Personalized Banks: How Does AI Change The Digital Banking Landscape?

Since the beginning of the pandemic, nearly every experience that was previously associated with going somewhere to do something went digital. At least to some extent. The most impacted by digitalization areas include healthcare, shopping, sports activities, entertainment, and, for sure, banking & finance.

In this article, we will focus on the latter, in an attempt to show you how the pandemic has accelerated the adoption of AI-driven technologies for the personalization of services by financial institutions. One more goal is to provide you with a clear picture of how banks can take advantage of innovations to ensure the demand for their services and increase the loyalty of their users. So here we go.   

Why does personalization in digital banking matter?

Banking and finance are known for being a highly competitive area where the delivery of contextual customer experiences is no longer a “nice to have '' option, but one of the key expectations to address. The thing banks understood in recent years is that while there are many service providers with different offerings, the real value and appreciation receive exactly those meeting the individual needs of each customer, and this is unachievable without personalization. 

Personalization itself can be achieved in a variety of ways. For example, banks can take into account the wants and needs of different demographic segments. By doing so, it becomes possible to target offerings in a precise way, as well as to cover the pains specific to each segment: security issues for Baby Boomers, virtual assistance for Gen Z, provision of financial insight to Millenials, and innovative technologies for Gen X.

Another good reason to adopt personalization lies in the development of the banking industry: in the 1960s, the sector introduced ATMs; in the 70’s - card-based payments; in 2000’s - 24/7 banking; in 2010’s - banking ‘on the go’. So now it’s time for the next step, and it’s the personalization of services with the use of AI. 

As McKinsey report states, AI can potentially unlock $1 trillion of incremental value for banks, annually. By leveraging this technology, banks can increase their profits, achieve at-scale personalization, provide distinctive omnichannel experiences, and facilitate innovation cycles. And these are just four key outcomes out of tens possible for you to consider. 

And the talk is not just about possible benefits, but rather about the must-have nature of AI to banks. The reasons why it’s no longer an option but a necessity are also provided.

In other words, banks that lack personalization offered by AI will soon not be able to survive on the market. Sooner or later, every player in the banking and finance sector will have to take a step towards the implementation of this technology.

Ways to improve customer service in banks with AI

Now it’s time to look at some examples of how the use of AI in digital banking can be used and what benefits its adoption can bring. Below, we provide you with two possible use cases that will help you to better understand their value. 

1. A person walks the street, passing by a bank. Somewhere in the 50-foot radius, the person receives notification via a mobile app, containing information about a personalized offering from the bank. What’s more, the app automatically creates a prioritized ticket to the electronic queue, so when the person comes to the bank, the first vacant specialist provides detailed information on the offering and follows up with the ongoing services. 
2. A person learns about a bank through a non-banking app integrated with the banking system. Interested in the provision of services, the person easily logs into the banking app with facial recognition and immediately receives personalized offerings based on behavioral patterns gathered by the firstly used non-banking app. Because of the perfectly matching services the bank offers, the person decides to try other solutions offered by the provider. Being satisfied with the way the bank deals with its clients, the person becomes a loyal customer who trusts long-term recommendations on the financial life given by the bank. 

And while these scenarios may sound like a free flight of imagination, there are several industry players who have already used some of the described opportunities offered by AI. These are Ally, Royal Bank of Canada, DBS, and others.

Personalized insights offered by DBS

Known as one of the most innovative banks in the world, DBS bank provides its clients with a mobile application that includes over 100 automatic personalized insights produced by their proprietary AI-driven predictive analytics engine.

Royal Bank of Canada with personalized automation tools

The suite of personalized tools used by the RBC is known as NOMI - the key provider of information concerning account activity to the bank’s clients, the sender of nudges and reminders about relevant financial activities, and the automatic shifter of funds into specially designated savings accounts. The app opened 250k new savings accounts for clients of the bank and is known as the best savings account originator  - on average, NOMI users save 225$ a month.

AI-based smart saving tools in the Ally Bank

One more well-thought-out saving option is offered by the Ally Bank. The solution offers to its users' open banking, account aggregation, goals and automated money movement in the convenience of a unified platform with external funds.

Technological solutions enabling personalization of banking services

So how to achieve the benefits offered by AI technology for the personalization of banking services? Here are some of the solutions you can consider for the development and implementation.

Business Intelligence

AI is known as a booster to the functionality of BI applications and can be used by banks dealing with large volumes of data as it allows breaking them down into granular insights, in this way allowing the industry players to unlock the value of smaller components in a larger picture.

Data Science

With AI used together with machine learning, banks can not just extract useful insights but take full advantage of data science, which allows creating a detailed picture of any aspect the bank is interested in. All that is needed is data, and banks have lots of sources to receive it, especially when having integrated services. 

Predictive Analytics

AI and ML technologies also open up space for advanced predictive analytics and forecasting. What’s more important, the produced data can be represented visually in a model that can be easily interpreted, in this way contributing to fast and accurate decision-making, which is crucial in the highly competitive market.

Mobile application development

Banking apps powered by AI are considered as one of the greatest options for industry players to stand out from their competitors, as they provide customers with advanced tools and offerings which make their journey easier and more satisfying. 

Chatbots

With chatbots, your clients will have an opportunity to manage their requests swiftly and efficiently. What’s more, your business will get an opportunity to use a chatbot as a channel that gathers important information about user habits, so you can anticipate customer actions and deliver hyper-personalized offers and services.

As you can see, there are various ways in which you can make your service offerings more personalized, and it’s up to you to choose which solution suits your business needs most. But in case you have some doubts, want to get a better understanding of how certain technology can help your business or need professional advice from tech-savvy experts, we are here to help you and answer all of your questions. Contact us and we will help you to find the shortest ways to win the hearts of your customers with advanced AI-driven solutions.