7 Ways AI Will Transform Your Bank into What Consumers Really Need

Artificial intelligence and related processes have come far enough now that they can make a real difference in customer experience. The question today is not whether financial institutions will adopt this essential technology, whether they will do so before it's just too late.

The pandemic is dramatically accelerating the pace of digital transformation. In financial services, the days of visiting your local branch for traditional purposes are waning and retail banks are scrambling to add digital services to replicate and enhance the array of sophisticated offerings that branches provide.

In addition, banks and credit unions are having to rapidly modernize back-office systems. Financial institutions must also consider that employees look likely to continue working from home and therefore need to be able to interact with systems remotely. This has intensified the pressure on banks to cope with a myriad of different and complex demands as they rush to digitize.

Many are struggling to meet the challenge. So, what can banks do?

It’s Time to Supplement Human Thinking with Artificial Intelligence

For too long bank digital services have been evaluated based merely on whether they work. Instead, the yardstick should be whether they match what customers and internal users expect and need. To make the shift, institutions must rethink how they create, build, configure and maintain digital products.

Banks can’t rebuild their systems, based on decades of legacy software, overnight. In some end-to-end workflows, old mainframe apps may interact with apps on legacy versions of Windows, driven by web or mobile apps — from client-facing systems to front, middle and back-office systems.

Rather than rebuilding or re-architecting, financial institutions need to turn to innovative technologies like AI and robotic process automation to automate previously manual workflows and to test the results through the eyes of the digital customer. These technologies can help financial institutions focus on businesses and consumers and maintain and look at the functionality, performance and utility of software and applications based on the user experience. The end result must be an amazing digital experience.

“Artificial intelligence is making the process of designing, developing and deploying software faster, better and cheaper.”

Artificial intelligence is making the process of designing, developing and deploying software faster, better and cheaper. With AI tools, product managers, marketers and business analysts can predict the impact on customers of a new application. For example, will it positively affect customer satisfaction? Armed with this data, they can then optimize the digital experience. The result is that they can now make bolder, faster decisions regarding additional features and functionality that will improve conversion or retention rates.

Here are seven ways banks and credit unions need to reorient around the digital experience they are delivering.

1. Work to Understand Customer Journeys

Improving the digital experience depends on understanding the user’s perspective — step out of your banking shoes. This requires review of all the different customer journeys and identification of all aspects of applications that are most likely to trouble users — and fix them before the product is released.

“The challenge with financial services is that websites and apps have millions of possible paths and hundreds of customer environments. However, many of these paths don’t generate revenue.”

Of course, the challenge with financial services is that websites and apps have millions of possible paths and hundreds of customer environments (e.g., different mobile devices). However, many of these paths don’t generate revenue. Institutions must learn to focus on those customers and paths that do drive revenue and optimize for them.

The ability to understand how an app reacts under different personas will allow institutions to pinpoint the parts that work or don’t work for each audience. For example, older customers are usually less digitally savvy and have very different banking needs than Millennials, who were already digitally proficient before COVID-19.

As institutions rush to deliver new digital services, they need to consider the varied needs of the target audience and optimize the app to deliver a personalized experience that delights. As time passes the system can observe customer behavior and “learn” the paths they most commonly take through a workflow. It can also identify common problems and frustrations that lead to lost transactions or churned customers — and ensure these are avoided.

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2. Focus on Delighting Customers, not Just Racking Up Features

Many institutions are stuck in a cycle of rushing to push out services. But they do so without ensuring that they are robust and meet customer needs. Instead, the focus should be on delivering digital products that delight customers.

This is especially true with the more sophisticated services that previously required going to a physical branch. No one wants a complex refinancing application that is difficult for a customer to navigate and complete in a timely, compliant manner.

Ensuring continuous quality for the digital banking customer is critical. If a banking portal or mobile app doesn’t perform as expected, frustrated customers will shift their money and loyalty to a competitor. Therefore, institutions must monitor transaction spikes and execute stress and load tests to ensure their digital properties can handle surges in demand.

There are no second chances anymore.

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3. Ignore the Back Office at Your Peril

In addition to customer-facing software and applications, financial institutions must rapidly modernize back-office systems to support digital transformation. Many financial institutions’ reliance on a mish-mash of legacy technology coupled with fragmented systems makes this a herculean task. However, it’s critical to the success of a bank’s digital transformation strategy.

4. Prioritize Performance Because Reliability is Paramount

Institutions need to understand where issues are occurring for customers and continually check and optimize the performance of all online channels. If they don’t adopt this mentality, they run the risk of their websites and applications slowing down or failing — and customers moving on. By reducing page sizes, optimizing images, minimizing text files, and removing irrelevant content, website speed improves, mitigating the risk of frustrating and potentially losing customers.

5. Track Digital Indicators to Be Sure Customers Remain Happy

Institutions should put in place key performance indicators that serve as a potential early alert system. These can include Net Promoter Score, customer churn, ratio of aborted transactions, new customers onboarded and many more. When the time users spend on a digital property starts to decline, it could be due to an underlying problem —AI can probe for the root cause, which may involve a technical flaw.

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6. Don’t Exclude Employees from Your Quality Control

Don’t treat employees as second-class citizens when it comes to digital experiences. With a distributed workforce, it’s important to make sure that the digital experience is optimized to support them. Internal apps and systems must benefit from the above approach to help employees be as productive as possible.

7. Be Continuously Learning and Ready to Try Fresh Ideas

Financial institutions must embrace the practices of “DevOps”— the blending of development and operations — to improve products and services by learning from real experience.

By tapping into underlying data, such as “what changed since the last release”, “how are customers really using this” and the real-time KPIs described above, banks and credit unions can diagnose whether a new release is a step forward or backward. This continuous learning allows a “fail fast” model, so that approaches and features can be tried, and lessons acted upon promptly.

Customers demand personalized experiences, and banks must embrace AI to achieve these, keep themselves relevant and reap the financial benefits of our digitally dependent world. By adopting these seven efforts, they will be able to accelerate the pace and quality of their digital offerings.

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