The digitization of our daily lives through artificial intelligence (AI) technologies is simplifying and improving our overall efficiency to manage our physical, mental, emotional, intellectual and financial wellness. Whether technology is used by enterprises, small businesses or consumers - the benefits of digitization are clear and ubiquitous.
In particular, the impact of digitization, or the ability to deliver connected services driven by data and analytics, is revolutionizing financial services. With the ever growing threat of demonetization, the general acceptance of digital and mobile banking becoming the norm has increased exponentially throughout India. This has given rise to a new set of challenges – how to humanize the face of digital banking technologies.
“Personalized insights and recommendations from banks can sound more like expert advice from a well-meaning friend or an intuitive advisor, enabling greater customer loyalty and trust.”
With almost every banking transaction being digitized today - new applications and financial technologies will be created to better manage and leverage the data related to savings, transactions, credit cards, and investments. Using this vast gold mine of data, artificial intelligence and analytics will enable banks to deliver personalized strategies and insights that help to customise banking experiences. Tools that use predictive analytics have the power to create extremely accurate, actionable and inspirational advice for banking customers. Machine learning and AI technologies will result in vastly superior customer service. Personalized insights and recommendations from banks can sound more like expert advice from a well-meaning friend or an intuitive advisor, enabling greater customer loyalty and trust.
This growing trend presents a great opportunity for financial service providers to leverage intelligent data to drive bottom-line business goals as well as to improve customer satisfaction and engagement. Leveraging this enhanced data has the power to deliver forward-looking insights and personalized guidance, which has been predominantly led by major retail and e-commerce brands such as Amazon and Google Now.
The power of personalization
Artificial intelligence has the power to transform customer experience through data-driven insights and predictions. We shall see how it can help to humanize digital banking.
- Data enables customized offerings: At its core, data becomes the single most important ingredient in creating a thoughtful user experience and can be augmented and enhanced through further analysis and predictive analytics. The insights gained from data analysis contributes to personalization and customized user experiences delivered through digital banking channels. This allows financial institutions to create a much stronger engagement with their customers and helps to facilitate better customer relationships on many levels.
- AI helps customers achieve their financial goals: Leveraging AI and predictive analytics allows banks to create a more detailed understanding of their customers thereby enhancing the opportunity for banks to create uniquely customized financial strategies for these customers - helping them to meet their financial goals. By engaging customers at this level, you create the opportunity for these highly engaged customers to be more active and profitable customers over the life of the relationship.
- Analytics enhance target opportunities based on lifestage: Using AI tools along with other data sets, banks can work with their customers and identify many of their long term financial needs. By understanding customers’ needs, banks can deliver more impactful lifestage planning and guidance for their customers allowing them to better manage their budgets and achieve their financial goals. In addition, banks can leverage this information to create more unique product offerings that meet the broader needs of a particular target audience based on their lifestage requirements.
- Predictive analytics helps to remedy customer financial challenges: Through predictive analytics and AI, banks can leverage customer data to better identify potential financial challenges (or tight spots) in a customers’ financial outlook. By taking into account current spending patterns and recurring debt obligations, banks can help customers to better manage their financial obligations through a host of in-app alerts and instant messaging tools. This creates opportunities for personalised reminders or offers (i.e. overdraft protection), adding real value to financial relationships between banks and their customers.
“The next generation of technologies in banking will almost certainly be friendly chatbots or robotic helpdesks - replacing some human tasks to streamline more complicated back-office operations.”
The next generation of technologies in banking will almost certainly be friendly chatbots or robotic helpdesks - replacing some human tasks to streamline more complicated back-office operations. They could assist in withdrawals, payments, financial plans, and even the most basic activities like cheque deposits. Those banks that focus on this level of customer interaction will truly differentiate themselves in the marketplace and become a leading force in the digital age of banking.
The trick for humanizing the digital capabilities of banking today is to create a complimentary mix of human and digital interactions. To some customers, proactive and predictive data analysis combined with marketing communications that accurately identify customer needs, cross-sell and up-sell products, could be an irritant or even worse, scary. The trick is to keep a fair balance of digital and personal interactions - so the banks can create the right combination of suggestions and actionable insights to offer scalable, personalized experiences for all customers.
While lately there have been discussions about automation and AI cannibalising human jobs, the critical fact here is that the growing digitization in banking will certainly require technology intervention in more ways than one. If AI and predictive analytics provide the relevant customer delight, that needs to be the way forward. Hence, financial services providers - banks or other institutions, have to recognize the critical need to transform their customer experience if they are to stay competitive in an increasingly competitive market. Emerging technologies such as artificial intelligence, data analytics and machine learning will chart the course for success and help to humanize digital banking, leading to higher levels of engagement and greater customer loyalty.
The author is Chief Analytics Officer, VP of Data Sciences and Analytics, Envestnet | Yodlee