Embracing AI to Shape the Future Success of Banking
Financial institutions are navigating what can only be described as a transformative period. Thanks, in part to AI, tech continues to advance at a breakneck pace, resulting in a major shift in consumer expectations. As we look ahead to the next couple of years, AI will only continue to gain momentum, staying relevant will be even more challenging, and banks and credit unions will have to invest resources into what’s new and what’s next in order to remain competitive.
Data-Driven Insights Losing Popularity?
According to a survey highlighted on The Financial Brand, 42% of credit unions are prioritizing their efforts to utilize data for insights over the next couple of years versus only 11% of banks. Instead, banks are more focused on seemingly short-term strategies like growing deposits and loans. While that will undoubtedly help with meeting revenue goals and appeasing CEOs and board members today, we would argue that prioritizing data and insights has a more holistic and long-lasting impact.
Data helps you understand new and existing customers or members, which helps reach them with offers today (and tomorrow) that are more likely to make them take action. While that requires an upfront investment through research or data partnerships, the results far outweigh singular-focused strategies. For example, Star One Credit Union came to Claritas because they realized they didn’t know their members as well as they wanted. They were using an outdated segmentation model that still worked but wasn’t as efficient in helping them reach their goals as they would have liked. By investing in a P$YCLE® Premier segmentation analysis on their membership, they were able to personify their members better, fill in demographic data gaps, and understand their member’s financial behaviors. Once they had those insights, their campaigns started performing above industry average. Two months in, they already had $10 million+ in attributable deposits from over 1,200 accounts gained. Now that they’ve seen that level of success, Star One is beginning to look at how they can incorporate AI to incrementally improve their already impressive results and continue to differentiate themselves from competitors.
Trend, Or Keeping Up with The Industry?
Credit unions like Star One are not the only ones setting their sights on AI. Improving data and analytics capabilities, powered by AI, emerges as the foremost trend in retail banking, cited by 52% of industry leaders. Does the word trend makes you think AI is a passing fad? While “AI” can feel like a buzzword to some, we predict it will have staying power. Think of AI as a means to improve and elevate what you’re already doing.
How are financial institutions incorporating AI today? AI-driven insights help personalize services, optimize operations, and predict customer needs more accurately. While we know media analyses deliver powerful results, it’s a fact that the single most important driver of impact is the creative itself. Our AI message personalization uses unsupervised learning to discern how to align different creatives and messaging across the consumer journey. This enhances our ability to deliver the most impactful messages across audio, digital, video, and potentially websites, email, text, and even call centers. We’ve already seen AI Personalization deliver KPI increases as high as +259% across areas like improving customer satisfaction and loyalty, automatically optimizing conversions in real-time, and more.
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Getting Consumers Involved
Earlier, we mentioned shifting consumer expectations, but what does that mean? For the most part, your customers and members (and prospects) expect you to know what financial products and services they are in the market for, when they are in the market for them, and they expect your advertising to reflect that. But, they also want to feel like they’re getting something in return – whether that’s something like a welcome bonus for opening a new account, as seen in our recent Suncoast Credit Union case study, or credit card rewards that get them closer to their next dream vacation. That’s why we developed a simple and free browser extension that protects consumer privacy by allowing them to earn gift card rewards for the browsing and shopping data they choose to share.
Banks and credit unions are getting involved by promoting this program to their customers and members as a way to better engage with them based on their expressed interests and behaviors. It’s a win-win situation that gives financial institutions a chance to access the same types of insights consumers already willingly share with walled gardens like Meta and Google. Those insights can then be incorporated into AI-powered marketing campaigns to achieve that original consumer goal of being reached with relevant offers at the right time.
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Barriers to AI Adoption
Despite the clear benefits of AI adoption, several barriers hinder its widespread implementation in the financial services sector, as reported by The Financial Brand:
1. Budget: Allocating funds for any new technology is almost always met with resistance. As it stands, marketers are being asked to do more with less, so diverting funds from traditional areas to AI initiatives can be challenging.
- Our solution: Generally, turning AI “on” means optimizations are happening much faster than human intervention, and the AI can detect anomalies and predict what will happen next, adjusting on the fly. These micro adjustments have the potential to save hundreds or thousands of dollars in wasted ad budget, and often net a higher ROI in the end. Remind decision makers that AI works around the clock for the benefit of the campaign.
2. Knowledge:There’s a scarcity of talent proficient in AI technologies and data science, meaning either headcount will need to be added or a data partner will need to be brought in.
- Our solution: When doing your research, look at what the difference in a headcount investment versus a data partner investment would be. If you have yet to add AI to your marketing process, it may not make sense to fully invest in new staff. By partnering with experts in the field, you have more flexibility with how you pursue adoption, for how long, and how widespread across your marketing efforts.
3. Leadership: Some organizational leaders require proven success stories before they consider new technology, which can be hard to do if you’ve not had the chance to test it for yourself.
- Our solution: Arm yourself with evidence to help build a case with leadership. When you visit the Insights tab on claritas.com, you will see that we have case studies, podcasts, and fireside chats that go in-depth on the process and the results our clients have seen when leveraging AI solutions. Even if you ultimately choose another path to AI, our thought leadership can certainly help better educate decision makers.
4. Resistance: Internal bias against change can make full organizational adoption a long and arduous process.
- Our solution: This is arguably the hardest hurdle to overcome, but this is why it is important to ensure you have the right parties involved in internal conversations to help “sell” the value to your internal staff. If your financial institution is working with a data partner for your AI needs, ask that partner about sales enablement programs and training. If you’re working with an in-house team, consider periodic lunch and learn style training sessions or office hours.
These are not the only barriers to AI adoption, though. Privacy concerns are also top of mind for financial institutions. While we do not dive into them here, we did release an episode of our podcast, The Marketing Insider, dedicated to the privacy landscape. We encourage you to listen to that episode for more information on the future of consumer privacy laws now that AI has become more prevalent. Overcoming these barriers can be tough, but the proven benefits of an AI led strategy far outweigh the negatives.
AI’s Potential in Your Financial Institution
Now that you know a little more about the types of AI solutions available for financial services, have seen some of the success metrics gained, and understand the types of challenges you might be up against, let’s get into the fun part. How can your institution leverage AI?
Today, most financial institutions are leveraging AI for things like fraud detection and security enhancement but, there’s growing exploration in customer segmentation and personalized marketing to enhance engagement and retention. Considering 61% of executives prioritize personalizing the customer experience above all other loyalty activators, we’d say that’s a great argument for the value of AI. Have you ever heard the saying “the early bird gets the worm?” The early adopters of AI have the advantage of higher success rates, due to lower competition levels, and they’re learning what works and what doesn’t before their peers.
Looking ahead, 81% of CMOs anticipate integrating Generative AI (GenAI) to support new business models within the next year or so, but why wait when there’s success to be had now? Just ask Progressive Insurance, who saw a 197% lift in campaign performance with GenAI turned on vs. ads delivered without AI.
How to Get Started
It has become virtually impossible to get through the day without hearing artificial intelligence mentioned at least once, so it’s worth investigating what this technology can offer your financial institution. Visit www.claritas.com/contact/ to start to conversation with our team, and let’s devise a plan to meet your marketing goals.