Putting the customer at “the heart of everything we do” has long been a stated aim for businesses. Now thanks to the revolution of artificial intelligence (AI), many industries are finally making it happen, and the financial services sector might be one of them that are doing the most to harness tools like machine learning and data analytics.
The financial services industry has been hit by the same digital trends disrupting other sectors, such as declining foot traffic to retail banks as customers shift to using apps and secure sites on their mobile devices. This has opened the door to new digital entrants that have seized market share from the incumbents.
The shift has highlighted the importance of using technologies such as AI that enable financial institutions to place customers at the center.
“We can really transform the customer experience with better use of technology,” says Harish Agarwal, Head of Marketing at Prudential Assurance Company Singapore. “We have been on this transformation journey in the past year, seeing the increased use of AI methods such as machine learning in delivering better end-to-end experience to our customers.”
From analytics to personalization, customer service and real-time insights, the insurer sees “tremendous” efficiency gains from deploying AI solutions. For example, it has adopted a chatbot dedicated to financial consultants and an AI-powered e-claims system for hospitalization policies.
The askPRU chatbot helps consultants enhance the customer experience, by allowing them to quickly and easily retrieve customer information on mobile. This has helped reduce calls made by consultants to the company’s contact center, giving them more time to attend to customers’ needs.
Improving the customer journey also means enhancing financial security and preventing fraud for customers’ benefit. AI is now able to detect fraud before it happens by analyzing historical data of every transaction and predicting the likelihood of fraud based on previous patterns.
Singapore’s OCBC Bank has been fighting financial crimes with the help of AI. It said the technology can “learn” from or adjust to changes in transaction patterns over time, and identify suspicious transactions more accurately.
For insurers, AI can also reduce fraudulent claims by enhancing the ability of assessors to scrutinize claims, potentially saving millions of dollars.
The General Insurance Association of Singapore estimates that around one in five claims the industry receives are either false or inflated, costing the industry around S$140 million (US$101 million) a year.
Redefine Customer Engagement
In addition to customer service and financial security, financial services firms that leverage AI tools in marketing will gain massive rewards too.
For instance, combining customer demographic and past transaction data with social media monitoring could help generate personalized product recommendations. Proactive marketing automation tools such as AIQUA allow marketers to segment the target audience based on their interest and online behavior, and engage them with hyper-personalized content and messaging across multiple platforms.
The benefits of using AI can extend from finding lookalike audiences to remarketing to potential customers, developing a more vivid picture of individual customers, along with reducing customer churn.
One bank that was losing mortgage customers to rivals turned to AI for a solution. By comparing attributes of loyal customers with those that left, it fed the data into a predictive modeling tool to project churn rates. The number of factors causing such churn was cut from more than 100 to just 10, with the model applied to all mortgage customers, ranking them based on their likelihood to leave.
The bank leverage these AI-generated insights and launched a targeted marketing campaign that cut the churn rate by nearly half, protecting a huge amount of revenue and profits that might otherwise have walked out the door.
Yet barriers remain to the implementation of AI solutions and realizing their associated benefits in the financial sector in APAC.
A recent Forrester survey commissioned by Appier finds that 51 percent of the financial services firms surveyed have adopted AI tools, while 27 percent are planning to do so in the next 12 months. However, respondents point to constraints caused by the sector’s demands on internal control and client data management.
Some of the key challenges includes assembling the right platform of data management (52 percent), gathering and integrating data (52 percent) and generating predictive customer insights (49 percent).
Despite the challenges, more than half of the financial services firms still expect to leverage AI to maximize customer value and loyalty, optimize marketing mix and increasing ROI, and deepen insights for smarter customer interactions.
There are many different ways that AI is altering the way that the finance industry works. It has the potential to not only revolutionize the industry, but also to improve the financial health of today’s consumers.