Author: Korbinian Krainau, Associate Managing Director, Financial Services
Imagine traditional banks as sturdy old ships, built to weather any storm. They come with history, reputation and respect. But with the shifting tides of customer expectations, they could find themselves not quite equipped for today’s digital currents.
In fact, according to the third edition of Publicis Sapient’s Global Banking Benchmark Study 2024, 75% of legacy banks admit they’re struggling to navigate these waters.
So, what can they do to keep themselves from being overtaken by swift, digital-first, tech-optimised vessels?
Enter Generative AI (Gen AI) – the wind in their sails, propelling legacy banks forward as they steer into a new era of customer engagement.
Understanding the gap in customer expectations
If legacy banks want to understand why challenger banks are often faring better in the eyes of customers, they need to recognize both what their competitors are succeeding at and what is holding them back.
Digital-first banks have raised customer expectations of what modern banking looks like. Their user-intuitive, friendly engagement models, optimised for online distribution and servicing, are giving users all the information they need quickly and efficiently. At the same time, 66% of legacy banks believe their systems are preventing them from providing the experience customers expect.
While understanding and comparing performance helps set ambition levels, the ‘how’ will unlock new competitive advantages.
Innovation from the inside out
This is where whoever masters Gen AI will create a competitive moat. When looking to elevate customer-facing capabilities, the technology will enable stronger data analysis (in combination with traditional analytics and machine learning), scaled personalisation, and automation across many services. Behind the scenes, it will empower legacy banks to adapt and innovate more nimbly, embracing the ‘challenger mindset’.
44% of banks are already investing in AI tools as a strategic choice to create an AI-ready culture in their businesses. But it’s not as simple as plugging in a quick ‘AI fix’. Real change requires a thorough understanding of the technology, the most impactful use cases, and adequate organisational adaptations.
That means educating teams and building AI proficiency across departments to maximise the technology’s benefits.
This is something Publicis Sapient has done while working with Deutsche Bank to lay the path for its use of Gen AI. It has helped the bank transform its business, starting with successfully laying the foundations in cloud and data before building AI components and launching impactful use cases to prove these components.
Crucially, it considered the role of people: customers, leadership, employees, culture and change management, realising value on both sides of the cost-to-income ratio.
This comprehensive implementation of AI across a ‘legacy’ bank’s operations improved its agility and aligned teams towards customer-centric innovation.
Proactive AI strategy for customer experience
One of the promising applications of GenAI sits at the intersection of customer insights and personalisation of services.
The Global Banking Benchmark Survey revealed that 42% of banks are focused on personalising customer journeys. New technologies will present even more opportunities to personalise at scale, with the help of data integration and AI. More sophisticated models will create more tailored experiences. This will create more value for both the customer and the bank, as customers are likely to engage more frequently and at the right moments.
A faster-paced, data-driven engagement model gives banks the chance to transform their slow-moving ships into agile, wave-skipping, and responsive organisations.
Giving a competitive advantage
Gen AI acts both as a powerful new compass and turbo-engine, levelling the playing field with challengers and guiding legacy banks through rough waters. They can chart a course that not only keeps customers on board, but also attracts new ones who expect smooth, standout digital experiences—and gain an edge over the competition
