Ensuring Lasting Future Growth With AI for Financial Institutions
NCUCCC Discussion
Listen now to Mark Gambale’s engaging discussion about AI at NCUCCC 2022.
Why are financial institutions paying attention to AI?
In 1941, the total value of assets in the U.S. was only $91 billion according to the FDIC. In current terms, the total assets within U.S. banks has grown multifold to more than $22 trillion.
While this may sound like significant growth in value for banks [1], the assets base across financial institutions is expected to shift dramatically according to Gartner.
They predict the rise of new competitive banks through dramatic shifts driven by new developed technology known as advanced AI. [2]
Why does this recent research matter significantly to financial institutions considering making significant investments in AI?
McKinsey has forecasted the AI industry within financial institutions is more than $1 trillion dollars. [3]
According to them nearly 40% of this market is considered within a rapidly growing segment known as advanced or augmented AI.
When done the right way, augmented artificial intelligence fosters deep human connections with customers using AI-enhanced communication and collaboration features that connect employees and customers; nurturing repeatable forms of customer delight, rooted in unbroken connection.
Why use the word augmented?
Well, the concept of AI was initially developed by Claude Shannon in 1941 while he was pondering the potential for a machine to imitate the functions of electrons firing across the synapses of the brain.
It was deemed at that time that AI would either be learned from the bottom up, e.g. by machines taking classes, e.g. grades K-12 and beyond or through a different method by a top down approach.
Across the last 81 years since AI’s inception, it has been developed through a top down approach of mankind training machines on how to compute an inordinate number of calculations within seconds.
How do we best understand the opportunity that AI poses for financial institutions?
Let’s look at some foundational facts to consider.
AI has multiple levels to understand. [4]
First there is the traditional or conventional AI, which is simply embedded code that has a stack of if-then statements that respond to things like balance inquiries or customer requests to speak to a human agent when a request can’t be handled by traditional AI.
This conventional method in banking is served by traditional AI-chatbots.
With the advent of new computing power, the spectrum of algorithmic processing not only occurs at the inception point of customer interaction, but it holds a host of new possibilities across the customer journey.
As in traditional AI, the customer benefits from an endpoint transaction that is assisted through AI.
Through advancements in combining algorithms something new and novel has occurred.
Artificial intelligence becomes augmented through the mixing and matching of AI across the customer journey through a platform experience versus only transactional.
This can only be made possible through not only thinking of the customer journey this way, but also by actively coding this way.
It is through the approach of the customer engagement platform that a new opportunity has developed.
As mentioned above, we are in a time when traditional AI has split into two spectrums.
Conventional versus augmented AI which powers the customer engagement journey simply known as CEP.
With the new combined AI-CEP model a revolutionary framework has evolved.
A pioneer of this new model is LinkLive, a company that has made advances in secure and engaging customer journeys for more than 600 financial institutions.
LinkLive fosters deep human connections with customers using AI-enhanced communication and collaboration features that connect employees and customers; nurturing repeatable forms of customer delight, rooted in unbroken connection.
On November 1 2022, LinkLive announced its strategic partnership with Kasisto, which has developed an AI platform known as KAI – Press Release.
KAI is built with the deepest conversational AI portfolio in the financial industry and is tightly integrated into the fintech ecosystem through partnerships with proven technology providers such as FIS, NCR, Q2 and others.
By combining with KAI’s financial industry-leading conversational AI and branded digital bankers, LinkLive continues innovating to create memorable customer experiences that engage financial customers and deliver a differentiated digital banking experience.
For example, the platform known as Kai from Kasisto has a proven track record in driving business growth and improving customer experiences.
The platform is engaging with millions of consumers around the world, all the time, across multiple channels, in different languages, and is optimized for performance, scalability, security, and compliance.
KAI is built with the deepest conversational AI portfolio in the financial industry and is tightly integrated into the fintech ecosystem through partnerships with proven technology providers such as FIS, NCR, Q2 and now the AI-CEP platform from LinkLive.
LinkLive fosters deep human connections with customers using AI-enhanced communication and collaboration features that connect employees and customers; nurturing repeatable forms of customer delight, rooted in unbroken connection.
By combining with KAI’s financial industry-leading conversational AI and branded digital bankers, LinkLive continues innovating to create memorable customer experiences that engage financial customers and deliver a differentiated digital banking experience.
From a ROI perspective, banks that use KAI experience a 4 fold increase in engagement with their financial institution.
One result of higher engagement is that financial institutions with conversational AI experience topline growth in a measurable and meaningful way.
Early adopters of this approach anticipate top line growth in the double digits. [5]
All told, these results have occurred from their initial conversational AI from Kai.
With the complementary addition of LinkLive, financial institutions are expected to achieve both additional asset and fee growth simply through enhancing the customer journey not only at the beginning of the process, but also through the entire experience known more specifically as the customer experience journey (CEP).
This combination approach of AI on top of CEP marks a new era in banking called enhanced AI-CEP.
What makes AI so critical for the future of financial institutions?
As mentioned above, the potential annual value of AI and analytics for global banking could reach as high as $1 trillion according to a McKinsey study.
In contrast, banks that fail to take action will not remain competitive.
According to Gartner, “80% of financial institutions will not remain competitive” amidst the dramatic switch to AI and will no longer be in business by 2030.
With these dramatic shifts ahead, by combining with KAI’s financial industry-leading conversational AI and branded digital bankers, LinkLive continues innovating to create memorable customer experiences that engage financial customers and deliver a differentiated digital banking experience.
What is enabling this shift?
In simple terms, many banks struggle with both upselling and cross-selling and upselling for one key reason: they aren’t able to deliver what their what’s needed to customers both when and how they need it.
The good news is that almost 89 percent of customers own at least a deposit account with a global retail and commercial bank, so they already have the customers in-house.
It’s simply a matter of creating baseline growth within their existing potentially switchable customer base by not only leveraging insights to provide current needs, but also anticipating future needs to sustain a loyal relationship.
With this said, banks can only dramatically increase their value added services and top line revenue through a robust customer engagement platform that harnesses advanced AI not only at the beginning of the customer journey, but also throughout the individual and holistic journey, anticipating customer needs, and leveraging insights to determine their interest and wants.
This matters now more than ever since a global bank loses up to 18% of its typical customer average balance simply with standard attrition^
A typical global bank loses approximately 18 percent of an average balance to customer attrition. The reason? Banks are failing to offer customers what they truly want: lower rates and fees and better customer service. In fact, 40 percent of customers say they are willing to switch if these issues are not addressed.2
The key to stemming attrition will be to personalize experiences, giving customers exactly what they want. Without them, banks face losing customers at even higher rates. (https://www.publicissapient.com/insights/anticipatory-banking)
Building the AI bank of the future will allow institutions to innovate faster, compete with digital natives in building deeper customer relationships at scale, and achieve sustainable increases in profits and valuations in this new age. (McKinsey
According to Insider Intelligence, North American banks could potentially save $70 billion by 2025 through implementing AI for middle-office task automation such as delivering personalized recommendations and enabling frictionless, 24/7 interactions.]
Financial institutions that are planning to not only survive, but thrive over the next 7 years must consider developing the right approach to investing in AI for their institution for topline growth and bottom line efficiencies. [6]
To learn more about AI, listen to Mark’s presentation to the top contact center managers at a recent industry conference in Las Vegas.
This article is written by Mark Gambale, Product Marketing Director at LinkLive and a former Gartner Analyst. Mark was responsible for researching the potential impact of SaaS to established industry players such as Microsoft, Apple, and IBM. It was during this time that Mark researched technology through the lens of a market futurist. Analysts are analogous with futurists whereby they investigate new technologies and how they will impact businesses and society as a whole. Mark not only measured the growth of new technologies, but forecasted how they would impact a multitude of industries.
While no futurist is guaranteed to be accurate, Mark honed his skills at predicting what would happen with new technologies across a three year horizon. It was his vantage point and expertise that helped Apple understand the development of plans for both hardware and SaaS models on the part of their competitors. Mark is not keenly interested in the impact of AAI-CEP which is recently known as augmented artificial intelligence that drives everlasting customer loyalty through the advanced framework known as a customer engagement platform.
