Artificial intelligence, though around for decades, increasingly shapes financial consumers’ wants, needs and expectations. Its current uses in financial services seem only the beginning and banks and credit unions should see further benefit from its use as early as this year as the technology grows more ubiquitous and more sophisticated.
AI-Driven Chatbots to Improve Communication with Banking Consumers
Some financial institutions have been using chatbots for several years, and AI will continue to add value in this area. As chatbots’ intelligence has increased, so too have their capabilities.
They’ve gone from simple digital tools handling generic consumer queries to digital assistants which can initiate actions and perform multiple tasks independently. This will lead to a growing number of financial institutions beginning to use chatbots for more proactive tasks, such as helping consumers set and achieve financial goals and manage their money more wisely.
“As the capabilities of chatbots and virtual assistants increase, their role will become more ingrained in banks and credit unions.”
As the capabilities of chatbots and virtual assistants increase, their role will become more ingrained in banks and credit unions. With chatbots and virtual assistants potentially able to be used for a wide range of tasks, Juniper estimates they will save industries, including banking, $8 billion annually by 2022.
While these figures are likely to spark some apprehension among bank and credit union employees, there should be little concern as financial institutions seem to be looking at AI as a tool to empower employees, rather than to replace them.
In fact, a report by EY suggests that jobs are likely to be reshaped, rather than lost, as banks retrain and reskill employees to understand how AI can be effectively applied. Similarly, Accenture predicts that banks that deploy AI wisely will see a 14% increase in jobs.
As Mariano Belinky, then-Managing Partner of Santander InnoVentures, said in 2017, AI goes beyond chatbots and into areas such as natural language processing. (Belinky has since become Global CEO for Santander Asset Management.) As technology in this area picks up pace, it is likely to only be a matter of time before virtual assistants come into use in financial institutions and give them the ability to analyze sentiment on phone conversations, for example.
AI Can Improve Customer Service for Small Businesses
According to our study of small and medium-sized businesses in the U.K. and U.S., less than 20% of owners in either country thought that banks they had dealt with over the past year fully understood their firm’s needs. This demonstrates a clear disconnect and lack of engagement between financial institutions and their small business customers.
In these situations, intelligent automation could be the much-needed solution. This year, using automated data collection on an ongoing basis, behind the scenes, can ultimately ensure that commercial banking relationship managers are better equipped with in-depth knowledge about their customers. This would position them best to support the small firms’ business and provide better service.
And that’s not to mention the time saved for the relationship manager who wouldn’t have to manually collect data about their customers and enter it into a system.
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How AI Can Influence Financial Marketers’ Role
Banks have a wealth of data at their disposal and it’s important that this data isn’t underestimated, as it can offer valuable insight into their customers’ lives, their needs and challenges. Through the use of AI, this information can be used to create highly targeted marketing campaigns which are personalized for each and every customer.
“AI could enable institutions to create marketing campaigns for an ‘audience of one’.”
In effect, AI could enable institutions to create marketing campaigns for an “audience of one.” As a result, banks would able to personalize calls to action based on what they know about that specific customer and implement dynamic price optimization, for example.
AI also possesses the ability to enable banks and credit unions to use information they hold on customers and members to drive predictive recommendations around product offerings. By looking at demographics, financial standing and product history, AI can highlight where there is potential to legitimately cross-sell.
Pushing products blindly at customers is no longer viable. Cross selling specifically targeted products based on a customers’ individual circumstances is a more sustainable way of growing revenue — while simultaneously offering customers the right products, at the right time.
Of course, one of the main benefits of this approach is the fact that it promotes trust and brand loyalty. By cleverly using AI in this way, banks would gain an opportunity to show they really understand their customers’ needs and wants. Gone would be the days of pushing generic products to all customers in a futile attempt to make a quick sale.
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How AI Can Help with Other Critical Functions
A key difference between AI applications and other more traditional technological solutions lies in AI’s ability to continuously learn from the data supplied to it. This enables it to refine its decision-making processes over time.
Currently, cybersecurity and regulatory compliance are hot topics for the financial services sector. Both are areas to which AI can add real value. Machine learning platforms can be coded to identify user patterns and detect anomalous network behavior, something that’s increasingly essential as cyber-attacks are often disguised with inconspicuous data or code.
In the very near future, AI has the potential to completely revolutionize banking services. It will redefine how financial institutions operate, what innovative products and services they create, and how they evolve the customer relationship. As this happens, many banks and credit unions may seek partnerships — more will turn to fintechs for support.
In such a severely competitive market, this will be a vital step to learn how to best leverage AI and what its benefits and limitations are, in order to drive much-needed growth, profitability and sustainability.