AI-Powered Contextual Banking CX Requires a Radical Paradigm Shift

There's no doubt about the huge potential and possibilities of conversational banking and Artificial Intelligence (AI) in banking. Though it's rarely discussed, its proper integration determines whether it will make customers’ lives better than ever before OR become deadly dangerous if applied without human centricity. A radical paradigm shift is required to ensure that the hyper-personalization of AI banking is not compromised by a lack of expertise in AI, technology or customer banking experience.

According to Temenos, 77% of banking leaders strongly believe that AI will be the biggest game changer of all advanced technologies. Amid the pandemic, 88% of customers expect companies to accelerate their digital initiatives, while 68% state that COVID-19 has elevated their expectations of brands’ digital capabilities, according to Salesforce.

We can see that, prior to COVID-19, experimenting with AI possibilities was more like a tick-box exercise to keep up with the slogan of innovation. Lately, however, its role has been gradually changing to “must have” in order to enhance the banking customer experience. It started with frictionless customer service available around the clock and has continued with more effective banking back-office operations that allow it to increase to overall speed and also lead to cost efficiency. Despite that, it's clear that the industry still lacks the appropriate knowledge, skills and understanding of what's to come and how to execute it to the fullest.

Digital Banking Future Supercharged by AI

The banking industry has been pressured to adapt new technologies for some time now. The growing pressure from competition with Big Tech companies and the emerging number of Fintechs was largely accelerated by the impact of the pandemic, leaving no choice but to take immediate action.

It's clear that the explosive growth of the challengers’ customer base depends on the ability to remove obsolete practices and adopt a new, user-centered approach to doing business by adjusting to growing customer needs and digital tendencies.

In fact, when it comes to a competitive threat, 50% of bankers would consider PayPal and ApplePay, while 34% name the Big Tech firms like Google, Facebook and Alibaba, according to The Economist Intelligence Unit.

Sixty-six percent of banking executives say new technologies will continue to drive the global banking sphere for the next five years. They point toward AI, machine learning, blockchain or the Internet of Things (IoT) as having a significant impact on the sector, according to Temenos.

As the number of advanced technological solutions of data processing and personalization through AI are becoming more and more accessible, it is broadening the opportunities financial institutions (FIs) can offer their customers. The question is how well will these be executed?

"The number one bank in the world will be a technology company,” as Brett King, Fintech influencer, author and futurist, predicted. It's true. The banks of the future need to become digital and create their digital strategies accordingly. It's unimaginable that a digital company would be slow in adapting to technological advancements.

According to Temenos, 33% of bankers are currently using banking AI platforms for developing digital advisors and voice-assisted engagement channels. The superpowers of AI also uncover the benefits of increased productivity, customer retention, risk assessment, prevention of fraud, improved processes for anti-money laundering (AML) and enhanced know-your-customer (KYC) regulatory checks.

Increased workforce and cost efficiency

Many banks clearly know what they aim to achieve from AI, not only in terms of increased customer satisfaction but also in productivity and efficiency.

It's predicted that, in the upcoming years, AI will completely replace most of the jobs in banking and other industries. AI software would only require some regular maintenance as opposed to vacations, breaks, the risk of human error and the demand for raises. Banks are already seeking ways to optimize the capabilities of AI chatbots and voice assistants so that it would be possible to solve almost any customer inquiry without a living person in sight.

For example, CaixaBank of Spain is using AI to process over 12,000 transactions per second in peak hours and boasts a 900 terabytes data pool to improve the customer experience. The bank’s 100-strong business intelligence unit uses big data, AI and machine learning to communicate with customers more efficiently. As a result, branch staff levels are half the eurozone average and CaixaBank’s costs are the lowest of its domestic peer group.The Economist Intelligence Unit & Temenos study

Even though many traditional professions are being gradually replaced by machines, as long as there will be a need for empathy, there will be jobs for emotionally intelligent people.

It's essential to note that the essence of a new technology like AI is to ease our lives, so it's very important that the innovations are easy to understand and use by the majority of non-tech-savvy customers. To ensure that, it's not enough to have brilliant engineers with a highly developed IQ.

There is a need for highly emotionally intelligent people who serve as translators between customers and the complexity of the opportunities uncovered by new technologies.

This explains why the demand for digital banking CX/UX experts is rapidly increasing. They are the user advocates that ensure a user-centered approach in digital product development.

What differentiates robots from people is the ability to feel emotions and empathy toward one another. This means that, while future technology might uncover superpowers for mankind, it's up to the actual people behind the machines to determine the success of the outcome.

The other side of the coin is how the skills and capabilities of the professionals who will remain in their places will be enhanced by the power of AI. There's no doubt that the speed and efficiency of the daily duties of a UX architect or a designer, for example, would skyrocket, as the AI would sort huge amounts of available data to offer a selection of best choices for the UX expert to make a decision.

Champions in personalization skyrocket customer experience

According to Wunderman’s research, 79% of customers in the United States are certain that brands should demonstrate understanding and care toward their customers, and 89% are willing to engage with businesses that not only show care but go above and beyond that.

It's true that the key to becoming a successful financial company post-COVID is having 100% focus on solving the customers’ problems in the most effective way possible, instead of following a standardized scenario.

It requires true empathy toward the customers─getting to know them, feeling their pain like your own and delivering a solution that will make their lives better and easier. This calls for personalized, contextual banking experiences.

In the digital age, the one-size-fits-all approach no longer works as customers demand and are surrounded by a more personalized experience. As conducted in a study by Wunderman, 63% of consumers state that the best brands are the ones that exceed expectations throughout the customer journey. The best way to exceed expectations and show customers that the financial brand cares about them is by offering a true value and benefit that is tailored to the specific needs the customers face.

Using big data and AI assistants, people will be able to get hyper-personalized insights and recommendations on how to improve their financial health and what products they might want to consider even before they have thought of it themselves.

Possibilities of personalized, contextual financial products

Personalized, contextual financial products powered by technology should:

•  inform the users about any situation that requires their attention;
•  help to improve users’ financial health by monitoring it and providing recommendations;
•  make financial forecasts and offer uniquely crafted possibilities according to the user's specific needs   and goals, in a specific context;
•  in the near future, it should also enable the users to conduct financial operations using voice processing, gestures, neuroscience, VR and AR.

An app that provides a contextualized experience should be able to predict the exact moment when a user needs a specific product and provide it by combining big data with behavior-based predictive analytics. The data already available to the incumbents could be used to provide personalized offers based on the user’s purchasing and financial behavior even before the user has requested it.

This would provide not only an amazing experience for the users but also a key factor that so many financial services of today lack─speed.

Contextual, personalized offers instead of annoying ads

The mobile apps and websites of many FIs are often loaded with redundant promotional information about the FI itself and the benefits of its products and services. But, if this specific information is not relevant to the customer, it just becomes annoying and creates a feeling of pushiness.

Users forget information but remember experiences, and experiences are created from emotions. This means that information should be integrated into a context of usage.

It should become an organic part of the banking user experience. Personalized offers created by AI allow connections with customers on an emotional level, rather than annoying them with tons of useless product description and information overload.

One of the most powerful features that digital banking AI can provide is personalized promotions. This can be ensured by using predictive analytics.

It should combine analysis of the user's financial activity, their social environment and big data analysis on typical behavioral patterns, geolocation data and contextual analysis.

For example, location-based push notifications about the location of local ATMs may appear when the user crosses the border. Purchasing a flight ticket could be a good chance to offer an insurance policy for travel. Child expenditures or maternity grants detected by the banking AI could become an ideal reason to offer a loan on increasing the living space.

In the marketplace of future banking concept Light Bank, users don’t have to browse a long list of financial products. Instead, using Open Banking APIs, Light Bank itself will choose the right solution from hundreds of products delivered by third-party providers. Artificial Intelligence prepares a pre-approved personalized offer in just a few seconds by scoring users’ financial profiles.

The future banking user experience should be fully personalized and able to come up with solutions that fit each customer's specific needs in specific circumstances, right when the customers need it.

To provide customized proposals for each customer, AI could be used for a more accurate customer credit scoring based not only on the user's bank's profile and credit history, but also social profiles and offline activity. This would allow the bank to generate a personalized proposal even before the user has requested it. All that the customer has to do is choose the proposal that best fits his/her needs and tap a single button.

Avoiding AI disaster with human-centered culture and strategy

The possibilities of AI are grand, but, in the end, its potential boils down to one central aspect─the shift of the company’s culture and mindset.

The huge force powered by the technology of AI can either make our lives better than ever before or result in disaster. This could happen if AI is integrated without a sharp focus on human centricity.

There are already concerns among customers about how AI technologies will use their data and whether it is safe. According to The Economist Intelligence Unit & Temenos study, 34% of customers are concerned about the lack of clarity surrounding data use, while 40% were concerned about the security of their personal financial information.

There's also uncertainty within the leadership of organizations.

According to a report by Board Agenda, 78% of board chairs, directors, CEOs, CFOs and other executives could not confirm that the board and senior management sufficiently understand the implications of AI for the business and industry, including its impact on society or geopolitics.

Many executives emphasize the main business gains of AI, such as cost savings and efficiency, while 76% are concerned that “the use of AI in the firm will introduce significant ethical or cultural changes within the firm that will need to be carefully managed.”

It's clear that many organizations and their leaders lack clarity on the matter, as well as the knowledge and skills to ensure a successful AI integration that would truly do good. What can be done about it?

5 action steps toward ensuring a customer-centric AI banking integration

To ensure that the integration of AI is successful, both for the business and the customers, it's essential to have an in-depth understanding and expertise in technology and customer centricity.

FIs that have already successfully undergone an AI-enhanced digital transformation clearly demonstrate that their winning strategies reflect a proper mindset integrated at all levels of the company and executed by carefully selected team members who partner with external tech experts within a holistic digital strategy. Here's how it looks in practice:

1. Embrace the Experience mindset

The first step toward maximizing the power of AI in a way that would do good to mankind is to adopt an Experience mindset. It's a way of thinking that consists of serving the customers, providing an emotional experience, offering solutions instead of over featuring, disrupting the industry and ensuring a smooth flow throughout the customer journey.

An Experience mindset is the way a financial brand thinks, acts and perceives the world to make it a better place for people to live. In this kind of mindset, the financial company and all of its employees view the customers as friends or family members, aiming to help them in the best way possible.

It is critical to start to perceive design as a mindset or an ideology that puts the customer at the center of all business operations.

2. Integrate customer centricity at all levels of the company

It's not enough to have a human-centered mindset at the executive level of the company. To ensure a successful adaptation to AI, customer centricity is integrated at all levels of the company, starting from business processes and ending with the ultimate value that the financial brand provides.

This involves the entire company in seeking and executing innovative ideas on how to better solve customer problems with the possibilities of AI and other new technology. It's an approach for creating demanded financial digital products that live up to the customers’ needs and expectations throughout the changing times and technological possibilities.

Here are five key aspects to focus on to accelerate FIs’ ability to adapt AI in an optimal way:

•  transform a business model into one that puts the processes of user centricity first;
•  implement UX expertise that will ensure the product brings true value to the customers;
•  execute the right actions guided by UX experts who are able to impact in-depth processes of the financial company;
•  have the correct criteria to evaluate the results your team is producing;
•  define and focus the authentic value your product will provide to the customers.

3. Adopt a disruptive, human-centered culture

Keeping up with technological innovations like AI requires great agility. This can be achieved if your FI adopts a disruptive company culture. This agile way of thinking and operating allows you to be flexible and adapt to any new technological and customer trends.

A disruptive company culture aims to transform the customer experience, bringing it to a new level and offering a solution that's way more pleasant and enjoyable than any other alternative on the market.

Think about providing an exceptional customer experience that's easily accessible throughout all of the platforms that people integrate into their lifestyles, specifically the ones of the future. Think about the ways to safely maximize the power of AI to bring even more value to your customers.

Constantly monitor and detect any change in the digital behavior of your customers and have the technological resources to adapt to it quickly and efficiently. By staying alert to rising changes in customers' needs, you will be able to prepare in advance and react in time, thereby expanding your digital solution to new platforms in a way that's enjoyable for your customers.

4. Expand the digital perspective and team up with tech companies

It's a fact that any FI that wishes to succeed in the future should develop their digital competencies. This kind of digital strategy includes all of the existing products and services as well as a clear vision for future development. Before we are faced with brand-new innovations, there is a lot that can be done right now to improve the value customers receive from the already existing solutions. All we need is to expand our digital perspective. This will make the transition to the future smoother and easier, as the new technologies will be integrated into the existing products, providing a superb banking customer experience.

However, this doesn't mean that the FIs have to deal with all of this on their own. Technologies implemented by Big Tech companies set the vectors for the future development of the digital world. Some will ignore them and get disrupted soon, while others will collaborate and actively integrate to gain a competitive advantage.

Include guidelines for tracking, using and collaborating with Fintech and Big Tech companies in your digital strategy. Your future digital potential depends on how quickly you will be able to utilize and adopt technologies introduced by Big Tech. It's no secret that the Big Tech companies are a huge step ahead of the finance industry in exploring and maximizing the possibilities of AI.

Look outside of the traditional financial industry and bring in digital experts by collaborating with Fintech startups, UX architects, interface design professionals and user researchers who have an understanding of digital customers’ needs and behavior to create delightful financial products.

5. Create a digital ecosystem

Forty-five percent of banking executives are transforming their existing business models into digital ecosystems. Banks are continuing to adapt their internal structures to digital technologies in order to enhance the customer experience, product offerings and new revenue streams, according to The Economist Intelligence Unit & Temenos study.

A consistent digital ecosystem is a pre-condition to maximize the potential and opportunities AI can provide. Without it, all of the benefits would just go to waste because of a confusing series of unusable, unconnected products, no matter what features it can provide.

Create a proper UX/UI design system. It ensures that everyone working on the ecosystem products are on the same page and can easily develop consistent digital solutions in their specific field of responsibility, and upgrade them consistently with the broadened possibilities AI uncovers.

Make AI a bridge between financial brands and customers

In an industry in which complexity and similarity have dominated for years, it's not so difficult to attract customer attention with a brand-new level of customer experience, possibilities and personalization. It is the one crucial condition to ensure the amazing world that AI uncovers for the banking industry and its customers.

People seek an emotional connection and a personalized attitude from others, and digital banking is no exception. AI can become the catalyst to building strong, valuable human-centered relationships with customers. It all depends on our preparedness and willingness to humanize digital technology and make the world a more friendly place for living OR unleash a greed-powered monster that will turn us into slaves.

Check out my blog about financial and banking UX design >>