AI Is Changing the Customer Experience. Is Your Bank Ready?

The dramatic rise of AI signals a new era of digital banking. Today, digital banking is no longer defined solely by the customer services a bank offers, but rather by how the digital layer of a bank’s infrastructure shapes everything it does.

In the current landscape, AI is foundational. In fact, 86 percent of finserv AI adopters say that AI will be very or critically important to their business’s success in the next two years.

That’s why banks that want to stay relevant need to have an AI-first mindset that is centered on three things: 

- AI as a means of fundamentally changing the customer experience
- AI as an enabler of adaptive experiences
- AI as a foundational element of all banking services and relationships

Just as importantly, they need to know what to do to take advantage of this transformation. Here, I’ll get into both.

AI Is Redefining the Customer Experience

Today, a lot of AI conversations start from the premise that AI is an accessory:

- Can we build something that adds more content to the website?
- Can we make it easier to mass-produce marketing materials?
- Can we automate our customer service to make it a little more effective in answering the top five questions we get?

While these types of use cases will continue, the new era of digital banking presents a bigger question: How will the addition of AI automation to the full underlying application layer fundamentally change the business?

Those shifts start with profound changes to the customer experience, which will be shaped by three key underlying principles. 
 
1. The Customer Is Becoming More Self-Sufficient
Digitized services let customers bank from their living rooms. AI-first digital banking allows far more self-sufficiency. Automation can and will offer customers a clearer picture of their total wealth, better guidance on meeting savings goals, and more.

For banks, this means thinking more broadly about that relationship and taking a big-picture view of how AI can continue to shape the customer experience.

2. AI Makes Everything Smarter and Faster
From basic risk management to predictive decision-making, the entire experience of banking is fundamentally more intelligent with AI at its core.

AI should make the customer smarter, the bank smarter, or the relationship between the two smarter. That might mean helping fraud teams identify fraud before it happens, moving away from a reactive model. Or it might mean the ability to spot cross-sell opportunities for existing customers and households so that they can proactively be presented with financial choices that are relevant to them. 

It’s not about adding a new AI-powered tool or app – it’s about rethinking every aspect of the customer experience with the possibilities of AI in mind.

3. AI Enables More Adaptive Experiences
AI implementations today tend to be very query driven, which means the go-to move in almost every transformation project is simply to build a better, smarter chatbot-style tool. But the next iteration of digital banking will move beyond the limitations of simple Q&As to something that’s embedded contextually throughout the experience.

For example, the bank may notice that a customer has been making a lot of recent credit card purchases at home improvement stores. This could lead to a suggestion that the customer look into getting a home equity line of credit since they’re doing home repairs or upgrades while paying 20% interest on credit card purchases versus a 6% or 7% HELOC.

Instead of providing that response one time in a chat, however, the bank may start to weave it into a variety of everyday banking activities, such as ATM transactions to gradually educate the customer over time and also increase the odds of catching the customer in a receptive moment. 
This is the adaptability of the customer experience, which will continue to evolve as more interfaces and more areas to engage come into play.

Digital Transformation as a Foundational Element of the Bank

AI-first banking means banks can build deeper relationships faster. But only if they have the right tech setup on the back end.

The key here is to make sure the business goal drives the tech and not the other way around. To do that, I recommend the following approach.

Target a specific business domain. It’s hard to transform the entirety of the bank all at once. Starting smaller with a more isolated objective – maybe small-business lending or residential mortgage lending – allows the institution to approach that objective with an AI-first mindset, thinking how tech can help change the entire value stream of that part of the business.

Take small-business banking, for example.

You might ask questions like:
- How will AI alter the customer experience to make things smarter going forward?
- Which aspects of the relationship will become more driven by self-service?
- How can technology help us maximize the lifetime value of that client?

Help employees rethink how they work. AI will change not only the customer experience, but employee workloads as well. If AI eliminates some low-end tasks and frees up time for higher-value work, what does that look like in practice?

Figure out the right KPIs to use. Focus on metrics that continually evolve to reflect both efficiency and growth.

Find the right technology to support the transformation. A great idea will only go as far as the tech the bank uses to make it happen.

Digital Banking Has Evolved – Your Bank Needs to Do Likewise

The application of AI across businesses has reached a new level of maturity. The organizational model has shifted, with the small-scale experiments of the past giving way to a more systematic and transformational approach that infuses AI into everything.

This is where digital banking is headed. From the chatbots and apps that have defined AI in banking thus far, we’re moving toward a more scaled and foundational version of the technology that will change the overall dynamic of banking as we know it. 

The question is whether banks are ready to lean into that shift.

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