Is AI the Secret Sauce for Financial Marketing Solutions?

Among the more recent technologies, Artificial Intelligence (AI) could have the biggest impact on finance marketing.

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 five key problems, namely;

1. Commoditization

As the financial market grows, thanks mainly to digitization, so does competition. Today the competition is so high such 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.

2. 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, only 8% of respondents said they had faith in their financial institutions.

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 is not safe. The financial crisis of 2008 also seriously eroded the little trust consumers had in financial companies.

3. 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, including content publishing and social media posting automated. You’ll also likely find robotic machines working alongside humans to complete tasks faster and with fewer mistakes.

Unfortunately, finance has lagged in automation for several reasons, one of them being the delicate nature of the finance industry. 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 will ease most 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 consumer still prefer to pay in cash. What this means is that the process of approval for credit card loans is more important than ever.

Artificial intelligence provides for a faster, more accurate assessment of loan applicants – 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. Fraud detection and management

In finance, especially ACH and payment card data processing, the prevention of fraud is vital. Typically, payments linger in the ACH network for a bit of time awaiting clearance for the final banking destination, a situation that can attract unwanted attention.

AI-powered fraud detection systems can help take care of these time-lapses. These systems analyze client behavior, location, and buying habits – in real-time – and trigger a security mechanism if something about the transaction doesn’t feel right. AI also reduces (by 20%) the work required to prevent money laundering.

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 personalization. Chatbots, for example, provide clients with comprehensive self-help solutions while reducing the workload in call centers. Then, you have voice assistants such as Amazon’s Alexa allowing clients to check balances, schedule payments, and so forth.

Bottom Line

There are many other ways AI will impact the financial services sector. Each of these applications goes a long way in making financial companies more appealing and trustworthy while at the same time, guaranteeing better productivity and ROI.