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Insight Financial Marketing recently presented a webinar called: Outlook for the Future: Bank Strategy During COVID-19 and Beyond.

We discussed the rapid changes to the economy as well as the impact on the financial situation of consumers and businesses. Now more than ever, financial institutions must have a deep understanding of the financial needs of their consumer and business customers. If your FI has not adopted a strategy to leverage intelligence from your bank’s data to help identify customer behavior trends, it will be more difficult to keep and retain customers because of their rapidly changing needs.

The New York Times recently reported a graphic showing how states are at different stages of reopening across the country. Some are open as normal, some are reopening, some having paused their reopening, and some have reversed and are imposing new social distancing and business closings. The graphic shows how states have proceeded with balancing the spread of COVID-19 by reopening their economies. Even within the footprint of your financial institution, your customers’ financial situation may vary depending on where they live and work.

We also shared insights on how investors have reacted to COVID-19 and economic uncertainty.

Two points here:

    1. Investors have rewarded technology firms as consumers and businesses have shifted their digital behavior.
    2. Retail investors are much more active in the markets due to technology applications that have facilitated free stock trading (driven primarily by the growth of fintech firm Robinhood).

The spending behavior of consumers has been shifting as well. The top earners have dramatically reduced spending while the lowest earners have remained the same. We discussed how the CARES Act has led to a rise in deposits, especially for the largest banks in the country.   In addition, most financial institutions have seen a more modest rise in deposit balances compared to the top 5 largest banks in the US.   The combination of reduced spending by high-income earners, and the influx of stimulus and COVID relief payments from the government will not continue for long. We believe that deposit retention and growth will continue to be important in the years ahead, especially in a low rate environment.

If you are interested in viewing the 30-minute webinar, please let us know. We will gladly provide a link to view the recording.  In the meantime, check out our latest vlog for a snapshot of the webinar content.

 

 

Insight Financial Marketing is an industry leader in helping financial institutions leverage customer insights, detect behavioral changes, and adopt a strategy to better serve the rapidly changing financial needs of its consumer and business customers. To learn more about utilizing our Intelligentsia™ technology please visit our website.

Among the more recent technologies, Artificial Intelligence (AI) could have the most significant impact on the financial services industry.

First discovered about 70 years ago, AI has transformed many industries already. From supply chain to retail and travel to education, AI has completely changed how work is done in these industries. The technology is predicted to have a similar impact on finance.

Common Challenges in Finance Marketing

Although financial service providers face many marketing challenges, most providers struggle with three fundamental problems, namely:

Commoditization

As the financial services market grows (thanks mainly to digitization), so does competition. Today the competition is so high that many financial services providers find themselves offering the same products.

Commoditization is a situation where the products and services offered by multiple market players are pretty much the same. When this happens, products from competing players can become interchangeable. As a result, consumers feel that they can move between service providers without losing value. Where there’s high commoditization, it’s very easy to lose customers no matter the quality of your branding.

Lack of Consumer Trust

For a long time now, financial service providers have complained about the lack of trust among clients. In a 2016 survey by the National Association of Retirement Plan Participants, for instance, over 90% of respondents said they did not have faith in their financial services providers.

Again, the chief contributor to the increased distrust is technology. After witnessing so many cyber-attacks and data breaches in the last few years, the majority of consumers feel that their data and money are not safe. The financial crisis of 2008 also seriously eroded the little trust consumers had in financial companies.

Automation

In most of the industries where technology is revolutionizing work, automation is one of the major highlights. In these industries, you’ll find many tasks being automated. You’ll also likely find robotic machines working alongside humans to complete tasks faster and with fewer mistakes.

Unfortunately, the finance industry has lagged in automation for several reasons, one of them being the delicate nature of the landscape. In finance, even one small mistake can have grave and far-reaching consequences. Compliance and regulations also make automation a big headache, often forcing providers to stick to traditional, familiar methods.

How AI Solves the Perennial Challenges

Although it’s impossible to solve all the challenges in finance completely, experts predict that Artificial Intelligence can ease many of the problems. Here’s how;

1 – Smarter Credit Decisions

More than three-quarters of consumers prefer to pay via credit and debit cards. Indeed, only 12% of today’s consumers still prefer to pay in cash. What this means is that the credit card segment is more important to financial institutions than ever.

Artificial intelligence provides for a faster, more accurate assessment of loan candidates – at a lower cost. Better still, AI-powered credit assessment solutions account for a wider variety of factors, leading to better-informed, data-backed decisions.

2 – Risk Management

In financial services markets, risk can be deadly if not given proper attention. Accurate predictions are critical to the protection of businesses.

AI will play a starring role in risk management going forward. Using superfast computers and AI solutions, providers can handle vast amounts of data in a short time. Cognitive computing (a branch of AI) helps to manage both structured and unstructured data, making it possible to catch potential issues early.

3 – Analysis of Customer Behavior

In the financial services industry, institutions find it difficult to develop the same deep relationships with customers that may exist with companies in other industries. Through transactional and behavioral analysis, artificial intelligence is empowering the finance industry with the ability to analyze money movement at scale so F.I’s can anticipate the future financial needs of an individual customer. Service providers such as IFM can work with banks to foster the development of A.I. solutions via IFM’s cutting edge technology that cleans and categorizes bank customer electronic financial transactions in near real-time. IFM’s data analytics service enables financial services firms to offer timely products and services to their clients and strengthens the relationship between a customer and the F.I. With IFM’s capabilities, a financial services firm can analyze client behavior and money movement – in near real-time – and can also trigger security mechanisms if patterns of transaction activity seem unusual.

4 – Personalized Banking

Personalization is the new way to market – even in finance. In multiple studies, consumers have made it clear that they are more likely to buy if the experience is personalized. In one study, for instance, 44% of respondents said they are likely to become repeat customers if a brand offers customized services.

AI currently offers some of the best solutions for personalizing the marketing of financial solutions based on consumer behavior and transactional analysis.

Bottom Line

Financial Services firms are faced with three common marketing challenges: Commoditization of products and services, lack of consumer trust, and the ability to automate solutions. Artificial Intelligence will help to solve these perennial challenges by providing an opportunity for smarter credit decisions, improved risk management, and a more in-depth analysis of customer behavior to provide a more personalized banking experience.

What strategy should your institution move forward with to solve these marketing challenges? Data Science experts believe that the key to developing A.I. solutions that guarantee better productivity and ROI rests on access to clean and categorized transaction data that can be utilized to power A.I. related solutions.

Reach out to our team at Insight Financial Marketing today to learn how IFM’s Intelligentsia™ service could have a positive impact on your institution’s ability to market the financial solutions of the future.