4 Keys Banks Need to Unlock Value From Artificial Intelligence

Banks of all sizes are tuning up their technology to better compete for customer loyalty by focusing on areas involving consumer interactions. But bank leaders need to understand that artificial intelligence, or AI, alone can’t revolutionize the customer experience.

In order for AI investments to elicit instant, human-like understanding and communication, banks must combine AI technology with:

  • Access to quality data.
  • Customer experience solutions that support responsiveness, natural interaction and context retention.
  • Security for enrollment, authentication and fraud detection — indispensable in the context of retail banking.

Quality and Access
Data is the fuel driving AI-based experiences. That means the quality of the available data about the user for a specific use case and the ability to access this data in a real-time, secure fashion are mission-critical aspects of an AI investment.

Unsurprisingly, increasing the quality of data and providing seamless, secure access to this data has been a challenge that banks have grappled with for years.

But institutions must overcome these data utilization hurdles in order to offer an AI-based experience that is better than mediocre. The best outcome? Users will no longer suffer through disjointed experiences or delayed satisfaction caused by siloed data, multiple data connection hops and antiquated back ends that haven’t been modernized to today’s standard.

Collection and Understanding
Big data — the collection of very large data sets that can be analyzed computationally to reveal patterns, trends and associations — goes hand-in-hand with AI. When it comes to consumer banking, an AI solution for banks should store all customer interaction information, from words used to communicate with the bot to actions taken by the user, so it can be analyzed and applied in future interactions. To do this, banks need to adopt AI technology that integrates a learning loop that’s always running in the background.

As data accumulates, AI-powered bots should get smarter over time. Behavioral, transaction and preference information enables banks to create personalized experiences that elevates customer experience to the next level. J.D. Power’s 2022 U.S. Retail Banking Satisfaction Study found that 78% of respondents would continue using their bank if they received personalized support, but just 44% of banks are actually delivering it.

Without the right data, there’s no intelligence to inform interactions.

Customer Experience
If someone asked, “What’s your name?” and it took you 8 seconds to respond, the conversation would seem unnatural and disjointed. Similarly, AI technology requires real-time responsiveness to live up to its human-like image. Additionally, bank customers expect to be able to seamlessly transition between interaction channels without having to rehash their issue each time they get transferred, change interaction channels or follow up. Banks can only achieve this omnichannel customer experience that incorporates customer interaction information across channels with customer experience technology that integrates AI.

Consumers now rank omnichannel consistency as the most important dimension of customer experience, according to a 2021 Harris poll, up from No. 2 in 2019. In a Redpoint Global research study, 88% of respondents said that a bank should have seamless, relevant and timely communications across all channels; less than half (45%) reported that their bank effectively achieved this objective. An omnichannel customer experience is foundational for AI.

As powerful as artificial intelligence can be as a competitive advantage in banking, lack of strong security measures is a nonstarter. In the latest The Economist Intelligence Unit Survey, bankers identified privacy and security concerns as the most prominent barrier to adopting and incorporating AI technologies in their organization. Thankfully, ironclad AI is within reach.

While AI capability is great, its usability is limited if its security is not up to par. An AI bot can go far beyond answering your customers’ basic questions if bank transactions are authenticated and secure; it can perform tasks such as retrieving account balances, listing and searching transactions, making payments, transferring funds and more. Imagine the impact that a friendly and reliable virtual teller, available 24/7, could have on your institution.

Four in five senior banking executives agree that unlocking value from artificial intelligence will distinguish outperformers from underperformers. To access its value, a bank’s customer-facing system must be supported by four pillars: AI understanding, quality data, omnichannel customer experience technology and security.

When technology budgets are tight, bank leaders must invest wisely; not all AI solutions are created equal. Chasing the new shiny thing can waste dollars if bank decision makers don’t have a handle on the scope of what their institution needs. Knowing which pieces of the puzzle will complete the picture is a competitive differentiator. Now, your bank can unlock the value of AI and win.

Are You Losing Business to Alternative Lenders?

lending-10-2-17.pngEvery relationship manager assumes that their clients would never go to another lender for a loan. The reality couldn’t be further from the truth, and the data proves it. Banks are starting to notice a trend in their existing client base. Their customers are receiving more and more outside financing from alternative lenders with each passing year. In some cases, this has grown by 55 percent a year since 2014. Small business owners are doing this for two main reasons: Applying for a loan online is fast and convenient, and it’s the path of least resistance to acquiring the money they need to help their business succeed.

Here are a few questions to determine whether your clients are moving to alt lenders:

  1. Does your bank avoid small business loans because they can’t do them profitably?
  2. Has your institution pin-pointed the number of online defectors in its own client base? Has your team dug deep into transaction records to see what percent of small-business customers are making regular payments to online lenders?

Be prepared to see some shocking numbers, which leads to the next question: How will you stop the exodus? Better customer service and product awareness? Sure, letting your existing customers know you provide small business lending services is a great start but one thing alternative lenders have that most financial institutions don’t is a well-designed, quick and easy, self-service online application.

When financial institutions dig deeper into their own customer data, they begin to see that even the most credit worthy clients with highly successful businesses and great credit scores are using alternative lenders. They might need money quickly and know traditional banks take several weeks to process a paper loan application. Or they simply might not have the time to go to a bank during regular business hours and instead prefer (and are willing to pay more for) the convenience and flexibility provided by alternative lenders that offer a 24/7 omni-channel-accessible application.

Providing a better experience for your clients is becoming a must. This includes having an application available to clients at any time on any device. And the technology has to accommodate every client’s and prospect’s preference, providing the option to complete the application on their own, or sit down with their banker to complete the application together. The improvement in the customer experience “lift” from technology also needs to go beyond the application, to include streamlining and speeding up all aspects of the end-to-end lending process, from decisioning to closing.

Building technology into the lending process will stop your customers from looking elsewhere. However, the benefits of such a partnership don’t just stop with the customer experience enhancements. Banks using a technology-based, end-to-end lending platform will see a significant reduction in the cost-per-loan-booked, enabling the institution to make even the smallest loans more profitable. Banker productivity and engagement also are positively impacted by technology. With the right partner, front office bankers are freed up from the responsibilities of shepherding loans through the process and instead can focus on acquiring new relationships, or expanding current ones. Back office bankers spend minutes analyzing each deal instead of hours, enabling them to focus on deeper inspection into larger deals, or diving into a “second look” process to try to turn “declines” into “approvals”.

Technology, when leveraged appropriately, enhances the relationship between banker and client, enabling the banker to provide more value and deliver a much better customer experience. When that happens, clients will no longer need to explore alternative/online lenders because their financial institution will be delivering the convenience, speed and path of least resistance to the cash they need to grow their business. The institution benefits from reduced costs, increased customer and employee retention, as well as portfolio and overall growth in revenue-per-customer.

The Technological Imperative: Why Banks Need to Keep Up with Changing Consumer Demands

3-14-14-ACI.pngWe live in a digital world where customers think less and less about the device they are using and more and more about the experience. Consumer technology is driving expectations. Customers are demanding real-time data, a consistent experience across all channels and a personalized relationship with their bank just as they do from their favorite shopping and online experiences like Amazon.com.

Today’s customers interact with financial institutions in a way that feels most comfortable and convenient for them, often beginning an activity in one channel, such as the branch, and moving between other channels, such as mobile phone and Internet banking, based on personal needs. According to the 2012 Google report, “The New Multi-screen World – Understanding Cross-platform Consumer Behavior,” 46 percent of people use multiple screens sequentially, by going back and forth, to manage their finances. The expectation of financial services providers is a single experience that delivers intuitive, relevant and individually tailored offerings.

Top Activities Performed Sequentially Between Devices


Source: “The New Multi-screen World – Understanding Cross-platform Consumer Behavior,” Google 2012

Compounding this issue is choice and ease of switching financial institutions. With advances in technology allowing the birth of digital banks not tied to any physical location, consumers have more choices than ever before. Consumers are more willing to use different institutions to meet specific needs, which makes the fight for share of wallet that much more important as bank channels proliferate and branch visits diminish. This means your customer experience is primarily defined now by an investment in banking technology.

Break Down Silos to Deliver a Holistic Experience that Transcends Channels

How can financial institutions adapt to meet these expectations? They can use a holistic approach to fully understand each of their customers and how they use technology. Traditionally, financial institutions built each customer touchpoint or channel in silos, often adding additional silos as new technology was introduced. Channels also frequently operate and are measured in isolation. This approach undermines the financial institution’s ability to tailor products and services to individuals, making a consistent user experience nearly impossible. Offers made in one channel (ATM), are declined by the customer only to be offered again in another channel (online) without the intelligent capability to know that the customer has turned down the offer already. Engagement and service opportunities are continually missed and customers become increasingly dissatisfied with the service and lack of personalization.

Leverage Data to Connect the Dots for Customers Across Touchpoints

The first step in laying the foundation for the omni-channel banking experience is in linking delivery channels such as bill pay, online, mobile, tablet and voice, along with the core through a common technical infrastructure. Financial institutions can then begin to leverage this valuable data to build a true customer profile, enabling more effective communications and driving loyalty through a more personalized customer experience. The technology and resources are available today to help financial institutions move in this direction. A growing number of service providers offer digital solutions tightly integrated across single platforms that deliver responsive, consistent experiences. And by using the data from these solutions coupled with the bank’s customer relationship management (CRM) tools, enabling online chat solutions, and leveraging the bank’s digital presence across the web and social media, banks are already well positioned to focus on improving the customer journey. This will not be an overnight process, but it will create tremendous opportunity as the future of banking unfolds. 

Now is the time to get started. Begin with tracking where customers spend their time (phone, tablet, voice) and how they interact—to gain a better contextual understanding of customer preferences.  By optimizing channels based on the nature of the interaction and customer preference, financial institutions will reap the benefits of the omni-channel experience.

Achieving the Omni-Channel Goal

Improving both customer experience and engagement is at the center of the omni-channel discussion. Brand loyalty will only be achieved by those that continually evolve to meet shifting customer expectations. Financial institutions must look at overall customer journeys and introduce consistent personalized interactions across all touchpoints. Continuing to operate in silos will cause significant loss as customers seek out other institutions that can provide the anytime, anyplace banking environment they demand.

Financial institutions now have viable technologies at their disposal to deliver innovative, tailored, touchpoint banking services. Community banks and credit unions or financial institutions of any size with limited resources can leverage the technology and data available to begin to apply this strategic approach. Those that respond now by working towards streamlined, integrated systems, a single customer view and optimal customer experience will ultimately get the edge over the competition and create lasting, profitable relationships with their customers.