The explosive growth of structured and unstructured data, along with the availability of new technologies such as cloud computing and machine learning algorithms, have made the expanded use of artificial intelligence (AI) in banking possible. According to Goldman Sachs, AI will enable $34 billion to $43 billion in annual “cost savings and new revenue opportunities” within the financial services sector by 2025.
With more data accessible than ever before, banks are actively working on opportunities to better integrate machine learning into their businesses. However, this does not have to mean a less personalized experience for customers. Rather, it is crucial for customer loyalty that, even with decreasing face-to-face interactions, customized interactions are the norm.
We researched the banking motivations of the affluent middle class in the US, UK, Brazil, China, India, Italy, Singapore, and the United Arab Emirates. 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% 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.
There are several opportunities for AI to meet this desire for personalization: recognize customers, offer personalized digital experiences and relevant rewards, and build loyalty by offering suggestions based on customer behavior.
Increased access to rewards
One challenge banks face is that their loyalty program members often accumulate loyalty currency without being able to redeem due to a lack of reward attainability or capacity issues such as limited availability of airline inventory. To address this issue, AI could use transaction data to suggest instances when customers could spend points and help to deliver timelier, location-based rewards.
For example, if a customer uses their credit card to book a flight, the loyalty system could trigger an offer for a discounted meal at the airport on the day of departure. By making it easier for banking customers to take advantage of the benefits offered by loyalty programs, AI can help boost customer engagement, encourage repeat business and even generate incremental revenue for financial organizations.
Time for more personalized interaction
AI can also free up contact center employees to act in a more consultative capacity. If chat bots are trained to automatically handle common calls, customer service agents would be freed to provide a more personalized recommendation service based on a real conversation. Financial organizations could use these human interactions with customers to offer improved financial advice and planning and capture additional lifestyle data for future product and service offerings.
Easy access to information
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.
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.