According to a report by CleverTap, a leading all-in-one customer engagement platform that helps brands unlock limitless customer lifetime value, it has been revealed that nearly 60% of banking customers would consider switching to a competitor if their bank fails to provide personalized digital experiences and AI-enhanced, convenient engagement models.
As the banking landscape undergoes a radical digital transformation, CleverTap report titled “Banking on AI: A Leader’s Guide to Customer Engagement Excellence in Banking” reveals that financial institutions must adapt or risk being left behind.
This underscores the urgent need for banks to meet rising customer expectations for greater convenience. The potential value of AI in the banking sector is projected to contribute $16 trillion to the global economy by 2030.
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“Generative AI is helping us enhance our customer support capabilities. The goal is to eventually build to establish customer trust, as this technology has the potential to improve trust by providing real-time solutions and immediate problem resolutions”, said Sebastián Pontillo, Head of Marketing Technology, Tenpo.
Despite advancements in generative AI and open banking, a significant number of banks still struggle with technology adoption and building customer trust. Many of these banks remain on the sidelines, waiting for proven results before adopting new technologies
“Banks are inspired by fintech in terms of delivering personalized experiences and adopting AI/ML algorithms for recommendations, but our agility and speed are often hindered by slower approval processes”, said Nikhil Padmanabh, Head Martech & Digital Analytics, Axis Bank.
The report also pointed out that banks often prioritize short-term gains over long-term strategies, neglecting the entire customer journey. By adopting a more holistic approach that considers both new and existing customers, banks can increase customer lifetime value and foster deeper engagement.
To bridge the gap between immediate actions and long-term financial impact, banks must leverage advanced analytics and metrics that focus on both current performance and future customer behaviors.
The report introduced the Core Four framework which are; Trust, Technology, Touchpoints, and Transactions, that provides a foundation for improving customer experiences and driving long-term value in the age of AI. By implementing this approach, banks can drive revenue growth and retain valuable customers by fostering trust, optimizing key touchpoints, and creating seamless, personalized experiences.
CleverTap’s Core Four customer engagement framework empowers banking professionals in retail, neo, and specialized banks to build stronger connections and deliver phygital experiences that boost customer lifetime value. This framework helps banks gain a holistic view of customer engagement and seamlessly integrate AI to meet evolving customer expectations.
The report further highlighted that different banks exhibit varying levels of trust, technology adoption, touchpoint usage, and transaction volumes. Each type faces unique challenges and excels in different aspects of the Core Four. Retail banks benefit from high trust levels due to their established reputations and physical presence but often lag in technology adoption.
Neo banks effectively drive high transaction volumes through their user-friendly digital platforms, but may struggle to provide a sense of security and trust due to the lack of physical branches. Specialized banks maintain trust by connecting with regional communities and prioritizing personalized service, but they also tend to adopt new technologies more slowly. To successfully pave the way for AI in customer engagement, banks must optimize their strategies around the Core Four.
By leveraging AI, banks can personalize customer experiences, optimize marketing campaigns, improve customer service, and predict customer churn. Also, by embracing the Core Four and harnessing the power of AI, banks can elevate their customer engagement strategies, drive long-term value, and secure a competitive advantage in the digital age.
Conclusion
Generative AI is helping to enhance customer support capabilities. The goal is to establish customer trust, as this technology has the potential to improve trust by providing real-time solutions and immediate problem resolutions.
To stay competitive in this evolving digital landscape, banks are urged to adopt a customer-first strategy rather than a product-first approach. By utilizing AI for dynamic personalization based on real-time customer behavior, such as spending patterns, banks can proactively engage with tailored offers. This shift can lead to higher customer relationships and build trust.