We are currently at an apex where several profound transformations are converging on the banking landscape – machine intelligence is positioned to complement (and even exceed) human intelligence, there are significant advancements in analytics and AI, and the cost to compute continues to fall drastically.
The bank-customer relationship is on very different footing than it was several years ago, and it requires a new way of thinking from financial institutions.
During the past year, FICO has engaged with numerous consumers, businesses, and industry leaders. Our conversations have revealed five key trends that are profoundly redefining the banking customer experience and the way we interact with each other.
Here’s a summary of the top 2023 trends that are impacting today’s customer experience and the financial services industry.
1. The Applied Intelligence Revolution
Technology is progressing at a rapid pace and consumer expectations are rising even faster. If you want to be a modern industry leader, you need much more than data and intelligence – you must be able to apply it.
Applied intelligence means activating your data with real-time insights so you can make real-time decisions. It means abandoning siloed departmental frameworks and connecting people + processes + technology across your enterprise. Instead of setting a goal for a win, you’re adopting a system that generates repeated success.
These days, financial institutions are competing on much more than pricing and terms. As technology continues to expand, so will the demand for emotional intelligence. The banks and credit unions that can be more human will flourish.
Applied intelligence is the collaboration of advanced analytics, decision modeling, AI, and human wisdom – all brought together by a single, extensible platform. This establishes a low-code/no-code environment that empowers business users to define strategies and rules, and test, monitor, and adjust without requiring IT intervention.
With applied intelligence, you can bring greater value to every facet of your organization – reimagine systems and operations, encourage collaboration, foster healthier culture, optimize interactions, and eclipse customer expectations with best-in-class experiences.
2. Responsible Use of AI
Artificial intelligence is changing the way we live, work, and play. It’s increasingly being used to shape strategies and inform decisions across multiple industries, including banking and financial services.
The problem is that many companies are deploying AI at a significant risk. In fact, 65% of companies can’t explain how specific AI model decisions or predictions are made. Furthermore, 78% of enterprises do not have an AI ethics board to ensure that the ethical implications of using new AI are considered properly.
This has become a crucial conversation because AI technology underpins many decisions that profoundly affect us all. So how can we make sure we’re using AI ethically, transparently, and securely? The answer is: Responsible AI.
Responsible AI is a standard for excellence. It ensures that AI technology is safe, trustworthy, and unbiased. When you use data to make banking decisions, you should understand that data is as much of an asset as it is a liability. Very careful steps must be taken to expose and address bias. By promoting Responsible AI, we can make sure that AI and machine learning (ML) models are robust, explainable, ethical, and auditable.
We should always be wary of irresponsible use of artificial intelligence. After all, it won’t be the algorithm itself that harms your customer or your business – it will be the inexperienced who try to apply AI.
3. Trust Is Vital
Earning customers’ trust is crucial to business success. Trust is a major driver of customer loyalty and attrition. But how do you measure and build trust? It’s an issue many companies are trying to address – and while it may not be a new concept, it’s experiencing a renewed focus.
Many firms struggle today because trust is even harder to maintain in a digital environment, partly due to the high quantity of transactions and interactions. The pandemic has only amplified this trend because it’s forced us to be vulnerable and place our trust in various institutions and companies.
Trust is a vital element of any healthy relationship. When it comes to your customers, trust creates real value through revenue-generating behaviors that lead to increased customer retention, loyalty, and advocacy.
Recognizing trust in customer relationships is powerful because it enables you to think about trust as something concrete that you can act on. Forward-thinking banks are already building trust scores, developing strategies, and defining metrics to measure trust and how it connects to customer experience.
Trust can be created and destroyed. Financial institutions often earn or lose customers’ trust based on their dedication to security, privacy, and ethical practices (or lack thereof). Fortunately, broken trust can be rebuilt – but only with real effort over time.
In many ways, the world is as uncertain as it’s ever been. We’re emerging from a global pandemic, facing geopolitical tensions and economic instability. The truth is that the problems we’re up against will require an immense level of cooperation and trust.
4. Customers Expect Hyper-Personalization
Financial institutions have a poor reputation when it comes to personalization. The reason is that most banks have been approaching personalization in myopic way. Their strategies and goals are nearsighted because they’re focusing more on business needs (product sales) than customer needs (valuable experiences).
Banks need a way to differentiate themselves and make meaningful connections with customers. Innovations in AI/ML and analytics have made it possible for every interaction to be personal and unique, and customers expect you to be investing in technology that fuels meaningful experiences.
Organizations that have embraced AI technology, predictive analytics, and centralized decisioning are leading their industries because they’re anticipating customer needs and improving customers’ lives on a hyper-personalized level.
Hyper-personalization supercharges the concept of personalization to provide a more individualized experience at every touchpoint across the customer lifecycle. It goes far beyond segmentation by leveraging data, advanced analytics, AI, and automation to drive optimal customer engagement at scale and in real time.
With hyper-personalization, you’re using context to infer customers’ needs and accompany them through a more optimal and profitable journey. This is about nurturing relationships and delivering customer value, not just selling products.
A customer is more than a moment – a customer is for life. Likewise, hyper-personalization is more than a one-off project. It can’t be treated as an add-on; it must be embedded in your enterprise architecture.
5. The Changing Roles Within Banking
The applied intelligence revolution and heightened focus on data decisioning are bringing about another major shift, which is fundamentally altering the way banks operate. Rapid digital transformation is changing the structure of banking as well as the roles within banks. As more tasks and processes become digitized and automated, banks are also having to change the way talent is found and developed.
The age of platforms and cloud computing is spurring the creation of fusion teams.
The new low-code/no-code environment that companies are adopting is enabling (if not forcing) synergy between business and IT departments. We’re moving away from single applications/solutions that require specific IT expertise and towards extensible platforms that eliminate silos and centralize decisioning.
This means we’re seeing stronger connections between how decisions are made and what technology is used. Now we can treat the customer lifecycle as a connected journey instead of separate stages. This is absolutely vital when it comes to delivering holistic and hyper-personalized experiences.
We’re on the forefront of a new digital environment that IT doesn’t have to micromanage. The atmosphere is geared towards learning and experimentation, where business users are empowered to define rules, test, monitor, adjust, and make real-time decisions.
To succeed in 2023 and beyond, it's crucial to understand how everything in your enterprise is connected – from boardroom objectives and business strategies to technology and people.
In many ways, these trends address the gap between what technology promises and how it fulfills our human needs. Banks will need to seriously reevaluate their digital transformation strategies as demand rises for a world that’s driven by data and guided by empathy.
Want to learn more? Read the full 2023 Trends Report here.