Banks certainly are in a position to seize this opportunity to promote meaningful and relevant products to each of their customers by leveraging AI in banking. As customers today have become used to notifications on their mobile devices about recommendations for products, hyper-personalization creates a huge impact on the retailers and customers alike.
However, this concept, hyper-personalization, is not something new, as most of us have come across this concept already. When was the last time you have seen a movie on Netflix and wondered how did they rightly get your taste? Yes, Netflix is one of the finest example of hyper-personalization and AI in banking.
This blog explores the topic of hyper-personalization, how the role of AI in banking drive hyper-personalized experiences and guidelines to keep in mind while creating hyper-personalized experiences, and lastly explores how banks and customers can benefit from this.
Hyper-personalization – A Key Differentiator
Hyper-personalization is the use of AI and insights from behavioral science to design products and services to meet the unique requirements and demands of each consumer by the analysis of data collected in the past and present. The critical thing about hyper-personalization is that it enables the company to continue that trend into the future with the changing demands and requirements of the customers.
In the past, retail banks offered the same products and services to all their customers. With the effects of the trend of hyper-personalization shaking up the banking industry, it has become inevitable for banks to reinvent their lineup of products and services for each customer (in other words, practice hyper-personalization).
The main drivers of this trend of hyper-personalization are
- The diversified and changing nature of the requirements and demands of customers.
- The rise of technology makes hyper-personalization possible across several sectors and industries. Customer service will emerge as a major differentiator as there is increased emphasis on customers demanding products and services tailored to their unique requirements. Customers are now switching to banks that proactively hyper-personalize their lineup of products and services to meet their changing circumstances based on their past interactions and anticipated future events instead of a standard lineup before the rise of technology that made hyper-personalization possible. But the truth is that 94 percent of banks have not hyper-personalized their offerings and advertising efforts.
It has become necessary for retail banks to process and analyze gathered and stored customer data collected during their previous years of digital transformation. Transactional, behavioral, and interaction data presents a wealth of opportunity for retail banks to be acted upon by utilizing AI and ML to gather insights to better understand their customers and satisfy them.
Hyper-personalization is the goldmine for retail banks to be exploited to skyrocket their revenues and profits as each interaction with their customers will be an advantageous one. Also with the development of open banking APIs and digital IDs unique to each customer, retail banks which hyper-personalize their products and services will have a greater chance of interaction and engagement with their customers, thus creating more data to be acted upon and leveraged upon. Therefore banks that start hyper-personalizing their customer experiences now will have a head start over those who don’t.
Ways AI can Power Hyper-personalized experiences
AI can power hyper-personalized experiences for retail banking customers in a number of ways. Some examples include:
- Personalized recommendations and offer: By analyzing customer data and identifying patterns and trends, banks can use AI to make personalized recommendations and offers to individual customers. For example, a bank could use data on a customer’s past purchases and financial habits to suggest financial products or services that may be of interest to them.
- Predictive analytics: AI can be used to predict customer behavior and tailor the banking experience accordingly. For example, a bank could use AI to identify a customer’s most frequently used banking services and offer them a customized banking package that includes those services at a discounted rate.
- Customer service: AI-powered chatbots and virtual assistants can provide personalized customer service, allowing customers to get answers to their questions and resolve issues quickly and easily.
- Fraud detection: AI can be used to identify suspicious activity on customer accounts and alert bank staff to potential fraudulent activity. This can help banks to protect their customers’ financial information and assets.
- Automation: AI can be used to automate routine tasks, freeing up bank staff to focus on more complex and important tasks. This can help to improve efficiency and reduce costs for the bank, while also providing a more convenient experience for customers.
Overall, AI can be a powerful tool for creating hyper-personalized customer experiences in retail banking. By using advanced technologies and data analytics to tailor the banking experience to individual customers, banks can increase customer satisfaction and loyalty, and create long-term, mutually beneficial relationships with their customers.
Guidelines for creating Hyper-Personalization
Here are some guidelines to consider when creating hyper-personalized experiences for retail banking customers:
- Use customer data: To create hyper-personalized experiences, you’ll need to have a deep understanding of your customer’s needs, preferences, and behaviors. Gather data from a variety of sources, such as customer interactions, transactions, and surveys, and use this data to create personalized recommendations and offers.
- Utilize AI and machine learning: AI and machine learning can be powerful tools for analyzing customer data and identifying patterns and trends. Use these technologies to predict customer behavior and tailor the banking experience accordingly.
- Focus on convenience: Customers expect a convenient and efficient banking experience. Use technology to make it easy for customers to access their accounts and perform transactions from anywhere, at any time.
- Provide personalized customer service: Use AI-powered chatbots and virtual assistants to provide personalized customer service and quickly resolve customer issues.
- Protect customer data: Make sure to protect your customers’ personal and financial information by implementing strong security measures and adhering to relevant regulations and laws.
- Be transparent: Be open and transparent with your customers about how you are using their data and how you are creating personalized experiences for them. This will help to build trust and increase customer satisfaction.
By following these guidelines, you can create hyper-personalized experiences that meet the unique needs and preferences of your retail banking customers and help to increase customer satisfaction and loyalty.
Benefits of Employing Hyper-Personalization
There are several benefits to employing hyper-personalization in retail banking:
- Increased customer satisfaction: Hyper-personalization allows banks to tailor the banking experience to individual customers, providing a more personalized and convenient experience. This can lead to increased customer satisfaction and loyalty.
- Improved customer retention: By providing a high-quality, personalized banking experience, banks can improve customer retention and reduce churn.
- Greater customer loyalty: Customers who have a positive, personalized banking experience are more likely to be loyal to their bank and recommend it to others.
- Enhanced competitiveness: By using advanced technologies and data analytics to create hyper-personalized customer experiences, banks can differentiate themselves from competitors and stand out in a crowded market.
- Increased revenue: By improving customer satisfaction and loyalty, banks can increase their revenue through increased customer retention and acquisition.
- Cost savings: AI and automation can be used to streamline and automate routine tasks, reducing costs for the bank and providing a more efficient and convenient experience for customers.
Overall, the benefits of employing hyper-personalization in retail banking include increased customer satisfaction and loyalty, improved customer retention, enhanced competitiveness, increased revenue, and cost savings. By tailoring the banking experience to individual customers and using advanced technologies to provide convenient and efficient services, banks can create long-term, mutually beneficial relationships with their customers.
In conclusion, the use of hyper-personalization in retail banking is a powerful way to tailor the banking experience to individual customers and provide a more personalized, convenient, and efficient experience. By using customer data, AI, and machine learning to create personalized recommendations and offers, predict customer behavior and provide personalized customer service, banks can increase customer satisfaction and loyalty, improve customer retention, and enhance competitiveness in a crowded market. While implementing hyper-personalization may require investment in technology and data analytics, the benefits for both banks and customers make it a worthwhile endeavor. By providing a high-quality, personalized banking experience, banks can create long-term, mutually beneficial relationships with their customers and drive business success.
Discover how can Aspire and AutomationEdge can collaboratively help you have a competitive edge over your rivals through robotic business automation.
- How AI in Banking is Revolutionizing Credit Scoring - May 23, 2023
- How AI in Banking can Power Hyper-Personalized Experiences for Retail Banking Customers - February 1, 2023
- How AI is Powering Innovation in E-commerce - November 30, 2022