It seems like only yesterday that Artificial Intelligence (AI) was the stuff of science fiction; a twinkle in the eye of the few computer scientists privy to its potential; a concept, rather than grounded in reality.
To suggest today––as many have––that AI is a buzzword, is to vastly underestimate how it will radically alter almost every aspect of our daily lives in the coming decades.
The great AI space race is well underway. Governments and business alike are pouring billions into the field. The AI market could be worth $46 billion within the next three years, according to the International Data Corporation, based on an anticipated annual growth rate of about 54 per cent.
Every industry bar none will evolve with Darwinian effect. Those which invest now will survive. Those which fail will go the way of the dodo. Any repetitive task, especially those involving large datasets, will in someway harness artificial intelligence in the near future.
This isn’t shiny new toy syndrome––it’s evolve or die.
Banks have employed AI, at least in rudimentary forms, for decades. Computer automation has been used by the financial industries for back office operations since the sixties. But remarkably, many haven’t invested early enough to stay ahead of the curve in other areas.
I say ‘remarkably’ because few industries outside of tech generate anything close to the vast quantities of data that banking does. The rise and rise of mobile banking has opened the door to exponential growth in the data financial institutions generate, process and hold. More data points leads to better results. Better results lead to more customers. More customers create more data, and so on.
The information held about millions of customers is complimented only by banks having the structure and capital to properly exploit it. Using AI, data covering anything––location, spending habits or balance, to name a few––can each be harnessed to produce better results at all levels of a business, from high street branch to marketing department, engendering a better customer experience overall.
Open Banking, and the second Payment Services Directive, implemented in February this year, demonstrated empirically the commercial value of data held by banks. Lenders were slow to exploit this potential value post-crisis, while fintechs steamed ahead, muscling in on banks’ turf.
Some banks are getting the hang of it. Take the app, Chip. Born in the Barclays incubator, Chip uses AI to analyse your spending habits and calculate what you can afford to stash away. Every few days, it then automatically transfers small, often-unnoticeable, amounts of money from your current account to your Chip account. You save money while barely noticing it. It’s a simple application of powerful technology, but it works.
A good start, but beyond personal finance tools and chatbots, high street lenders are only just catching up with the pace of AI innovation. The way customers interact with banks is evolving, and CMOs would be wise to stay apace, or risk falling behind.
By deploying excellent AI products, CMOs will improve their customer interactions, and the quality of their offering. Attracting new customers is a never-ending battle in the subscription economy, especially so in an industry with famously loyal customers.
A recent Feefo survey found that while customers generally regard themselves as loyal, more than six out of 10 under-35s see themselves switching providers more often in future. This generation wants to engage with banks in more meaningful ways––which presents opportunities for savvy marketing teams.
Artificial intelligence is perhaps the best way for CMOs to provide the meaningful experiences customers crave. Using the masses of data they produce, banks and financial services providers can get to know their customers on a far more intimate level, and communicate as necessary.
Banks’ marketing departments are some of the biggest investors in advertising, spending $17.1 billion per year at last count. Our research has found that a media plan requires roughly 5,000 decisions. It’s easy to see why AI is an attractive option for taking over that heavy lifting.
Systems that use intelligent machine learning are able to absorb masses of data and identify which factors contributed the most to a certain metric at any given time, allowing marketers to properly analyse the ‘true’ effects of their advertisements. A more granular, detailed understanding of their marketing effectiveness allows marketers to employ different media mixes for different purposes, such one for retaining current customers and another for obtaining new ones, and to keep an accurate pulse on their effectiveness.
On average, at Blackwood Seven our customers experience a measurable 20 per cent sales uplift from their media investments when they use AI, worth millions in revenue growth. There is low hanging fruit, ripe for the picking. There’s nothing artificial about that.