In a recent study conducted by NTT DATA, which enables its clients, as well as society, to move confidently into the digital future, senior financial executives overwhelmingly agreed that the implementation of Artificial Intelligence (AI) will be the key competitive driver of success over the next few years.
NTT DATA surveyed 4,807 consumers and 476 senior executives in banking, brokerage, capital markets, wealth management, and cards and payments across the globe to find out what attracts customers and what makes them stay.
Eighty-three percent agreed that AI grants access to unique data sets which opens the door to differentiate offerings and win customers. However, only 16 percent of financial institutions use AI and data to provide personalized service which makes us wonder, where’s the disconnect?
While AI drives cultivates creativity and innovation obstacles remain and adoption lags. In fact, respondents report technology implementation (55 percent) creates new business startup culture in an established business (51 percent), and organizational skill changes (43 percent) are challenges faced when implementing personalized AI services.
Since the COVID-19 pandemic, consumers have increased their search for digital finance solutions and apps. Now more than ever, financial institutions must find a way to break down these brutal barriers and overcome them in order to assist customers and proactively offer financial guidance.
“Customers provide striking testimony that they want banks to act as a strategic advisor on their major spending decisions, according to recent data,”Matt Provencher, SVP of Financial Services and Insurance at NTT DATA Services said in a statement. “Our research shows AI is the pathway to offering the hyper-individualized services customers crave. The data doesn’t lie—financial institutions need to double down on AI to meet rapidly evolving consumer demands, or risk handing their competitors the keys to poaching their customers.”
NTT Data’s Key Findings:
The top five challenges, in order, for financial institutions to attract and retain customers:
1) Using AI to provide customized advice to individual customers
2) Building trust with customers
3) Competition from fintechs and technology companies
4) Limited in-person customer interactions
5) Slow to launch new products
A majority of financial institutions see personalized proactive services as an opportunity [to attract customers], however:
- Only 16 percent of financial institutions are leveraging data to provide specific, one-to-one financial guidance to customers on how to achieve their life goals and ambitions
- 32 percent of firms are leveraging data to provide “broad tailoring” — recommendations to target customer segments, as a one-to-many strategy
Overall, the main drivers for financial institutions investing in personalized proactive services are:
- 68 percent customer acquisition
- 66 percent customer retention
- 61 percent new revenue channels
- 59 percent enhanced emotional connection
- 58 percent expanded revenue in traditional channels
- 53 percent increased profit margins
- 35 percent expanded customer wallet share
Financial institutions report challenges with AI implementations because it requires changes on the business side, too. Top challenges for using AI to provide 1:1 services are:
- 55 percent technology
- 51 percent creating new business startup culture in an established business
- 43 percent organizational / skill changes
- 35 percent understanding the business questions to be answered
- 35 percent management support
- 30 percent building partnerships and alliances
- 30 percent data
- 22 percent justifying the ROI
“The next step in creating the true digital bank of the future is a more powerful use of AI and other digital technologies to engage in the lives of each individual customer,” Kaz Nishihata, executive vice president for NTT DATA said in a statement. “Financial institutions across the globe will need to focus on AI, big data analytics and processing power—as well as make the organizational change initiatives and strategic partnerships—to meet the needs of customers and truly differentiate.”
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