FSI Personalization 2.0: How GenAI Is Revolutionizing Customer Experiences
- By Winston Thomas
- November 24, 2023
The financial services industry (FSI) is at an inflection point.
Customers increasingly expect hyper-personalized experiences from their banks and insurers. Yet legacy systems and siloed data make it difficult for most companies to deliver relevant, timely interactions at scale.
Enter generative AI (GenAI). “GenAI has the potential to revolutionize financial services,” says Clement Quek, digital strategist for Asia Pacific at Adobe. “But there's a lot of noise and hype about AI nowadays. The real challenge is to identify useful applications that provide actual benefits to companies and customers. We need to move past the hype and find cases where AI can help solve problems for businesses and the people they serve.”
Quek notes that FSIs can apply GenAI-powered personalization to a wide range of personalization use cases, from targeted marketing campaigns to customized product recommendations.
More importantly, it can help FSIs close the technological gap when translating the high-touch, personalized service once delivered in physical bank branches to digital channels.
Science of getting personal
AI is nothing new for FSIs. Banks and insurers have used AI for years to detect fraud, analyze risk, and chat with customers online.
However, the role of FSIs is quickly shifting. Quek explains how they have progressed from transaction facilitators to financial enablers and advisors. Customers now see FSIs as partners in supporting their lifelong financial health.
Research from Forrester found that half of consumers wished their bank was more proactive about advising them, and more than half (52%) wanted their financial provider to alert them to issues that might impact their financial health.
Banks must scale personalization to play this role effectively—a significant challenge for most. "Historically, personalization initiatives were sporadic, focused on individual use cases, and often spearheaded by individual departments or IT teams, leading to fragmented and disconnected experiences," says Quek.
This has led many FSIs to keep to the tried and proven route of using basic or segment-level personalization techniques. While Quek notes that some FSIs "looked at 1:1 or microsegment-based strategies that allow for nuanced, targeted interactions," the transition has not been easy or quick.
According to a joint Adobe-Incisiv report, a significant portion (73%) of the industry has adopted some degree of personalization, demonstrating a broad understanding of its importance. Slightly less than a third (27%) deliver personalization at a segment level, indicating that many have progressed beyond essential personalization. Yet advanced personalization techniques, such as microsegment-based and one-to-one approaches, are less common, with 22% and 12% adoption rates, respectively.
GenAI gives an alternative route
The rise of large language models like ChatGPT has thrust GenAI and its role in rapid personalization at scale into the spotlight.
By simulating or utilizing real customer data to generate human-like text, images, audio, video, and more to improve satisfaction, boost engagement and increase conversion rate—a key reason why an eMarketer study felt that FSIs will be better off with it.
It’s not just customer experience that will gain. On the employee front, Accenture research predicted that 90% of all working hours in the banking industry could be impacted by large language models (LLMs). It also forecasted that by 2028, the industry will see 30% employee productivity gains across the front office through back-office operations.
So, how should FSIs chart a course toward GenAI-driven personalization? Quek advises starting with "low-hanging fruit" use cases and building up from there. For example, FSIs can deploy chatbots enhanced by natural language processing to boost customer service efficiency.
Behind the scenes, GenAI can help FSIs derive more value from data. Transactional data is abundant in FSI environments, but turning it into actionable insights is where the real challenge lies. As Quek explains, AI can be a "copilot to marketers”—surfacing microsegmentation ideas and guiding better targeting.
Looking ahead, Quek sees creatives directly leveraging AI to augment their work: "Content creation has also improved a lot with this type of use case." Tools like Adobe Firefly allow marketers to generate images and videos optimized for different audiences and channels instantly.
Overcoming the data hangover
Of course, thoughtfully structuring data access across the organization is critical for GenAI's success. While there is no one-size-fits-all model, they face two immediate challenges such as:
Siloes: GenAI is often siloed on separate architecture from existing systems and owned by specific data science teams rather than integrated into marketing workflows. This makes it a "black box" for FSI marketers. To be effective, FSIs need to speed up their efforts to eliminate siloes and drive data sharing. As McKinsey puts it, creating a more centralized data “brain” eliminates silos, improves access to data, and develops a more collaborative culture.
Data quality: According to the Adobe 2023 Digital Trends Financial Services report, more than double the number of FSIs are being hindered by poor quality data this year compared to last: 46% versus 21%. Key factors include new channel experimentation, over-stretched resources, poor deployment of new technologies and the ability for users to opt out of app tracking.
Quek calls for a strong data foundation, which is critical. "FSIs must invest in creating a robust data infrastructure that effectively integrates siloed data from multiple touchpoints," he explains.
This unified customer view is a vital prerequisite for implementing successful personalization strategies. Otherwise, it creates trust deficits, amplified when GenAI workloads run on separate systems with privacy and ethical controls often an afterthought.
Re-balancing the personalization equation
A careful approach toward GenAI is wise in a highly regulated industry where trust is paramount. Regulators support AI innovation but remain cautious about potential misuse, comprising security and privacy.
As a result, Quek asks FSIs to find the right balance between rich personalization and appropriate use of customer data, avoiding practices that come off as "creepy." Meaningful, delightful experiences boost engagement; anything that makes customers uncomfortable can quickly erode trust.
Technology alone is not enough for personalization success either. As GenAI propels banks and insurers to new heights of hyper-personalization, they must be thoughtful stewards, putting people first.
Partners like Adobe can provide the platforms and guidance needed to unleash GenAI's potential while respecting consumer interests. Done right, GenAI can transform the way FSIs do personalization. Done recklessly, it risks jeopardizing the industry's most precious asset—trust.
"If a bank uses AI to enhance the customer experience, I think that is something many consumers favor. But it's only when the bank starts abusing this technology that the trust is broken," says Quek.
Winston Thomas is the editor-in-chief of CDOTrends. He's a singularity believer, a blockchain enthusiast, and believes we already live in a metaverse. You can reach him at [email protected].
Image credit: iStockphoto/Natali_Mis