By Matt West, CMO at Feefo
There is huge amount of noise currently about the use of artificial intelligence (AI) in the financial services sector.
Every fintech application or new piece of banking software must be accompanied by bold claims about its use of AI, even though in many cases they are simply upgraded algorithms.
It would certainly be beneficial if we had an AI application that could cut through the spin and present us with only what is relevant to the specific requirements of our job or organisation.
In truth, such advanced filtering applications are already available. They are justone of the AI-driven applications that are going totransform the way customers view financial organisations, especially in the retail banking and lending sector.
What could be more timelyin the UK when the Competition and Markets Authority’s Open Banking revolution is placing greater requirements on banks to use technology for more effective engagement with customers? It all adds to the competitive pressures as new challenger banks and fintech companies enter the banking and lending market.
AI will change banking
As they compete in this intense atmosphere, financial organisations will quickly find they must embrace AI, given the range of applications now operational, such as chatbots, virtual assistants or automated personalised review summaries.
Analysts at Gartner have forecasted that more than 85 per cent of customer interactions will be managed without a human by 2020, while AI market research specialist TechEmergence believes that chatbots will become the primary consumer AI applications over the next five years.
There is indeed every reason for banksto deploy chatbots to engage with customers seeking help or information, just as H&M’s Kik app, recommends outfits to shoppers based on the style of clothes they prefer. Banks and insurers know their customers far more intimately than fashion retailers and with AI to analyse the data, can make highly relevant recommendations about financial products and services.
AI solutions can also head off potential problems before they develop, learning to detect the ‘distress’ signals and react accordingly. The technology isa huge driver of efficiency in customer-service, facilitating rapid expansion and keeping a lid on recruitment costs. The use of chatbots and other virtual assistants, for example, reduces what is often heavy and costly staff-turnover in call centres by removing tedious tasks from the work of customer-service agents.
AI will meet the demands of new generations
There certainly is no alternative to AI-adoption unless a bank or insurer is determined to lose out to competitors. It is clear that today’s consumers – especially the under-35s – will head elsewhere if they are not given fast responses and quick, effective solutions to their problems.
This generation wants to engage with banks, lenders, insurers and mortgage-providers in more meaningful ways – preferably using a mobile device. Our own research found that while they regard themselves as loyal, more than six-out-of-ten of the under-35s see themselves switching primary providers more often in future. Nearly nine-out-of-ten thought banks should be doing more to keep them as customers.
This is a demographic that is moving into the mortgage market, gaining higher salaries and having families.They cannot be ignored and while fees and charges matter, the use of technology is a major factor in who they should bank with, especially when it comes to customer-facing technology that makes interaction easier and increases personalisation.
Personalisation is essential to winning customers when a simple mouse-click is all it takes to switch between competitors. What builds loyalty and increases revenues, is treating customers as individuals, recognising them each time they interact with a business so that their specific requirements are always met.
AI-powered review systems will have immense influence
Which brings us to reviews. Authentic reviews now play an important role in determining what consumers think of products, services and organisations. Research conducted by Feefohas found that access to positive feedback from fellow customers in genuine reviews is the single most influential factor when consumers under 35 decide which bank, lender or financial service to opt for (selected by 85 per cent). Remarkably, it was more important than verbal recommendations from friends and family (82 per cent).
Among the financial organisations surveyed, we found that 43 per cent envisage using AI to provide personalised summaries of reviews, saving customers’ time and increasing the overall relevance of the organisation to each individual. The fact that financial institutions are embracing AIis promising, but it is still lower than the average across all industries of 46 per cent.
Finding the resources and solutions to make it work
At first glance it may seem as if the financial sector is well on the way towards implementing these advanced AI solutions. More than nine-out-of-ten decision-makers in our research said failure to implement AI would be a competitive disaster. The great majority (71 per cent) said they will use the technology in customer-engagement, with the same percentage opting for customer-service chatbots.
The difficulty across the industry, however, is that almost eight-in-ten banks and lenders (79 per cent) said they are short of the capacity and expertise to develop AI initiatives.
Yet this is not an insuperable difficulty. Many organisations are already realising that off-the-shelf solutions with their plug-in-and-play ease of integration will enable them to meet these challenges immediately. In this way the shortage of expertise is effectively side-stepped, with bottom-line benefits quickly realised as existing customers feel more engaged and potential customers are convinced it is worth switching accounts. The ease of reading genuine reviews that cover precisely what interests each person is a powerfully persuasive factor.
Chatbots, virtual assistants and personalised review summaries are AI technologies that are fit for purpose now, and with sophisticated out-of-the-box solutions readily available, retail financial business must start implementing them or watch competitors leap ahead.