Next-generation banks are on the cusp of a transformative revolution, as they harness the power of generative artificial intelligence (AI) and personalization to revolutionize the banking industry. These innovative technologies have the potential to touch almost every aspect of banking, from influencing financial decisions to detecting vulnerable customers, training call center staff, and even managing social media accounts.
For years, the UK banking industry has been utilizing AI through predictive models to detect fraud and analyze risks. However, banks are now embracing generative AI, which utilizes complex models to create something entirely new based on a vast amount of data. This technology has started to make its way into the mainstream, with the emergence of chatbots like ChatGPT and Google’s Bard.
Tom Merry, the head of banking strategy at Accenture, acknowledges that generative AI is both exciting and scary for bank executives. They are wary of the risks associated with these complex technologies. However, seasoned experts like Merry are witnessing an increasing number of requests from banking firms eager to experiment with generative AI.
The applications of generative AI in banking are vast and remarkable. One possibility is designing personalized products for customers based on their personal spending and banking data. This level of personalization could greatly improve customers' financial well-being by nudging them toward making small decisions that enhance their financial strength.
Generative AI can also be employed in voice recognition technology, enabling AI to detect the sentiment of callers and potentially identify if they sound vulnerable or distressed. This prompts staff members to engage more deeply with these customers. Furthermore, banks can explore using generative AI to manage their social media platforms or even train human resources and call center staff through virtual avatars for role-playing interactions.
Peter Rothwell, KPMG’s UK head of banking, emphasizes that for generative AI to gain wider adoption, customers must trust that their data is being used for the right reasons. Banks can leverage customers' data to offer more personalized assistance in managing their financial outcomes. However, trust, data security, and reliability are paramount in building and maintaining this relationship.
Studies suggest that there is still significant room for improvement in the banking industry’s engagement with customers. A recent poll by Eligible, an AI platform for banks, revealed that almost a quarter of people in the UK reported receiving no personalized communication from their bank regarding their financial situation. This lack of personalization often leads customers to ignore the communication entirely.
Zahra Hassan, Eligible’s co-founder, believes that AI can play a crucial role in identifying potentially vulnerable customers by assessing their understanding of financial products. By doing so, banks can proactively support and guide these customers. Hassan affirms that AI has the power to transform customer support from a reactive relationship to a proactive and personalized one.
The advent of generative AI and personalization in the banking industry coincides with the decline in physical bank branches. As high street lenders in the UK shift toward mobile banking, KPMG UK’s research reveals that roughly a fifth of UK consumers have not visited a bank branch in the past year—an increase from 14% in 2022. More customers prioritize an easily navigable app as their primary interaction with their bank, underlining the need for seamless digital experiences.
The integration of generative AI and personalization represents a significant step forward in reshaping the banking industry. Banks that embrace this technology have the potential to deliver personalized, proactive, and trustworthy customer experiences. However, addressing concerns regarding data security and building trust with customers are essential for wider adoption. The future of banking lies in the hands of generative AI, revolutionizing the way we manage our financial lives.
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