If you happened to be seated at the table during the recent strategy sessions of almost any bank or credit union in the United States, you would have likely heard several similar topics: customer experience, innovation, retaining/growing customer base, fending off new challengers and financial wellness. The underlying theme in all of these is the need to transition to a customer-centric business model. It is pretty clear that the days of fee-based retail banking have ended (or more accurately – been killed-off) thanks to free offerings and the fact that financial institutions (FIs) now find themselves in a fight with the likes of Amazon, Apple and Walmart to remain at the center of providing financial solutions to their customers.

Conversational AI Can Put You “Front & Center” with Your Customers

The recent rise of fintechs (and their next gen apps) for budgeting, saving, investing, P2P and borrowing, is putting additional pressure on FIs, who risk losing those core businesses one at a time if they don’t adapt. The challenge of non-traditional players (hello Amazon Bank?) and fintech scope creep (hello Venmo card!) can be combated the same way – FIs need to change the way they engage with their customers and deliver real value. Conversational Artificial Intelligence (AI) is the way FIs can truly change their engagement models and move back to the place where they belong – the center of their customers’ financial wellbeing. 

The Next Generation of Personal Financial Wellness

In the case of financial wellness, a theme many FIs are focused on this year, the benefits of increased customer engagement through Conversational AI are particularly pronounced. FIs have historically provided education or planning templates to help with budgeting and overall financial wellness. That just isn’t enough any longer. Simply offering to teach “how” or “why” to budget and be financially disciplined stands little chance against the billions spent on marketing by retailers to achieve the exact opposite. 

Millennials are gravitating towards fintech apps that “do it for me” or have AI-assistance (Mint, Stash, Acorn, Robinhood, Venmo, etc.) and are poised to become the largest demographic in the U.S. this year. Millennials and the following generations are accustomed to (even expect) digital services that deliver timely and valuable data-driven insights (i.e. ride-share, accommodations, events, etc). While many FIs are updating their approach from education to delivering insights, there are varying degrees of quality and success. As FIs compete with fintechs to create more and better insights, pairing these insights with Conversational AI is what will transform the engagement model. Conversational AI in the form of an AI-powered Virtual Financial Assistant (VFA) serves as a financial coach in the pocket; is FI branded; and consistent across any channel (web, mobile app, SMS, smart-speaker, etc). When insights are delivered by a flexible VFA in natural language, customers have the ability to explore and question the recommendation, increasing engagement and the potential for positive outcomes.

Virtual Financial Assistants Can Take Engagement & Loyalty to Higher Levels

“Insight-explore-action,” or in other words – tell me what to do, make it easy to do, and I will be much more likely to do it! When I get an alert or text that a bill is due, I don’t want to then have to make a mental note or click a link and then navigate a few menus. I want a virtual financial assistant to follow-up with a question of what date to set up the payment for, then complete the setup right there in the chat or voice session.

As customers utilize the VFA and this enhanced engagement method (insight-explore-action) for routine tasks like billpay and avoiding overdrafts, they will reap the value of better service and outcomes and be open to exploring other use cases. Each task completed through the VFA represents higher engagement, better service (give me natural conversations, not a maze of menus) and lower cost-to-service for the FI (no need to call the support center for non-complex requests!). As new features are rolled out on the VFA, especially account opening and loan origination, the customer data garnered through the VFA becomes a feedback loop to inform better product offerings and more personalized insights. 

Full-service banks and credit unions are in the unique position of offering a full-product suite in one place (savings, credit cards, investing, loans, etc). VFAs offer the opportunity to not only cross-sell (including incorporating data from previous interactions with the VFA), but do so when and where the customer chooses with 24/7 answers and contextual guidance. Harnessing this enhanced engagement of VFAs as a 24/7 financial coach will promote loyalty as well as better financial outcomes, both things that ensure FIs plant themselves back at the center of providing financial solutions to their customers.

If you are with a bank or credit union that is interested in leveraging the power of a VFA to better engage customers, give us a shout and we’ll be happy to tell you more.