AI in Banking: How Artificial Intelligence Can Personalize Customer Experience

Banking has evolved massively over the last couple of decades with the introduction of the internet. While customers from older generations were used to going to the bank to manage their accounts and products, customers today want to do it all from their phones in a few clicks. 

On top of that, artificial intelligence (AI) has also started to play a role in the industry, helping financial institutions better understand their customers and solve their problems. According to McKinsey, the implementation of generative AI could add between $200 billion and $340 billion in value annually to the total financial sector revenue. Most of it is due to more efficient use of resources, including improving the overall customer experience and problem-solving abilities.

The shift is happening. AI is here to stay, and its role in banking and financial services is just starting. 

Role of AI in Banking and Finance

Banks and financial institutions worldwide have started implementing artificial intelligence across multiple functions. By doing so, they have found better ways for the organization to provide value to their end customers while reducing workloads and time-consuming processes. 

• Customer Experience and AI: As we will discuss more in-depth in the following section, CX has changed by implementing AI in ways that help companies and institutions alike. 
• Security and AI: Thanks to artificial intelligence, additional security measures and identity theft technologies can now ensure safer banking experiences. In a world where cybersecurity risks are at their peak, AI levels the playing field, empowering institutions and individuals to prevent scams and other risks. 
• Compliance and AI: Compliance is a thorough and time-consuming process that ensures processes are in order. With artificial intelligence, multiple repetitive tasks can now be done by a machine that, with proper human oversight, saves financial institutions man hours to focus on strategic work rather than cyclic operations. 
• Risk Management and AI: Dealing with financial assets means taking on risks larger than most other industry averages. With artificial intelligence and machine learning technologies, financial institutions have built secure infrastructures and protocols to reduce risk and improve user experience simultaneously.
• Data Analytics and AI: Information overload concerns most financial services. By integrating AI that computes data faster and helps managers make better decisions, banking institutions can increase their revenue and minimize unnecessary data collection and analysis time. 
• Forecasting and AI: AI's capacities to create financial models are astonishing. Financial institutions can improve their asset management, forecasts, and investment decisions with proper forecasting and a human oversight component. 
• Operations Automation and AI: A lot of background work is required to provide an excellent experience for any financial product user. With AI, many operational loads can be significantly reduced, allowing managers to do more without spending more time or resources on any given task. 

Personalized Customer Experience With AI in Banking

Whenever you go through a thoughtful customer experience, you can feel it. Whether it is a funnel on some unique product that matches your style or just a typical call with a financial institution, feeling like the experience was seamless makes a difference.

With AI, institutions across all industries can gain a more nuanced understanding of each customer. In other words, artificial intelligence helps businesses know what matters to their users, when to reach out to them, what particular offers to highlight, and how. 

Among all of the advantages of using AI for financial institutions, the following few stand out:

AI-driven Customer Support

Remember the endless hold times when calling your bank? Thanks to technological advances, we have moved forward from waiting for someone to take your call all the way to being independent and capable of solving most problems by interacting with a conversational AI solution. From checking the balance on your accounts, transferring money, or canceling an order, self-serve options empower users to meet their needs without any wasted time. The game has changed from the most basic chatbot to intelligent virtual agents with conversational AI, and customer support is now a plus but a basic expectation for most financial services. 

Tailored Financial Advice

Segmenting clients and understanding how they live their financial lives is a challenge. With AI solutions, navigating the vast amount of data points available and making sense of their needs makes it a lot easier to understand behavioural patterns and provide advice that matters to them. Whether it is a savings goal, an investment strategy, or even something as simple as transferring money, AI technologies offer hi-fi information, and banking professionals and institutions can provide better service without making any extra effort. 

Personalized Product and Service Recommendations

Upselling and cross-selling are the most common strategies financial institutions use to serve customers better and increase profits. AI makes this process much more efficient by having a clearer picture of behavioral patterns, segments, and signals that indicate interest in a particular product or service. Being able to anticipate what customers may need and provide thoughtful advice and recommendations makes a difference (and leads to more profits).

Segmented Marketing Campaigns

Running marketing campaigns when you have millions of users can seem like a daunting task. However, by using artificial intelligence to help you segment users in multiple ways (demographics, psychographics, product usage, etc.), financial institutions can run campaigns to increase brand loyalty and revenue targets. Unlike any other moment, it is now possible to run personalized and massive marketing campaigns that deliver curated offers and messages without extra effort. 

AI Can Help Understand Customer Behavior Better

Information is power. But just because you have a lot of data doesn’t mean you inherently know how to interpret it. With artificial intelligence and machine learning technologies, banking professionals can accomplish more and have a more precise and predictive understanding of their customers.

Security and Fraud Detection

As we mentioned earlier, cybersecurity is a concern. In 2023, there were around 343 million victims of cybercrimes. With AI technologies, banking institutions can help their users remain safe with automated protocols to detect any unusual behaviours and preemptively take action. For countries with a higher density of aging population, this is a particularly important subject, helping them stay protected from phishing attacks, scams, and advanced money laundering or identity theft protocols. 

In any case, remember that consulting with your legal team to ensure compliance and safety is vital beyond the technological aspect. 

Personalized Digital Banking Through AI

Finally, and perhaps the most essential feature of implementing AI for a banking institution is to be so good at understanding their users that their entire experience adapts to their needs and habits. While this is not an individual experience but a more personalized experience with better segmentation, users who perceive their bank as a partner providing counsel and solutions develop a sense of trust and brand loyalty money can’t buy. For instance, Fintech Bank Nu has pushed the envelope by offering its users an entirely personalized and thoughtful experience. They let their users adjust their credit limit directly from their app and even pay a lot of attention to analog details, shipping beautifully packaged products that people love to brag about on social media (benefiting the neo-bank just as much as the user).

Future of AI in Banking

AI will inevitably change the banking industry. Customer service will improve and change to ensure banking operations are increasingly smoother, more efficient, and revenue-friendly all while increasing customer satisfaction.

Among some of the more futuristic scenarios banks can anticipate are:

• Spatial computing: This technology is expected to become more predominant in the next couple of years meaning that banks must find a way to adapt to it. 

• Enterprise collaboration: Banking internal infrastructure and interdepartmental collaboration can be hard to manage. With AI, the possibilities of collaboration and seamless internal alignment are clear. 

• Fully digital banking experience: While unlikely, some experts claim financial interactions in the near future will be 100% digitized. Whether your organization is betting on that depends on multiple factors, but understanding there’s a shift to less analog financial habits surely may have an impact in your business.

How Mosaicx Provides Personalized and Secure Financial Interactions

With Mosaicx, your customers go through natural-sounding conversations that help them resolve requests such as checking their balance, transferring funds, or updating information without speaking with an agent. Allowing users to be more empowered by their financial experience and helping them accomplish their goals while letting your team focus on more strategic tasks improves your brand equity and overall perception. 

Visit our finance page to see how our real-time conversational AI solutions accomplish personalized, trusted, and secure financial interactions.