AI, as in active interaction: How artificial intelligence builds customer relationships

Powered by artificial intelligence (AI), banking’s brave new world should provide a seamless customer experience not unlike the ones people have come to expect from Amazon, Uber and Netflix.

But with a few notable exceptions, the promise of a better banking experience thanks to AI remains largely untapped. There is good news, though: The current state of affairs sets the stage for a 2018 where AI realizes just a portion of its amazing potential to revolutionize the financial services world. 

You can glimpse what’s to come thanks to the efforts of several financial institutions—primarily the largest ones—that have set AI in motion. It’s clearly an idea whose time has come; these big banks have either launched or currently pilot programs that leverage AI in exciting ways. It frees employees from more routine tasks so that they can focus on building relationships with customers. In other cases, the banks harness AI to bring speed and convenience directly to the customer—a big boon in an age when so many of us have come to expect seamless consumer experiences.

The technology makes it possible to analyze troves of customer data at record speeds and create a more personal, proactive customer experience for banks at a lower cost. Ron Wellman, global director and industry principal for financial services at Cambridge, Mass.-based Pegasystems, says AI has a variety of uses. The ones he finds most effective and engaging are applications that help a banker connect face-to-face with a customer for what he calls “that trusted advisor moment.”

Pegasystems, maker of software for customer engagement and operational excellence, uses AI to mine data for financial institutions to uncover unique customer insights. Those AI-enhanced insights, he says, should not be opportunities to upsell or cross-sell a customer but instead serve as the basis of collaborative goal planning and needs assessment.

AI-inspired customer insights can surpass their weight in gold. He cites the example of a banker who uses AI to discover the incorporation date of a prospective client and acknowledges that anniversary in a special, personal way. Wellman also likes AI for its ability to glean data and forecast in a way that Amazon uses AI to offer smart, almost clairvoyant suggestions on someone’s next purchase

Yet despite AI’s many positives, less than 20 percent of financial institutions have implemented one or more AI solutions, according to the study “Artificial Intelligence in Banking” that BAI and Jim Marous, publisher of the Digital Banking Report, unveiled at this fall’s BAI Beacon. Bankers still sitting on the fence might want to consider these examples of how banks use or experiment with AI to enhance customer experience:

• Bank of America announced in spring 2016 a virtual assistant it calls Erica (as in America). Now being tested with bank employees, the chatbot will work within the bank’s mobile app. It uses predictive analytics and cognitive messaging to provide 24/7 financial guidance. Erica can also help customers with simple transactions such as checking account status or paying down debt. Customers can also chat with Erica via voice or text message—interactively a la Amazon’s Alexa. The bank hopes to roll it out to customers in 2018.
• Wells Fargo in spring 2017 piloted an AI-driven chatbot through Facebook Messenger. The goal: to deliver information in the moment to help customers make financial decisions. Using a conversational interface, the yet-to-be-named chatbot answers basic questions about account balances, payment due dates, customer routing number information–even how much the customer spent on groceries last month.
• The Royal Bank of Scotland is using an automated lending process to approve commercial real estate loans up to $2.7 million—a process that normally takes days—in less than 45 minutes. The 2017 AI-driven launch is part of the bank’s broader digital and innovation agenda.

The world is embracing AI—and while some financial institutions are doing so, many others should follow suit. Yet if a good number of financial institutions, particularly community banks and credit unions, feel that they have some catching up to do, there is good news. In 2018m, we will see more financial institutions implement AI-driven solutions to replicate user experiences seen everywhere in ecommerce by contracting outside help from fintechs and third parties. The potential in doing so is powerful. Popular consumer brands leverage high-powered recommendation engines that analyze customer search and purchase history. Armed with that data, they can make recommendations customers find valuable. If they can do it banks can, too.

If the change isn’t happening fast enough for some, we need to keep in mind that the Amazons and Ubers aren’t constrained by the strict regulations facing the banking industry. Regardless, an innovative spirit can help bankers provide a first-class customer experience within a regulated environment.

Here are three ways to leverage the power of AI:

• Make the most of customer data. Banks possess this in spades and customers—often millennials and GenXers—are usually willing to share more personal information in exchange for a more customized, streamlined service. (Baby Boomers tend to be more reserved.) Companies like Pegasytems mine data for banks as do companies such as Oracle, IBM and SAP. Newer players include Kreditech, ZestFinance and Grow.
• Use AI savings to fund AI customer experience initiatives. Few banks have the resources of Bank of America, which had a reported $3 billion innovation budget for 2016. But banks can make room for a larger innovation budget in part through reduced costs for employees to execute routine, repetitive tasks in the back office, thanks to AI.
• Form a special team to drive AI programs. Wells Fargo in 2017 created its AI Enterprise Solutions Team. The cross-functional unit, which sits under the umbrella of its Payments, Virtual Solutions and Innovation Group, works to create more connectivity among the bank’s staff with technological experts, who in turn can help create a seamless, rewarding experience for customers. But with Silicon Valley placing big bets on AI and lavishing handsome compensation packages on AI experts, banking and other industries can’t effectively compete for top talent. Consider tapping AI-enablers such as Kasisto, maker of a leading conversational AI platform, or Voyager Labs, which uses AI to analyze millions of data points.

Meanwhile, there’s nothing to stop you from getting your feet wet and launching an entry-level chatbot. It’s doesn’t require the skills of a Ph.D. in computer engineering. In fact, Facebook offers an easy-to-build kit for a chatbot that can operate in Messenger.  It’s a great time to get moving: AI promises to move forward at such a rapid clip that the landscape and capabilities will change dramatically in the next five years. On the one hand, banks could use that forecast to rationalize waiting things out: to remain in that 20 percent Marous references in his report.

But such a stance comes at great risk. AI is sprinting towards a tipping point where the longer banks sit, the steeper the learning curve to catch up and compete. Strong customer experiences that delight and spur loyalty are possible today. Rich storehouses of data can move out of their dusty silos and yield valuable insights.

All this comes thanks to this burgeoning technology. You don’t have to run the numbers through AI to see the future in our midst.  

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Holly Hughes is the Chief Marketing Officer at BAI.

If you enjoyed this article, check out: Your purpose starts with the ‘why’: Know your bank’s core beliefs and Podcast: Branches, branch tech and the future of banking in 2018.