How to create powerful consumer experiences with AI-driven personalization in banking

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Banks have been gathering information on their customers for hundreds of years. This information has not always been used in the best way, if any at all. 

The reality is that banks have always held a certain level of consumer trust, based on historical interactions and family loyalties. However, with the massive migration to digital banking since the onset of the pandemic, there has been a shift away from trusted banking relationships where your local branch manager knows your children’s names and is in tune with when you are planning your next vacation. Banking has become commoditized, highly transactional, and is contributing to an erosion of trust.

At the same time, consumers have lost faith in outdated forms of communication like email marketing, cold calling, and banner ads. They are also demanding better digital experiences. The brands that get it right are able to demonstrate empathy, showing they truly know and understand their customers – without them having to sacrifice their privacy. 

Let us look at how the landscape has transformed with personalization banking, and how better to use the technology available.

The current state of AI-driven personalization in banking

Banking, the 4th industrial revolution, and a global pandemic

Technology is constantly evolving, and it is doing so at an unprecedented rate. When the world was thrown into the chaos of a pandemic, these advancements became an essential part of day-to-day living. The banking environment saw a massive shift towards remote interactions. Branches and face-to-face consults have, as such, almost become surplus to requirements. 

Consumers were already moving away from traditional methods. However, the pandemic has accelerated this shift. Accenture research shows that 50% percent of banking clients now engage with their bank through digital avenues, which is a substantial increase from the 32% recorded just two years ago.

“With the shift in consumer engagement, banks now need to know where and how to meet their customers digitally, to enrich their off-line world.”

But updating legacy systems doesn’t come without its challenges as they may hold redundant systems and be multi-faceted. AI is also more than one single thing and it can be difficult to root inference capabilities to the right technology in the technology infrastructure. The question banks should be asking themselves is how to make their digital channels more predictive and context-aware?

With data power comes data responsibility

In a rapidly accelerated digital era, data has become the next big asset class. Banks have access to an unprecedented amount of information on people’s lives. Harnessing the power of this data will allow banks to create a uniquely personalized ecosystem of experiences around each and every one of their customers. 

Of course, it doesn’t end at having access to the information. It continues to the point of keeping the information secure and safe. Data breaches are a real threat, and consumers are wary of how and where their information is being used. No one wants their information to be traded for commercial gain without their knowledge. This has created a ‘Digital Tension’ where consumers desire incredible digital experiences but are dissatisfied with their perceived cost of giving up their own data.

This is where banks are uniquely positioned to rebuild consumer trust. There are now ways where this digital tension paradox does not have to exist. New capabilities are coming to the market where banks can encrypt and tokenize data to predict, cluster, and associate information. 

Through encryption and tokenization, customers never give up their own data. Instead, it comes from a context plugin that draws information from sensors, location, bandwidth, battery power, transaction stream, and strategic partnerships where entities can share use-cases together. 

By creating personalized banking experiences, financial institutions can offer their clients tailor-made value offers instead of generic ones. When interactions are directly targeted and personalized in this way, the resulting engagement is substantially more successful than traditional ‘spray and pray’  approaches, creating a much more loyal relationship by demonstrating to customers that their bank truly knows and understands them.

AI and personalization

The next step is finding ways to compile this information in such a way that it can be used properly.

Spotify is a great example. They use algorithms to build a profile and suggest music based on your preferences. They also offer new experiences based on your past choices. Imagine if this concept was applied to your banking interactions. The opportunities are endless.  

So how can banks achieve this? Imagine receiving real-time, relevant recommendations from your bank with offers and rewards, that you automatically qualify for. These could be local offers and cashback on items that you already spend money on, sent to you at the exact moment you need them.

Imagine receiving personalized recommendations from your bank about rewards cards that you automatically qualify for. 

It’s not just about adding another card to your wallet either, it offers very real benefits that apply to you – local offers and cashback on items that you already spend money on. 

You get rewarded for your everyday spending as strategic partnerships between your bank and other businesses allow you to build points and save.  

It is exactly this kind of modular personalization that allows banks to build loyalty and increase customer engagement. 

Flybits offers AI-driven solutions that can be tailored to any banking needs at scale to create engaging experiences for the customer. Our products turn customer information into powerful personalized recommendations, delivering them at the right time and moment. 

The end result? Increased brand sentiment and boost in acquisition. 

The importance of a personalized consumer experiences in banking 

Personalized experiences are arguably one of the most important aspects of modern-day consumer engagement. The importance of creating personalization in banking is immeasurable if it’s not capitalized on correctly. 

Banks and financial institutions have access to transactional data. But they can also connect their proprietary data with many other data sources like device data, CRM data, partner data, location data, weather data, and more – to generate a more holistic view of their customers and deliver experiences that go beyond banking. Think, creating unique marketplaces that link consumers to relevant third-party providers; or offering advice on how better to manage their wealth.

Ingesting this data and delivering meaningful customer experiences can improve the onboarding process, stimulate engagement, drive loyalty and retention, and ultimately improve consumer trust. 

Frankly, banks hold the ability to have one of the largest impacts on modern-day consumerism. There is an opportunity to build positive financial behaviors for the customers that don’t necessarily manage their finances in the best way. In the same breath, banks can create links between customers and services that add value to their lives, driving product acquisition.

Previously there were redundant marketing processes in place that slowed down how banks engage with their customers. Advertising is part of everyday life, and the majority get skipped over. The reason behind this is a lack of relevance. The lack of relevance sees a decrease in consumer engagement, and this is the exact opposite effect that is desired.

But, through the embrace of technology and AI in the banking environment, this can be changed. Personalized banking is pivotal to the success of any financial institution trying to stay relevant in the digital economy. 

The way to do this is to create engagement with consumers through context-aware AI-based personalization. This engagement truly turns data into meaningful experiences that add value. By creating offerings that are relevant to consumers, product acquisition, onboarding, loyalty, and retention are exponentially increased.

Final thoughts

It is easy to see why engagement from a consumer perspective is so important to building loyalty and trust. There is also a clear indication of why information is power, and this power is only going to grow. 

Flybits is a leader in this field and delivers the technology to help banks turn data into customer experiences that drive value. From personalized remote banking experiences within existing apps to uniquely curated offerings based on behaviors, Flybits introduces a real-time means of taking information on board and creating personalized banking experiences for consumers. 

To learn more about our products and how to launch proactive, AI-driven personalization in banking that drives engagement now, download our latest ebook

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