By Rebecca Crook, Chief Growth Officer, EMEA at CI&T
With millions now banking online and physical branches and cash steadily disappearing, a strong digital customer experience is increasingly critical to how banks differentiate themselves. As a result, technology must become the priority for banking brands that want to thrive and succeed.
Much like the internet, AI looks set to become the world’s next great tech revolution. Research from The Economist found that “77% of bankers believe that unlocking value from AI will be the differentiator between winning and losing banks”, while a McKinsey report revealed that AI could save the industry between $200bn to $340bn annually. So, the banking sector must consider how it will embrace and leverage AI both from a customer and internal perspective as part of its broader digital strategy.
Banking is commoditised like many service industries, so the brands that can provide personalised, tailored financial services for customers will not only retain customers but attract new ones. AI can be the breakthrough technology that helps banks achieve this on a major scale—from AI models that give customers personalised financial advice, to ultra-accurate fraud detection. So, let’s explore its potential in a little more detail.
Instant AI improvements
There are many practical ways in which AI technology can be used today to instantly improve outcomes. For instance, AI can scour a bank’s data to assess customer risk, enabling the bank to dynamically optimise their products, pricing, and lending rates accordingly. By harnessing AI to better understand their customers’ behaviour and profiles, they can provide stronger, more personalised offerings that then help to boost company revenue.
AI also helps to protect banks from errors and penalties, too. In 2022, the FCA issued £215,834,156 in fines to UK banks, with reasons ranging from minor regulation oversights to repeated gaps in anti-money laundering controls. AI technology can help remove many of the manual mistakes that result in these sanctions, helping to build trust from both customers and regulators.
Making the most of customer data
Banks sit on a wealth of customer data, a lot of which is unintelligible to the human eye. However, this ‘dark’ data could contain huge amounts of untapped insights. Could AI help banks to scour this information and unlock new insights that bolster the financial wellbeing of their account holders? Absolutely.
Every transaction in an account provides a small window into a customer’s life. Whether that’s knowing when they may be away from home, when their annual home insurance premium leaves their account, or even what day they typically top up their car with petrol. By harnessing the power of AI, banks can use these insights to offer better deals to their customers that go far beyond traditional banking services.
For example, banks can see when someone may be planning a holiday and offer them deals on travel insurance. They can recognise when their annual insurance policy may be due for renewal and make unique recommendations about new policies that could save them money. They can even spot when customers tend to fill the tanks of their cars and provide live information about the cheapest fuel prices closest to home.
AI will be critical to developing such services, which not only add value but can simultaneously promote the financial wellbeing of customers, particularly amidst the cost-of-living crisis. It’s these types of offerings that can, in the eyes of customers, transform banks from a relatively insignificant, indifferent commodity into a genuine, long-term ‘partner’ that has a tangibly positive impact on their lives. But first, banks must overcome AI’s complex installation.
The hurdles of AI integration
The introduction of AI into the banking sector is thrilling, but it doesn’t come without challenges. For instance, safeguarding customer data may prove to be a considerable obstacle. It will be imperative for banks to ensure they have secure AI interfaces that protect sensitive information.
Another challenge will be customer adoption. Customers will need to be convinced of the benefits of AI-powered services, and trust must be instilled to ensure widespread uptake. So, banks will need to invest in providing interfaces that are simple and intuitive to use, underpinned by approachability, credibility, and security at every level.
Ultimately, if harnessed correctly, AI is set to revolutionise the banking industry. It will allow banks to leverage untapped data to supercharge customer experience, simplify operations, personalise services, and boost profits. The ways in which banks choose to integrate this technology may make or break their future, with the ones that use it to the customers’ advantage likely to storm ahead of the competition.
