Blog > Leverage the Power of AI in Banking and Wealth Management
Millennials, Gen Y, Echo Boomers. Call them what you want, this customer segment is going to be the most potential target audience in the coming years and your strategies need to revolve around their buying behavior, preferences, needs, and nuances.
Why? Because by end of this decade, millennials will be the largest adult segment, aged between 18 to 34 years, they will enter their prime years with high earning capability.
– By 2020, the aggregated net worth of global millennials is predicted to double from US$19 trillion in 2015 to US$24 trillion.
– In developed countries, 54% have already started or planned to start their own business and 27% are already self-employed.
Source – ‘Millennials and Wealth Management. Trends and Challenges of the New Clientele’, Deloitte
With high earning capacity and more opportunities to be financially independent and successful, the digitally empowered customer segment may have the means, but they seek financial guidance and knowledge. This a huge opportunity for financial institutions (FIs) and banks to provide wealth management services and financial guidance. Especially with the use of AI banking technology, customer experience (CX) can be elevated to the next level.
Before delving into wealth management, it would be good to get an understanding of your potential customer segment, who they are, what they are, and what clicks and ticks for them. Ultimately, you need to know your market before you can speak their language. Want to know more? Check out this post to get a ‘Snapshot of a Digitally Empowered Banking Customer’.
What is the essence of wealth management? In plain and simple terms, it refers to sustaining and growing long-term wealth. It relates to personal banking and financial services, investment and portfolio management, basic money management services.
With the new age of the digitally empowered banking customer, AI banking technology such as conversational AI applications and omnichannel chatbots are popularly used to provide banking assistance and customer service.
Here are some pointers on how FIs, banks and wealth managers can align their strategies and services:
Sync with Customer Values to Instill Loyalty
Compared to the previous generations of Baby Boomers and Gen X, the Millennial customer segment demonstrate different behavior in terms of their personal values and how they value money.
Two-thirds of millennials are concerned about the state of world affairs and how they can bring about a change. This is further reflected in the choices they make, and the brands they prefer. An interesting fact is that millennials value those brands that are socially responsible. They expect their banking and financial providers to reflect the essence of their personal values which play an important factor in loyalty.
Provide Balanced Access to Modern and Traditional Communication Channels
50% of millennials are influenced by personal recommendations when making their buying decisions. However, 82% value face-to-face, personal interaction with investment advisors.
FIs and banks need to revamp their perception about their target audience in order to resonate to the needs of this new customer segment. While word-of-mouth recommendations are considered, a personal meeting could further strengthen the relationship between banker and customer. By utilizing AI banking technology, conversational AI banking chatbots are programmed to proactively assist customers with relevant personalization, giving relationship managers more time to customize offerings and provide personalized attention to each customer.
Satiate their Thirst for Financial Knowledge
While 72% of millennials claim to have direct control of their wealth, they still lack financial knowledge and are always looking for ways to educate themselves.
By understanding what financial information customers are looking for, FIs and banks can relevantly educate, guide and inform customers. Using the latest technology to disseminate information, FIs and banks can use digital channels which are most popularly preferred. Banking chatbots have assumed an important role in providing information to customers when they want, through the channel they prefer and as relevant as possible to their requirements.
“The Game is Afoot” – Adopt AI in Banking & Wealth Management
57% of millennials would shift their banking partners because of a better technology platform solution.
Millennials have embraced some of the latest technologies when interacting with their banking partners. From artificial intelligence chatbots to robo-advisors, FIs and banks must upgrade their technology platforms to leverage AI in banking and add value to banking and financial services.
Here is a snapshot of how wealth management has evolved using AI-powered technology:
• Manual – Human involvement
• Semi-automatic – Rule-based software technology with some human involvement
• Automatic – Machine or application capable of learning, analyzing and replicating human behavior
AI in banking is changing the ecosystem of how FIs and banks communicate, interact and build a connection with their customers. Wealth management companies that utilize the power of AI in banking processes can personalize customer dashboards, analyze and customize performance reports and provide portfolio decisions specifically designed around the customers’ requirements.
In this era of the digitally empowered banking customer, millennials are the primary target market. They want the power and control to be drivers of change, they want 24/7/365 availability of service, information, and assistance, and they want to be connected through channels and devices of their preference. What better way to give them what they want and need than to utilize the power of AI banking technology!
February 1, 2019