Hyper-personalization and AI are key to the growth of financial services, study finds

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More than four in five senior executives at financial services companies say AI will be the main competitive driver of success over the next several years. In particular, financial institutions are turning to AI technology and differentiated data to drive “hyper-personalization” of services, according to the NTT Data survey.

In its survey of 480 financial institutions, NTT Data found that 83% of senior executives rely on AI to help them differentiate offers and win customers. In particular, institutions are turning to AI to create highly personalized experiences for customers.

The economic shutdowns of the last year have reinforced this trend. “Particularly in light of the COVID-19 pandemic, consumers are increasingly looking for digital finance solutions and applications that anticipate their needs and proactively offer financial advice,” the company says.

NTT Data also surveyed approximately 4,800 financial institution customers to learn more about their feelings about data sharing and user experiences. The company found that tech-savvy and younger people (35-44) “are eager to engage and share personal data with FIs if it can be used to tailor services to suit. their individual financial needs. to one, ”the company said.

These “futurists” represent 35% of the study group, against 65% of respondents that NTT Data described as “traditionalists”. The company has encouraged financial institutions to bet on AI to attract futurists.

Source: NTT Data Services

We are entering an era of “hyper-personalization” or “hyper-individualization” in financial services, according to Matt Provencher, senior vice president of financial services and insurance for NTT DATA Services, based in Plano, TX.

“Customers provide vivid testimony that they want banks to act as strategic advisers for their key spending decisions, according to recent data,” Provencher said in a press release. “Our research shows that AI is the way to deliver the hyper-individualized services that customers need. The data doesn’t lie – financial institutions need to double their reliance on AI to meet rapidly changing consumer demands, or risk giving their competitors the keys to poaching their customers.

So what kinds of AI-based services are futurists willing to pay for (through their data or through fees?) According to NTT Data Services, the data indicates that:

  • 53% of customers say they want proactive reminders of upcoming bills, like mortgage and auto loans;
  • 49% would like their financial institution to anticipate products that might interest them;
  • 47% would like their bank to “connect the dots between my income, expenses and savings”;
  • and 46% would not want the bank to act as a “conscientious advisor” on large spending decisions.
  • However, only 39% say they want their financial institution to “step in and prevent purchases” to help stay on budget.

While AI is firmly on the minds of executives of banks and other financial services companies, there remain significant barriers to achieving these AI goals. According to the survey, only 16% of financial institutions are currently using AI and data to deliver personalized services today. Twice that percentage (32%) use data, but do so with “broad personalization” or target a limited number of customer segments in a “one-to-many” fashion.

Several challenges stand in the way of achieving more with AI and data. More than half (55%) of NTT Data survey executives cite technology as a barrier to success, while 51% say the existing corporate culture prevents change. 43% say organizational and skill changes are a barrier to wider and better use of AI and data.

You can get a copy of the report here.

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