. We found that those who feel loyal to a bank are 72 percent more likely to purchase a product from them in the future, and 70% would be prepared to recommend a banking brand to their friends and family. Furthermore, if a customer purchases additional products through their bank, over half are less willing to switch provider.

Improving digital experiences

There are several opportunities for AI to recognize customers, offer personalized digital experiences and relevant rewards, and build loyalty by offering suggestions based on customer behavior. One challenge banks face is that their loyalty program members often accumulate loyalty currency without being able to redeem due to lack of reward attainability or capacity issues such as limited availability of airline inventory, which can put pressure on a bank’s balance sheet.

To address this issue, AI could use transaction data to suggest instances when customers could spend points. AI could also help to deliver more timely, location-based rewards. For example, if a customer uses their bank card to book a flight, the loyalty system could trigger an offer for a discounted meal at the airport on the day of departure.

If AI can make it easier for banking customers to take advantage of the benefits offered by loyalty programs, it will help boost customer engagement, encourage repeat business and even generate incremental revenue for financial organizations.

AI can also free up contact center employees to act in a more consultative, advisory capacity. If chatbots are trained to automatically handle common calls, it could free up customer service agents to provide a more personalized recommendation service based on conversation. Financial organizations could utilize the human interactions with customers to offer improved financial advice and planning and capture additional lifestyle data for future product and service offerings.

AI- enhanced in-person interaction

Although more customers are now comfortable using digital financial services, some still want face-to-face interactions with their banks. When we asked how the global mass affluent customer likes to bank, more than a quarter (26 percent), said that they prefer to visit a branch, 24 percent bank via an app, 29 percent favor using a website, and 21 percent showed a preference for the phone.

Much of the talk about AI in banking has been about how technology can replace some functions currently performed by humans. However, AI could also help banks serve their customers more effectively by giving them easier access to relevant information.

This year, U.S. Bank announced the formation of an artificial intelligence enterprise solutions unit, which sits inside its payments, virtual solutions and innovation group. The bank has begun experimenting with how AI can serve customers that have product, service or loyalty program related queries that are not frequently asked.

Machine learning will ensure that over time these less typical queries have ready- made responses versus the current situation where advisors often have to consult experts in another department to provide immediate advice.  

If AI could contain an encyclopedic knowledge of U.S. Bank’s offerings, advisors could quickly provide relevant information, enhancing the overall customer experience. It is worth noting that customer experience is most often cited as the reason customers feel loyal to a brand and remains critical to retaining profitable customers.

In the dynamic and aggressively competitive environment that organizations operate in today, financial services brands need to work harder to understand their customers, to engage with them, to reward them appropriately and ultimately retain them. Through the effective application of AI, banks can leverage technology to offer enhanced products, services, communications and programs that achieve the ultimate in customer behavior – devotion to a brand.

Written by Lars Holmquist

Lars Holmquist is Senior Vice President for the Americas at Collinson Group

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