Financial Institutions Can Put Artificial Intelligence to Much Better Use

I’ll start with a potentially controversial statement. Banks are misallocating their investment in artificial intelligence and predictive analytics by putting it into consumer-facing chatbots, rather than using it internally to empower their staff to understand and better serve the customer.

I’ll start with a potentially controversial statement. Banks are misallocating their investment in artificial intelligence and predictive analytics by putting it into consumer-facing chatbots, rather than using it internally to empower their staff to understand and better serve the customer.

Most customers don’t like speaking with bots and usually call their bank when they have an issue that requires processing that’s beyond what artificial intelligence can currently offer. In fact, AI’s reputation has been damaged virtually beyond recovery by the endless loop most customers encounter when they call the bank, not able to get to where they want to go.

Moreover, you don’t see pictures of chatbots pinned up in banks with “Employee of the Month” emblazoned across the bottom. Nor was any new business won on the strength of a chatbot’s performance. Finally, customers don’t stay with banks because they developed a great working relationship with a chatbot. Truth of the matter, chat hasn’t reached the level where it’s consistently reliable for addressing the customer concerns that rise to the level of making a call to a financial institution.

All that said, artificial intelligence is a highly powerful tool. How it’s being used is simply being misallocated. So the question becomes, is there a way banks can use it to enhance human engagement with clients? The answer is, “Yes.” Although banks and other financial institutions are in a completely different line of business than, say, a luxury retailer or car dealership, what they have in common is that critical need to engage customers at various points in a given transaction. This applies to banks and other financial institutions at least as much as it applies to other businesses. Reaching out to, connecting with and maintaining relationships with customers, and doing it well, is a key consideration. Done well, banks have a better chance of securing a higher lifetime value from their clients when they get it right. And it’s much harder for bankers or advisers to know about the hundreds of products that are available to them; far more so than, say, a car salesman at a dealership, or an associate in the dress department at Saks. AI’s best use is providing them — the customer-facing bank advisers — with the tools to have the right information for the right client, so they can spend more time on the customer relationship.

There are ways in which the power of predictive analytics can be brought to bear immediately, creating a more substantial and recognizable benefit for both financial services providers and their customers. A knowledge-driven approach to cross-selling and upselling is one such strategy.

There’s a vast range of training, tools and processes that can positively influence engagement efforts. But predictive analytics can push these initiatives into a much higher gear, providing a uniquely powerful impact when it comes to solidifying those all-important bonds with customers. Through better analysis and use of data that’s already available to most financial institutions in petabytes, it’s possible to learn more about customers, and consequently offer them more relevant service, support and product options. The right, internal approach to applying predictive analytics, therefore, results in benefits for both customers and the financial services providers they work with — a true win-win situation.

Historically, banks — especially large ones — tend to lean more toward conservative, careful approaches to new strategies and technology than quick movement and adoption. Given the mound of compliance mandates that govern their every engagement, this is understandable. But it but can be a significant drawback. This is where predictive analytics can sharpen their game. Many institutions have demonstrated a resistance to adopting this specific tool, or have used it in a very limited way. But they’re missing out on the benefits. And understanding the inherent pitfalls in predictive analytics is key to achieving success in deploying it.

How Financial Institutions Can Effectively Deploy Predictive Analytics

It’s a given that cross-selling and upselling help create more lifetime value from customers. But finding strong connections between products and clients is still a complicated process; particularly when you have to juggle moving parts, such as customer credit scores, income, credit utilization, and the like. Figuring out what products you can sell to whom, and predicting what those outcomes will be, constitutes a successful cross-sell. When done correctly and ethically, cross-selling can ultimately strengthen the customer relationship into a lifetime value — read, profitability — for the bank. This is because they’re able to match a product that was needed with a demand that they’ve identified.

It’s 20/20 hindsight, but we all know about the debacle of Wells Fargo’s unethical cross-selling and upselling, and how much trouble it got into as a result. With upselling, predictive analytics can really make a difference in the campaign to upsell. And unlike the Wells Fargo situation, this approach is sustainable. Looking through vast amounts of consumer data can help banks to understand how relationships have historically evolved between the bank and its consumer over time. On the consumer side, the spotlight is on how their data is being used. Only by robust analysis of customer behavior — ideally where multiple products are being offered — can banks regain their customers’ trust that their data is being used to benefit them.

Predictive analytics platforms can conduct this type of analysis, leaning on demographic information, as well as purchasing and financial data that institutions already have from past customer activity. All in real-time. Such an analysis would be prohibitive in terms of time, were trained experts to do the crunching. The predictive analytics tool can then offer sharply defined, personalized, relevant recommendations for staff members to share, while they continue to provide the critical human element in the cross-selling and upselling processes.

Where does this data come from? The sheer volume of payments data that banks gather, whether credit card, utilities, rent or many more — can inform what financial product the customer might be looking for and can afford, creating a sharper, more relevant offering. And that’s where artificial intelligence and predictive analytics can play a role that helps bankers sharpen their game and engage more successfully with their customers, without throwing them on the mercy of the bots. Incidentally, it also proves the notion that artificial intelligence is less about displacing humans and more about helping them perform higher-value work.

Securing profitable customers — back to the lifetime value concept — is job No. 1 for banks, whether small or large. Successfully cross-selling — truly matching a product with an identified need — goes a long way to strengthen that customer relationship. The current financial services landscape is ripe for improvement through the use of predictive analytics. Many institutions are already using advanced analytics, tied to marketing and basic interactions — but few have developed strong processes that focus on understanding customer habits and preferences. From there, they can use predictive tools to become more relevant, valuable — and humanly available — to their clients. The institutions that manage to do so will have an advantage in building stronger, longer-lasting relationships and will enjoy the increased value that comes from them.

With thanks to Carol Sabransky, SVP of Business Development, AArete, who made substantial and insightful contributions to this article.

Wells Fargo Fiasco: The Downside of Upselling

If the recent Wells Fargo fiasco is any indication, the sales and marketing culture at Wells Fargo (and many other financial institutions) should be taking an abrupt left turn — and none too soon. As a long-standing Wells Fargo customer, here are a few ways they can ensure my continued loyalty:

wells fargo upsellIf the recent Wells Fargo fiasco is any indication, the sales and marketing culture at Wells Fargo (and many other financial institutions) should be taking an abrupt left turn — and none too soon.

Early in my career, I was working for a large financial services company and we would have long strategic planning sessions on how we might be able to generate new accounts through in-branch and direct mail upsell and cross-sell techniques. Applied for a home loan? Since the bank ran a lengthy credit check, why not offer a credit card to help furnish that new abode? Carried a higher balance in a non-interest bearing checking account? Push the customer to add a savings or money market account to their portfolio.

The ideas were endless, and we were all measured by our success rate: the number of net new accounts each month. Luckily, no one ever pressured me (or anyone I knew) into doing anything even remotely close to the fraudulent behavior Wells Fargo is accused of perpetrating.

But that said, why did Wells take a simple cross-sell / upsell concept, “you want fries with that?” and turn it into a high-pressure sales mandate? Aside from the obvious greed-based factor, Wells forgot some of the loyalty basics I learned many moons ago.

As a long-standing Wells Fargo customer, here are a few ways they can ensure my continued loyalty:

1. Treat me with respect, concern and understanding, and I’ll be loyal for life: You don’t need me to own eight products in order to remain loyal. If you have my checking account and I make regular electronic deposits of my paycheck, you’re my primary bank. If you can help me with anything, it’s figuring out why the ATM will NOT take the 10 checks I try to deposit collectively after carefully ensuring they are all lined up together EXACTLY as the instructions indicate, but spit them back every single time.

2. Play fair: When I call occasionally with a complaint, stop and really listen. Show some empathy and be willing (and ensure your front line is enabled) to waive a fee here and there in order to make amends. Sometimes it is actually YOUR mistake, and if it’s not, show me you understand that we all make mistakes now and again and waive the fee anyway.

3. Be helpful. Truly helpful: If I want you to “review my accounts,” I’ll ask. Don’t offer every time I step into the branch or try to make a large deposit. It does feel intrusive that you know my balances or if I’m overdrawn while I stand in front of you like a dope.

4. Give me online security questions that I can actually recall the answers to: First pet’s name? Well, I owned a dog and a cat and who’s to say which one I was thinking of at the time I filled out the form. Where I was born? You mean the city? Or the city and county (since I was not born in the US, perhaps, you could be more specific with the question)? Mother’s maiden name? (While this was not a challenge for me, a colleague noted that she was adopted and couldn’t remember if she supplied her birth mother’s maiden name or her adopted mother’s maiden name … yes, really). And yes, I have been locked out of my account for not knowing a few of these off the top of my head.

And one more thing — can you pay a little higher interest rate on my funds in your care? I think you’d have a bit more to give if you didn’t give one of your most senior employees a $124 million payout.

Daymond John on Marketing – The Complete Interview and Audio

A couple magazine issues ago, I interviewed “Shark Tank” star Daymond John for our cover story “The Shark on Marketing.” That story included excerpts from our interview, but there were a lot of things we didn’t have room to fit in the magazine. Now you can read — and listen! — to the complete interview.

Daymond John on Marketing - The Complete Interview
You can hear the whole conversation between Thorin and Daymond John by downloading the whitepaper.

A couple magazine issues ago, I interviewed “Shark Tank” star Daymond John for our cover story “The Shark on Marketing.” That story included excerpts from our interview, but there were a lot of things we didn’t have room to fit in the magazine.

Now you can read — and listen! — to the complete interview in one handy PDF that you can download right here. (The audio is embedded in the file, so it’s about 20 megs.)

What takeaways didn’t make the cover story? For starters, here are some things John sees marketers getting wrong and right in their marketing.:

Thorin: When you see a company that’s getting its marketing wrong, how do you most often see them going wrong with that?

Daymond: When I see companies doing their marketing wrong, I see that they are not upselling and they don’t have a good CRM system and/or a way to really, really engage a current customer and keep upselling them in a way that it’s beneficial for both parties, them and the customer. Not offering them incentives to loop other people in and benefit all of them.

That’s the basic one. I see the fact that they’re saying, “Well, we know that our customer acquisition cost is $7,” or whatever the case is. Unless you go look at new pockets to find people instead of really, really trying to find a way to increase the offering to the current customer, that’s one of the things.

The other thing is, as I shared with you, they don’t create a lifestyle or a following. They just, as I said, [it’s like they’re doing a TV show and] 27 minutes is commercials and three minutes is information. So they don’t give the customer anything to take and learn and use in their life for their own benefit, not for the brand’s benefit.

Thorin: Other than doing those things correctly, is there anything else that you really notice when a marketer is doing it right?

Daymond: Yeah. You know what I’ve learned? When I see the guys that I know that I respect do it right, they start off the relationship with somebody from a transaction standpoint.

[Rather than saying] “Let me give you something free, free, free, free, free, and then hook you on something,” they generally have started off with the hook. “Let’s have a transaction now, and we will continue after this to always provide stuff for you free.” But at any given time, you were converted from transaction one. Now we’re going to give you a lot of stuff that’s going to improve your life, but we know anytime we have something to sell you, you believe in us already because the relationship was based off of a transaction.

I generally see that working more than the one before where it’s, “Try this for 30 days, try this, try that, try this, and then if you want more …” It just seems to be a little bit more successful at this point.

In a couple weeks, I’ll post about what John looks for when hiring marketers. But you don’t have to wait! Click on that link and you can read and listen to it all today.

It felt like a great interview to be a part of, and I think you’ll benefit from reading or hearing the whole thing.