AICorner OfficeExpert Opinion

How Digitalized Banks Can Take Customer Experience to a New Level

Digital transformation now presents banks with a massive opportunity to connect, customize, and delight their customers.


Post-Covid-19, the global banking sector will become a transformed industry. Backed by a huge digital revolution, banks across the globe are now primed to move into the next big era of high performance. The numbers predicted are staggering. The global market for digital banking, estimated at $12.1 billion in the year 2020, is projected to reach $30.1 billion by 2026, growing at a CAGR of 15.7 per cent over the analysis period.

While the products, services, solutions, channels, and modes of communication will acquire a tech-based edge, what will not change is the expectation of trust and personalized connect that was prevalent in traditional banking systems. Both the millennials, the new age customers of banks, as well as the traditional banking customers, expect a higher level of relationship banking that is individualized, customized and segmented.

Therefore, customer engagement in 2021 and beyond is more about building trust and replicating the high-touch, secure model of offline banking to your online channels as well. It is also about providing a ‘connected customer experience’ for the ‘here and now’generation that wants to be seamlessly linked to information and enjoy superior service via internet-enabled devices and tools.

This is where tech-based business processes and artificial intelligence (AI) come to the fore, particularly in the areas of marketing and customer service. They help boost revenues and, more importantly, reinforce customer loyalty by enriching their experiences.

Offer what customers want

The banking industry can certainly take notes from sectors like entertainment and retail in leveraging technologies such as AI to understand their customers and customize offerings at scale.In particular, the OTT platform  presents a compelling case study with a service mandate to ‘offer what customers watch,’ as opposed to forcing customers to ‘watch what is offered.’

What sets service providers like Netflix, YouTube, and Spotify apart from others are features like transparency, customization, and ease of use.

Amazon is a frontrunner in the online retail sector with a plethora of personalized offerings across various cultures and countries. The company has created a solid and loyal customer base by constantly addressing customers’ needs and never letting them out of sight.

Using technology to fulfill digital growth expectations

The key to unlocking customer engagement in the banking sector lies in using technology tools such as AI, robotic process automation, and machine learning. These solutions can dramatically improve your bank’s abilities to achieve desirable results like higher profits, at-scale personalization, distinctive omnichannel  experiences, and rapid innovation cycles.

According to Accenture’s Global Financial Services Consumer study 2019, close to 50 percent of the consumers surveyed said they expected their financial services providers to ‘offer propositions addressing their core needs and not just traditional services.’ Half of the group also evinced interest in personalized financial advice from banks, and more than half of the respondents wanted to experience omnichannel  banking and seamlessly move between physical and digital spaces.

Personalized interactions through smart predictions

Today, AI-powered chatbots offer personalized services in real-time and are backed by predictive analysis and machine learning capabilities, which leads to personalized offerings.

The Covid-19 pandemic and ensuing lockdown periods is an epoch of the world’s digital development when all transactions went online. The banking industry in particular took a giant leap forward using applications like chatbots and voice assistants for calls and conversational assistance. Chatbots serve well to answer basic service queries and can also be leveraged to educate customers about additional services and offerings, up-sell, and make relevant recommendations.

The industry now relies on AI to curate and generate content that is tailored for each customer and ensures the content is delivered at the right moment as also perform quick and insightful segmentation to predict consumer expectations accurately.

For instance, customer mapping can be done depending on lifestyle needs: housing loans, study loans for children, car loans, or credit cards for family members. This would pave the way for better customer interactions and offerings that are timely and useful. Analytics-driven personalized money management offerings could very well become the order of the day

AI could also inspire banks to focus less on customer acquisition which could cost five times more than customer retention. A PWC Digital Banking Survey reaffirms this statistically: that customers are as likely to move to a new bank as they would stay with their present one.

Banks could also use the churn prediction software and capitalize on features that allow forecasting based on which customers are likely to switch banks and quickly stall the shift in loyalty. The benefits of customer retention are manifold: repeat customers tend to spend more, long-term customers are open to up-selling, existing customers require less marketing, and loyal customers engage in word-of-mouth marketing. The only way banks can derive these is through the intelligent use of technologies like AI.

In addition, the software identifies clients who are willing to pay more for premium services and also predicts the best time to offer these services.

Incremental value

According to a McKinsey study, technologies such as AI can render $1 trillion of incremental value for banks. It can boost revenues through increased personalization of services to customers (and employees), lower costs through higher automation, and better resource utilization. It can also generate insights that realize the real potential of data.

Therefore, banks are now in a good place to  tap into technology and merge the physical model with the digital world to reach out to, engage with and retain customers.

(The author Raviteja Dodda is CEO & Co-Founder at MoEngage and the views expressed in the article are his own)

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