Future of Credit - 1
Customer data and AI enables banking providers to prioritize high-value activities and creative solutions around customer experience. As such, consumers would have a more streamlined and more straightforward interaction with their banks.
DATA AND AI FOR PERSONALIZATION
- Artificial Intelligence (AI) enables the smart chatbots used to provide detailed self-help solutions for clients, thus reducing the workload at call centers. AI systems are intelligent systems that are continuously learning, adapting, refining their algorithms, and improving their results over time based on available data.
- Customers are exact when it comes to personalization, with solutions such as receiving recommendations that they would not have thought of themselves, purchase guides when shopping for a product or service, mostly based on their previous activity.
- Customers of financial institutions would like for their providers to know them, look out for their interests, and reward them regardless of the channels with which they patronize the institution, their location, or time.
- As consumers give banks and credit unions access to their information, they expect to receive continuous value for such insights, such as providing them with information regarding their overall financial status on demand.
- Using customer data and AI, customer experiences can be transformed to create new banking business models in the future. Banks and credit unions can drive loyalty by using digital assistants that manage routine inquiries effectively and provide personalized advice.
- AI technologies will enable retail banking providers to prioritize high-value activities and creative solutions around customer experience. As such, "high-volume, recurring tasks can be automated at a lower cost."
- Wells Fargo, Bank of America (BOA), and Chase are top US banks on top of this technology's implementation. They have each launched Mobile banking apps that provide reminders for their clients to pay bills, plan expenses, and have easier, more streamlined interaction with their banks.
- Voice-first banking involves the use of voice and a contemporary intelligent agent or assistant to communicate and interact with consumers in the place of a human workforce. Voice-first banking is poised to transform customer engagement by making daily tasks much more straightforward for consumers. As many consumers would like their banking processes to be executed swiftly due to their already tight schedules, this technology would serve to eliminate typical lengthy waiting procedures.
- Consumers favor the use of voice assistants, stating that cooperating with the same affords them a simpler and more streamlined service.
- As such, many credit unions will transition from the standard account and dialogue sectors to handling transactions that revolve around voice commands. Such transactions could include making payments through the cooperation of voice commands or go as far as utilizing account notifications centered around voice commands or transferring accounts.
- This technology has an outlook of enabling 50% of all banking interactions in the next five years.
- As of 2017, institutions such as Ally Bank, US Bank, and Capital One were already engaging consumers through the use of voice assistants such as Amazon Alexa to enable consumers to obtain quick results regarding their finances, among other functions.
- Open banking, also known as open bank data, provides fintech providers with open access to consumer banking, transactions, and other financial data from banks and other non-bank financial institutions. This technology offers such access using application programming interfaces (APIs). It is one innovation that can transform the banking industry.
- Under this system, banks grant third-party service providers access and control over the personal and financial data of consumers. These third-party providers are usually tech startups and online financial service vendors. However, consumers still have to give consent to the banks to allow such access, often by checking off a box in the "terms of service" screen of an online app.
- This innovation would facilitate reliance on networks in place of centralization, thus allowing consumers of financial services to share their financial data securely with other financial institutions. The potential impact of open banking is quite numerous. "For example, open banking APIs could facilitate the sometimes onerous process of switching from using one bank's checking account service to that of another." By looking at the financial data of consumers, the API can also recommend the best financial products and services for them.
- Besides the consumers, lenders would also have a more accurate description of a consumer's financial status and risk level. That way, they can offer more favorable loan terms.
- Financial institutions of various sizes are moving closer to an open banking platform future as account aggregation is becoming more common.
- Open banking initiatives are gaining traction among financial institutions. About 77% of US banks planned to make investments in this area in 2019. However, other countries such as Australia, Brazil, New Mexico, and Nigeria are already on top of this trend.
- "Payveris recently announced a collaboration with VyStar Credit Union to develop an open-banking focused credit union service organization (CUSO)."
- A digital-only banking proposition involves integrating new technologies and solutions to the existing design, brand value, and business model of a banking system. To do so, tech-savvy leaders would need to build technology using a consumer-centric approach. The institution could also utilize the technical capabilities of startup fintech providers to assist with such a development.
- More non-traditional banking options are becoming readily available to consumers, which is facilitating the switch from banks to customized services and products. This was cited in a report by Accenture, where it was stated that "banking consumers in North America want it all — deals and discounts, convenience, relevance, and banking customer experiences that combine the latest in digital banking with human interaction."
- Digital-only banking provides better deals and unique customer experience to consumers. They are also a less costly option for the banks implementing them.
- According to the report, consumers do not mind sharing their data if it gets them what they want and would be willing to switch banks if they don't.
- Citibank, for example, is developing digital-only products due to the trend of open banking and account aggregation.
- In 2017, DBS Bank launched a digital-only bank called DBS Digibank.