We are currently at a cusp where several profound changes are converging across the banking landscape – machine intelligence positioned to complement (and even exceed) human intelligence, significant advances in analytics and AI, and the cost of computing The steep decline continues.
The bank-customer relationship is on a very different level than it was several years ago, and this requires new ways of thinking from financial institutions.
Over the course of the past year, FICO has worked with many consumers, businesses and industry leaders. Our conversation revealed five key trends that are deeply redefining the banking customer experience and the way we interact with each other.
Here’s a summary of the top 2023 trends impacting customer experience and the financial services industry today.
1. Applied Intelligence Revolution
Technology is progressing at a rapid pace and consumer expectations are rising even faster. If you want to be a leader in a modern industry, you need more than data and intelligence – you need to be able to apply it.
Applied intelligence means activating your data with real-time insights so that you can make real-time decisions. This means ditching siled departmental structures and connecting people + processes + technology across your enterprise. Instead of setting a goal for one win, you are adopting a system that produces success over and over again.
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. Banks and credit unions that can be more humane will flourish.
Applied intelligence is a collaboration of advanced analytics, decision modeling, AI, and human intelligence – all brought together by a single, extensible platform. It establishes a low-code/no-code environment that empowers business users to define and test, monitor, and adjust strategies and rules without the need for IT intervention.
With applied intelligence, you can bring more value to every aspect of your organization – re-imagine systems and operations, encourage collaboration, foster a healthy culture, optimize interactions, and deliver best-in-class Meet customer expectations with experiences.
2. Responsible use of AI
Artificial Intelligence is changing the way we live, work and play. It is increasingly being used to shape strategies and inform decisions in many industries, including banking and financial services.
The problem is that many companies are deploying AI at a significant risk. In fact, 65% of companies cannot explain how specific AI models make decisions or predictions. Furthermore, 78% of enterprises do not have an AI ethics board to ensure that the ethical implications of using new AI are properly considered.
This has become an important conversation as AI technology underpins many decisions that deeply affect us all. So how can we be sure we are using AI ethically, transparently and safely? Answer: Responsible AI.
Responsive AI is a benchmark for excellence. It ensures that AI technology is secure, reliable and fair. When you use data to make banking decisions, you must recognize that data is as much an asset as it is a liability. Very careful steps should be taken to uncover and remove biases. By promoting responsible AI, we can ensure 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 hurts your customers or your business – it’s the inexperienced who try to implement AI.
3. Trust is important
Earning the trust of customers is critical to the success of a business. Trust is a key driver of customer loyalty and engagement. But how do you measure and build trust? It’s an issue many companies are trying to address — and though it may not be a new concept, it’s gaining renewed attention.
Many companies are struggling today because it is even more difficult to maintain trust in a digital environment, partly due to the high volume of transactions and interactions. The pandemic has only exacerbated this trend as it has forced us to become vulnerable and place our trust in various institutions and companies.
Trust is an important element of any healthy relationship. When it comes to your customers, Trust creates real value through revenue-generating behaviors that increase customer retention, loyalty, and advocacy.
Recognizing trust in customer relationships is powerful because it enables you to think of trust as something concrete that you can act on. Forward-thinking banks are already creating 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 customer trust based on their dedication to security, privacy and ethical practices (or the lack thereof). Fortunately, broken trust can be rebuilt—but only with genuine effort over time.
In many ways, the world is as uncertain as it has ever been. We are emerging from a global pandemic, facing geopolitical tensions and economic instability. The truth is that the problems we face will require an extreme level of cooperation and trust.
4. Customers Expect Hyper-Personalization
Financial institutions have a bad reputation when it comes to privatization. This is because most of the banks are moving towards privatization in a short-sighted manner. Their strategies and goals are visionary because they are focusing more on business needs (selling a product) than on customer needs (valuable experiences).
Banks need a way to differentiate themselves and build meaningful relationships with customers. Innovations in AI/ML and analytics have made it possible to make every interaction personal and unique, and customers expect you to invest in technology that fuels meaningful experiences.
Organizations that have adopted AI technology, predictive analytics and centralized decision making are leading their industries because they are anticipating customer needs and improving customer lives at a hyper-personal level.
Hyper-personalization supercharges the concept of personalization to provide a more personalized experience at each touchpoint in 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 are using context to anticipate customer needs and accompany them through a more optimal and profitable journey. It’s about nurturing relationships and providing customer value, not just selling a product.
A customer is more than a moment – a customer is for life. Similarly, hyper-personalization is more than a one-time project. It cannot be treated as an add-on; It should be embedded in your enterprise architecture.
5. Changing Roles Within Banking
Applied intelligence revolution and increased focus on data decision making is another big change, fundamentally changing the way banks operate. Rapid digital transformation is changing the structure of banking as well as the roles within banks. As more functions and processes become digitized and automated, the way banks find and develop talent is also changing.
The era of platforms and cloud computing is driving the creation of Fusion Teams.
The new low-code/no-code environment that companies are adopting is enabling (if not forcing) synergy between the business and IT departments. We are moving away from single applications/solutions that require specific IT expertise and towards extensible platforms that eliminate silos and centralize decision making.
This means that we are seeing a strong correlation between how decisions are made and what technology is used. We can now view the customer lifecycle as a connected journey rather than as separate stages. This is absolutely crucial when it comes to providing a holistic and ultra-personalised experience.
We’re at the forefront of a new digital environment that doesn’t require IT to micromanage. The environment is ready to learn and experiment, where business users are empowered to define rules, test, monitor, adjust and make real-time decisions.
To be successful in 2023 and beyond, it’s important 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 the promise of technology and how it meets our human needs. Banks will need to seriously re-evaluate their digital transformation strategies as demand grows for a world that is driven by data and guided by empathy.
Want to know more? Read the full trends report for 2023 here.