All the artificial intelligence (AI) in the world won’t change one customer relations reality: You can’t fake personalization. But it is trying.
It has to. Bank and credit unions customers increasingly choose to live in an automated world. Nearly half of consumers (47%) are willing to use chatbots or robo-advice in the future, according to research by Accenture. Consumers expect their digital banking experiences to be as knowing and spot-on as the GPS on their phones.
This matters to bankers today because by this time next year, they risk losing 11% of their customers. That’s the percentage of banking customers who switched to virtual banks in 2017, according to Accenture, primarily from smaller US financial institutions.
Retaining these customers and members, and attracting others, requires investments in artificial intelligence and in various forms of digital assistants that make digital interaction more conversational, helpful and natural. This is the future of financial marketing, and banks need to prepare to deliver.
Artificial intelligence, like that used in digital assistants, enables access to massive amounts of data at amazing speeds, allowing for digital conversations that naturally unfold the way human conversations do. When data is used accurately and responsibly, it can structure appropriate, moment-specific communications at an individual-customer level.
Following are three areas where digital assistants are emerging in the banking world and the opportunities they present for personalized marketing.
1. Virtual Mobile Banking App Payment Functionality
Imagine that three friends meet at the theater. The first friend purchased the tickets in advance so they could sit together. After the show, the second friend awkwardly writes a check to cover the cost of the ticket. The third pays through a payment app.
The third friend is among a growing number of payment app users, some of whom are willing to switch banks for a better payment app experience. In fact, consumers ranked a more attractive mobile app as the third-highest reason for switching banks, according to the Accenture research.
Peer-to-peer mobile payment apps are gaining broader recognition after Venmo launched in 2009. Many predicted it would cost banks fee revenue at best – and customers at worse. Then, in 2018, an alternative payment system called Zelle emerged. Zelle P2P payments work directly within a bank’s existing app (with more than 30 banks participating and counting). If the theater friend paid for the theater ticket with Zelle, he or she only had to tap a few buttons to transfer funds … just like with Venmo.
Now, consider the functionality of a bank’s mobile app that not only can make payments like Zelle, but deploys them in combination with artificial intelligence to personalize and elevate that customer interaction. For example, it could forecast a user’s after-transfer account balance, anticipate other charges and deposits based on previous activity, and provide an end-of-week balance that forecasts the customer may soon be overdrawn.
Based on these formulations, the app could recommend a balance transfer amount to cover the forecasted variance. At the end of the day, it proactively enables the customer to avoid overdraft fees.
This type of engagement helps customers feel: (1) confident that their bank is looking out for them, and (2) empowered to make more informed financial decisions. Customers will appreciate that banks don’t just say they’re looking out for their best interests, but demonstrating that they value the relationship long term (more than they value a one-time fee).
2. Virtual Financial Assistants
With the example above, we’re re-imagining Alexa with a head for compound interest and high-yield savings. There’s evidence that more banks appreciate the value in artificial intelligence-enabled virtual assistants for personalized marketing and customer assistance, but they aren’t quite there yet in terms of delivery.
The first step to building an effective virtual assistant is understanding what the customer would want from it. How would you feel if you were charged a fee for an overdraft, thinking you had protection, and were not notified of the penalty until after the fact? In today’s world of increasingly high consumer expectations, the onus is shifting from the customer to the bank to be more proactive; to help the customer avoid pain points like unexpected fees so they remain loyal.
Since the virtual assistant has access to regular banking activity – balances, deposits and payments – it can detect a potential overdraft. Essentially, this ethereal robot is a guardian angel, guiding the customer away from the pitfalls of everyday banking life.
These assistants come in different forms today, like CapitalOne’s digital assistant Eno, a chatbot, which enables users to check their balances, review transactions and make credit card payments via text. It also issues virtual account numbers for users when shopping online to protect against hackers.
There are also voice-enabled assistants. CapOne’s credit card works through Alexa voice, and USAA is working with Amazon to deliver a non-chatbot virtual banking assistant that can interpret questions and provide answers, mimicking human conversation.
3. AI-Enabled Virtual Wallets
With the help of digital assistants, virtual wallets will most likely evolve from payment and transfer tools to proactive advisors, that combine and track all activities and accounts. A ‘walleted virtual assistant’ could help consumers recognize financial issues, and then make suggestions on how to better manage his or her financial lifestyle.
An AI-enabled virtual wallet could send simple micro-step savings tips to a 30-year-old customer: “If you save just $10 from each paycheck starting this week, you will have nearly $10,000 by the time you are 65!” Or, if a customer is carrying an interest-heavy credit card debt and has money sitting in a non-interest-bearing account, the wallet could advise him or her to use it to pay off the higher-interest debt.
In fact, these virtual wallets are expanding beyond just their own internal view. Enter Citi, who recently introduced a 360° Financial View in their mobile app that brings together Citi and non-Citi bank and investments accounts.
Though it’s not bot- or voice-assistant-enabled so far, this potentially sets another bar for traditional and non-traditional banks in making their apps more and more useful to customers and demonstrates an attempt to “own” the financial virtual wallet space.
Another exciting development on this front is voice and face recognition and the potential for integrating human emotion. If a consumer is interacting with an assistant on a mobile device, the app could recognize their facial features and detect their mood to determine if it is a good time to send advice on savings.
It could similarly recognize if the consumer is excited about a product or service offering the assistant has made. This presents another way for customers to receive increasingly personal engagements from their banks, which ultimately helps them to feel the virtual financial assistant (and the bank) is looking out for their interests.
Digital Engagement Tools For Organizations of All Sizes
Artificial intelligence is a nuanced science, so it is essential to ensure you don’t cross the “creepy” line. Collect and manage data responsibly and be clear with consumers about how you’ll use it. Rather than gathering as much information as possible, focus on filtering out just the data required to achieve specific service goals. In other words, these virtual assistant tools are scalable for organizations of all sizes.
Problem solving is a major advantage of AI and advanced analytics. Consumers, particularly younger consumers, are willing to share more information if it is used to help solve their problems or tasks that must be completed.
It’s a value exchange: The consumer shares data in return for better service, advice and proactive alerts. Shape communications in clear, easy-to-follow terms that explain how consumers can benefit from the use of their data. Banks and credit unions that don’t hold up their end of the exchange risk losing customers.
With this knowledge in hand, consumers are likely to be more trusting. That leads to loyalty, and there’s nothing artificial about that.