While online banking and AI capabilities have become ubiquitous, many of us still grapple with a crucial question: Are we truly empowering our customers and fundamentally transforming the banking experience?

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In our previous blog post (Banking’s Engagement Era: Improving Customer Understanding), we discussed the importance of customer understanding. Now, let's explore how we can leverage this understanding to address key challenges faced by enterprise financial services firms.

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The Challenge: Moving Beyond One-Size-Fits-All

The standardised digital experience offered by many banks fails to utilise this new understanding of customer effectively. This misses opportunities to use digital capabilities, such as AI, to increase this customer understanding further and provide a better service and customer experience. By not doing this, it often leads to:

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1. Decreased customer satisfaction and loyalty

2. Missed cross-selling and upselling opportunities

3. Inefficient resource allocation

4. Increased regulatory risks

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Let's explore four key areas where we can reimagine banking to address these challenges:

1. Anticipatory Product & Service Recommendations: Driving Revenue and Satisfaction

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Challenge: How can financial institutions anticipate and meet customer needs in an increasingly digital banking landscape?

Solution: Leverage AI combined with anonymized financial data from permissioned sources to create a holistic picture of a customer's financial ecosystem. This data can include traditional banking information, loyalty programs, travel plans, and even smart home energy usage.

Example: A customer is planning a trip to Japan, as indicated by an airline booking on their card and hotel purchases. A smart bank can use AI to proactively offer: 

1. A temporary yen account linked to a travel debit card, eliminating foreign transaction fees
2. Real-time currency exchange rates
3. Tailored travel insurance based on the specific itinerary and spending habits
4. Local money-saving tips based on planned activities and past spending patterns

Benefit: This level of anticipation and personalised service:

1. Fosters trust and loyalty
2. Creates a sense of being truly understood by the financial institution
3. Transforms the bank from a simple product provider to a lifestyle concierge
4. Offers proactive, tailored solutions that fit the customer's unique needs and preferences

Additionally, this approach aligns with the growing trend of mobile banking, which is predicted to reach 4.6 billion users globally by 2024 according to Statista, highlighting the importance of a seamless digital banking experience.

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2. Adaptive Service Journeys: Enhancing Efficiency and Customer Experience

Challenge: Complex, one-size-fits-all service journeys often lead to customer frustration and increased operational costs.

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Solution: Personalise service journeys based on deep understanding of customer goals and streamline user experiences without increasing the cost to serve each customer.

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Example: A mid-sized business client is seeking working capital financing. Predictive ML techniques recognise this goal through analysis of their account activity and recent interactions. It then tailors the loan application process, pre-filling relevant data points from existing financial information and offering targeted educational content. This could include interactive simulations comparing different financing options based on the client's cash flow projections.

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Benefit: Improved customer satisfaction, reduced time-to-decision for financial products, and lower operational costs.

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3. Reflexive, Step-up Support: Mitigating Risks and Enhancing Loyalty

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Challenge: Identifying and assisting customers who need additional support can be resource-intensive and often reactive.

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Solution: Utilise AI to identify customers who require additional assistance and proactively offer help.

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Example: AI detects unusual patterns in a corporate client's international transactions, potentially signalling compliance risks. The system proactively schedules a call with a compliance specialist to review recent activities and offer guidance on best practices for international banking regulations.

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Benefit: Reduced compliance risks, enhanced customer loyalty, and more efficient allocation of specialist resources.

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4. Rapid & Flexible Regulatory Compliance: Staying Agile in a Changing Landscape

Challenge: How can financial institutions keep up with rapidly evolving regulatory landscapes, particularly in light of new regulations like the Consumer Duty or let's think back to past ones like Abolition of LIBOR, how can we deliver and maintain compliance quicker and better whilst protecting both the bank and its customers?

Solution: Utilise predictive analytics as a powerful tool for ensuring agile compliance by continuously monitoring regulatory changes, analyse their impact on the bank's products and services, and automate compliance processes.

Example: When a regulatory update impacts specific investment products:

1. Set up scanning scripts which can instantly scan customer portfolios to identify potentially affected holdings
2. Deliver clear, concise notifications to customers outlining the regulatory change and its implications on their investments
3. Proactively updates risk assessments and compliance procedures
4. Suggests necessary adjustments to ensure continued adherence to evolving regulations to operations and customer teams. 

Benefit:

1. Protects the bank from legal repercussions by ensuring timely compliance with new regulations
2. Demonstrates a commitment to transparency and customer protection
3. Fosters trust and long-term loyalty among customers
4. Reduces the manual workload on compliance teams, allowing them to focus on more complex issues
5. Enables faster adaptation to regulatory changes, potentially providing a competitive advantage
6. Minimises the risk of human error in interpreting and implementing new regulations

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Delivering on This Vision: A Technology Roadmap

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To implement these use cases effectively, enterprise financial services firms need a comprehensive technology transformation. Here's a roadmap to get started:

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1. Omnichannel Integration Platform: 

• Enhance Mobile to be a unified platform that integrates data and services across all channels (mobile, web, branch, call centre).

• Ensure consistent customer experiences and data flow across touchpoints.

2.  Personalization Engine: 

• Develop a sophisticated recommendation system that can deliver personalised offers, content, and experiences across all channels.
• Utilise machine learning techniques such as collaborative filtering and content-based recommendations to improve accuracy over time.

3. Advanced Platform & Scalable Architecture: 

• Implement a robust analytics platform capable of processing vast amounts of structured and unstructured data.
• Enable the Development and deploy machine learning models at scale for customer segmentation, propensity modelling, and anomaly detection.
• Develop a scalable, API-driven architecture to enable rapid integration of new services and partners.
• This approach facilitates easier implementation of new use cases and faster time-to-market for new features.

4.Curated Customer Data Assets:

• Create a centralised repository of customer data, including transactions, interactions, and external data sources.
• Implement strong data governance and privacy controls to ensure ethical use of customer information.

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Next Steps: Starting Your Transformation Journey

Implementing these changes may seem daunting, but the key is to start small and scale. In our next blog post, we'll dive deeper into how banks can leverage the technology components above to reimagine customer journeys. We'll explore a concrete use case that brings together critical features from these components, providing a blueprint for iterative implementation.

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By focusing on these areas, enterprise financial services firms can not only enhance customer experiences but also drive operational efficiency, increase revenue, and stay ahead in an increasingly competitive landscape.

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Are you ready to reimagine banking for your organisation? Let's start the conversation on how we can help you build a more connected, intelligent, and customer-centric financial services ecosystem.

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