More than four out of five of senior executives in financial services companies say AI will be the key competitive driver for success over the next few years. In particular, financial institution are looking to AI technology and differentiated data to drive “hyper personalization” of services, the NTT Data survey said.
AI to help differentiate financial offerings
In its survey of 480 financial institutions, NTT Data found that 83% of senior executives are counting on AI to help differentiate offerings and win customers. In particular, the institutions are looking to AI to create highly personalized experiences for customers.
Economic shutdowns in the last year have bolstered this trend. “Especially considering the COVID-19 pandemic, consumers are increasingly looking to digital finance solutions and apps that anticipate their needs and proactively offer financial guidance,” the company says.
NTT Data also surveyed about 4,800 customers of financial institutions to learn more about their feelings regarding sharing data and user experiences. The company found that folks who are comfortable with tech and on the younger side (35 to 44 years old) “are eager to engage and share personal data with financial institutions if it can be used to tailor services to their individual financial needs on a one-to-one basis,” the company said.
These ‘futurists’ account for 35% of the study group, compared to 65% of respondents who NTT Data termed “traditionalists.” The company encouraged financial institutions to place their AI bets on attracting the futurists.
We are entering an era of “hyper-personalization” or “hyper individualization” in financial services, according to Matt Provencher, senior vice president of financial services and insurance for NTT DATA Services.
“Customers provide striking testimony that they want banks to act as a strategic advisor on their major spending decisions, according to recent data,” Provencher says.
“Our research shows AI is the pathway to offering the hyper-individualized services customers crave. The data doesn’t lie–financial institutions need to double down on AI to meet rapidly evolving consumer demands, or risk handing their competitors the keys to poaching their customers,” he adds.
So, what sorts of AI-powered services are the futurists willing to pay for (either through their data or through fees?) According to NTT Data Services, the data says that:
- 53% of customers say they would like proactive reminders of upcoming bills, such as mortgage and auto loans;
- 49% would like their financial institution to anticipate products they might be interested in;
- 47% would like their bank to “connect the dots between my income, expenses, and savings”;
- and 46% wouldn’t mind the bank acting as a “conscientious advisor” on major spending decisions.
- However, only 39% say they wanted their financial institution to “intervene and prevent purchases” to help stay on budget.
While AI is firmly on the minds of executives at banks and other financial services companies, there remain substantial obstacles to realizing those AI goals. According to the survey, only 16% of financial institutions are actually using AI and data to provide personalized services at this time. Twice that percentage (32%) are using data, but doing so with “broad tailoring,” or targeting a limited number of customer segments in a “one-to-many” manner.
There are several challenges standing in the way of achieving more with AI and data. Over half (55%) of executives in the survey cite technology as a barrier to success, while 51% say the existing business culture is preventing change. Another 43% say organization and skill changes are standing in the way of bigger and better use of AI and data.