Personalization and AI in Banking: How Banks Can Tailor Services to Individuals

Personalization isn’t just a “nice to have.” It’s a significant driver of real business benefits. In banking, for example, a mature personalization program can boost both customer and employee satisfaction by 20%, conversions by 10-15% and revenue by up to 25%.

Armed with AI and data-driven insights, banks can make this happen – reaping the rewards of personalized financial products and services.

How Banks Can Tailor Services to Individual Customers

Banks have access to a lot of customer data. With the right tools and strategy, they can make use of it to tailor their products, services and communication in a number of effective ways.

Personalized Product and Service Recommendations

By analyzing customer data – transaction histories, preferences and behaviors – you can identify patterns, predict customer needs and provide personalized solutions and services.

• Customized investment advice

• Tailored loans

• Individualized financial planning

• Personalized recommendations, like relevant savings accounts and credit cards

You can also customize loan and credit terms based on individual customer profiles, with interest rates, repayment schedules or credit limits tailored to borrowers’ financial situations and needs.

Personalized Marketing Communications

AI can organize and distill customer data into actionable insights that enable you to personalize marketing messages – like targeted offers, promotions and information about relevant financial products and services. This data-led approach not only increases the effectiveness of marketing campaigns but also fosters a more meaningful connection between banks and customers. Personalized marketing communications lead to greater trust, deeper engagement, higher satisfaction and longer-term loyalty.

Account Customization

Allow customers to personalize their accounts with features like spending limits or real-time transaction alerts. This empowers customers to take greater control of their finances and even add a personalized layer of security to their accounts. You’ll improve customer experiences and inspire loyalty.

Mobile Banking Features

Offer on-the-go solutions through mobile apps, online platforms and digital wallets to keep customers informed and give them greater control over their banking experiences. Features like spending analysis, credit monitoring and budgeting tools empower customers and create additional points of engagement.

Customer Loyalty Programs

Advanced data analytics and AI models can help you analyze individuals’ spending patterns, preferences and behaviors to design personalized rewards and benefits programs. Tailored experiences enhance customer engagement and satisfaction, improving customer retention and loyalty.

Real-Time Customer Support with Chatbots

Almost three-fourths of customers prefer interacting with a chatbot to a human, and in 2025 chatbots are predicted to handle up to 90% of inquiries in the financial and healthcare sectors. They can offer 24/7 assistance, handle customer inquiries and resolve issues promptly, provide account information and facilitate basic transactions – all leading to increased customer satisfaction and lowered operational costs. Bots can also be trained to extract valuable insights from unstructured data, such as customer reviews and social media posts, offering a deeper understanding of customer sentiment and needs.

Enhanced Security and Fraud Detection

Banks can use AI and machine learning to search transactional data for anomalies that may indicate fraud. Advanced data analytics and AI models pull data from various sources, using customer behavior and location to identify suspicious activities. This enhanced security helps banks stay compliant with various regulatory bodies and laws, including Anti-Money Laundering legislation.

Strategies for Implementing Personalization

True personalization goes beyond using a customer’s name in marketing communications. It involves collecting and meticulously analyzing demographic and transactional data. There are a lot of ways to deliver more effective personalized customer experiences.

• Utilize advanced analytic tools and technologies like AI/ML.

• Gain insights into the customer’s preferred communication channels.

• Create interactive customer pathways with tailored landing pages and customized promotions and offers.

• Gather data from external sources through open banking initiatives.

• Continuously adapt strategies to address changing needs and trends.

Get Started with Personalization and AI with Material

By combining technology with a deep understanding of human behavior, banks can create a personalized, tailored experience for each customer. But choosing the right technology, and knowing how to make the most of it, can be tricky. You’ll need a partner adept at building strategies based on data, behavioral science and customer needs – and expert at employing machine learning and AI in banking.

Material is that kind of partner. We can help you deliver personalization, create engagement, build loyalty and drive revenue. Reach out today and let’s start the conversation.