European Banks Turn to AI for Hyper-Personalized Digital Banking

The same survey found that 47 percent of respondents said they would feel more satisfied if their bank improved the quality of digital services, and customers specifically called out personalized recommendations. The article cites the EVP and Industry Head of Financial Services and Public Sector at Infosys in its discussion of what customers want.

As banking has digitized, seamless transaction experiences have become the norm and are standardized across banks with little to differentiate them. Digital channels are efficient but impersonal. For most customers, they are a way to complete quick, functional tasks such as checking an account balance, which has gradually emotionally distanced consumers from their banks.

At the same time, consumers who are embracing digital banking are demanding more personal interactions. For instance, 59 percent of European consumers want financial recommendations tailored to their individual needs. Banks that fail to provide this will see customers walking away.

AI technologies are now enabling banks to meet these seemingly irreconcilable expectations. Where previous digital technologies allowed some personalization, mostly at the segment level, AI is driving hyper-personalization of digital banking experiences in real time and at scale.

Advanced analytics models analyze customer and transaction data to identify insights into individual needs, preferences and behaviors, and intelligent recommendation engines then suggest the most suitable products and services. In addition to tailoring products using traditional financial metrics, such as loans and investment plans customized according to risk profile and financial goals, AI can personalize banking based on an individual's data and activity outside the bank. The article cites the Buy Now Pay Later model as an example, in which ecommerce businesses allow customers to pay for purchases in instalments based on creditworthiness assessed using previous transaction history and other variables.

AI-powered tools can also detect cash flow patterns or spending anomalies to offer proactive guidance that helps customers manage their finances better. Generative AI-powered chatbots and virtual tellers can support customers at any time of day or night, conversing in natural language like a human relationship manager, to answer queries and even resolve complex issues. Customers can ask specific questions about their portfolios or financial goals, and generative AI will respond independently, or along with a human advisor, with targeted recommendations and guidance.

Generative AI's ability to converse in a highly personal, human-like manner is also transforming debt collection. Using natural language processing and machine learning, generative AI systems analyze borrower preferences and behaviors and then create personalized messages that improve both engagement and repayment. They also minimize confrontation by showing empathy and suggesting solutions that are more acceptable to customers.

In communication, bombarding people with generic messages is inefficient, ineffective and exposes a bank's lack of in-depth customer understanding, the article says. It also annoys consumers already flooded with spam and unsolicited calls. AI is changing this by helping banks craft highly relevant messages. Predictive tools identify which customers are likely to respond favorably to different types of messages, and generative AI creates personalized content and campaigns in the customers' chosen language or languages. Other AI solutions identify the right channel, format and time for sending the communication.

The gaming industry presents another frontier for banks seeking to engage younger, digitally native audiences with generative AI. With many gamers interacting in immersive virtual environments, banks can use generative AI to create hyper-personalized financial experiences aligned with gaming lifestyles and personas. For example, AI-driven insights can enable banks to offer micro-investment products based on in-game spending behavior and dynamic credit options.