Open banking is transforming how banks operate, by enabling the seamless and secure transfer of financial data between banks, financial institutions, fintechs and other third-party providers. And most banks recognize that open banking is more than providing access to data–it’s powering innovation, creating better experiences for customers and, ultimately, driving revenue.
But while banks are clear on its benefits, 75% say they aren’t yet ready for open banking.
Between growing consumer expectations for hyper-personalization and new and emerging open banking regulations, like the CFPB’s Personal Financial Data Rights soon-to-be-finalized rule, banks are feeling the pressure to prepare. And, according to Sopra Steria and Sopra Banking Software (SBS)’s Digital Banking Experience (DBX) Report, they’re leaning into AI to fill the gaps.
For our third annual DBX Report, we spoke to more than 850 senior decision makers at global banks and over 11,000 global bank customers to uncover the driving forces behind banks’ AI ambitions.
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As banks look to deploy generative AI across the enterprise, here are three areas where we’ll see the most significant impact:
- Empower new collaborations between banks and fintechs.
The move towards open banking means the entire financial ecosystem has access to more data—but data is only as valuable as the insights it provides and the actions it powers. The data sharing capabilities created by open banking makes it easier for banks and financial institutions to collaborate with fintechs and create new financial products and experiences for customers based on data.
A majority of banks–74% of global banks and 66% of U.S. banks–see this kind of collaboration as “crucial” to their futures.
The collaborations with fintechs and other third-party providers offer banks and financial institutions access to AI and other innovative technology that they would otherwise have to build in-house or invest in. This allows banks to introduce new offerings and accelerate their time to market, while still providing customers the secure and compliant experience they expect.
By each focusing on what they’re good at, banks and fintechs can work together to provide the banking experiences that meet customers’ evolving demands. And it’s beneficial for both parties. Banks can introduce new digital offerings and strengthen the experiences of current experiences to continue to build on the trust they have with their customers. Fintechs, on the other hand, can continue to innovate, with the backing of banks’ services and infrastructure to be in compliance with existing and future regulations.
- Introduce a new frontier for personalization.
Banks have a very high reserve of trust from consumers, but they’ve grown to expect more from banks. Consumers are offered hyper-personalized experiences in everything else they do–from Netflix recommending television shows and movies to Spotify personalizing playlists at specific times of the day–and they want their banking experiences to be no different.
Consumers want convenient, hyper-personalized advice from banks to help them manage their finances, but 40% say they haven’t received it. As consumers face big changes in their life like graduating college, getting married or even loved ones passing away, they are looking to banks to make relevant recommendations. But right now, only 27% of consumers believe that their bank offers them services suited to their personal financial situations.
Banks must consider these needs as they undergo digital transformation initiatives to introduce new experiences, boost customer satisfaction and increase retail banking revenue. If they’re not successful, it can cause customers to walk away completely. Nineteen percent (19%) of customers say that the level of personalization a bank provides can cause them to change banks altogether.
With open banking enabling access to data, banks can better understand a holistic picture of their consumers’ financials by aggregating data across different applications and providers. Using AI, banks can use this data to make more personalized financial recommendations to consumers. This can span from recommending specific financial products to offering personal financial insights for individual consumers, such as how much money they should save each month to achieve a financial goal based on their monthly income and expenses.
Historically, these services were limited by how much information each institution had about the customer. Now, new open banking regulations and the rise of AI-powered insights will help banks exceed customer personalization expectations to maintain their market share and drive sustained growth.
- Offer reliable service to customers, whenever they need it.
Over the years, banks have sought ways to offer the most comprehensive customer service without overextending their resources. Now, banks can harness AI to offer their customers more options for 24/7 support, 365 days a year.
For example, AI chatbots can not only provide support for customers at any time of the day, but offer them personalized advice based on their specific financial scenario. In the U.S., nearly two-thirds (62%) of U.S. banks say that AI will have the most significant impact on customer service, and 64% of banks are looking to expand their investment in AI-powered chatbots.
Once a bank creates and trains a chatbot, it can run autonomously with little day-to-day human interaction. Autonomous chatbots can service multiple people simultaneously, which means that customers don’t have to wait in a queue for a call center staffer to answer the call. Chatbots also allow an always-on option for customers who want to avoid calling their bank or going into a branch to access service.
Now is the time for banks to harness AI technology across their enterprise to increase efficiency and their bottom line while meeting customers’ needs. With open banking opening so many new doors for banks, we’ll see them increasingly looking to AI to innovate products and services and deliver the most personalized experiences to customers.
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