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Is AI the Key to Unlocking a Superior Customer Experience?

The financial services industry stands on the brink of a new frontier — one where AI and innovation will reshape not only the way businesses operate but also the customer experience itself

In the rapidly evolving financial services sector, digital transformation is no longer just a trend—it is a necessity. As industries from banking to wealth management undergo significant disruption, the integration of Artificial Intelligence (AI) is becoming the driving force behind enhanced customer experiences. AI's transformative impact on customer interactions, operational efficiency, and hyper-personalisation is reshaping the business landscape, creating unparalleled opportunities for companies that embrace innovation. A similar discussion was recently highlighted at the Global Fintech Fest (GFF), an annual fintech conference organised by the Payments Council of India (PCI), the National Payments Corporation of India (NPCI), and the Fintech Convergence Council (FCC), that took place in Mumbai, India from August 28-30.

The Power of AI in Financial Services

"Today’s customers expect more than mere convenience; they seek highly personalised experiences tailored to their unique needs," explained Sunil Pandita, Vice President of Sales (India and South Asia) at Newgen Software during the conference. "Most interactions today, especially in industries like banking and financial services where we play a larger role, have become digital. Whether it's asset-side or liability-side products, we see increasing digital adoption, even in areas like commercial lending, which are traditionally more complex. As such, the true differentiation between industry players will come from innovation, and AI will be at the forefront of this transformation with customers now demanding hyper-personalised experiences,” he said.

AI is no longer a novelty; it has become a key differentiator in the customer journey. From onboarding to credit decision-making, AI enables financial institutions to offer personalised services that cater to a diverse demographic.

"AI acts as a key differentiator throughout the customer journey, from onboarding and product selection to credit decision-making," Pandita continues.

"Ethical AI plays an integral role in these processes. With numerous APIs available today, AI is central to enabling credit for a highly diverse demographic."

Hyper-Personalisation at Scale

With AI’s ability to analyse vast amounts of behavioral and transactional data, financial services providers can deliver targeted services that anticipate customer needs. This hyper-personalization is critical in not just acquiring new customers but also retaining them in a competitive market.

"Customer retention and managing churn rates are critical, especially in industries where churn is a major issue," Pandita notes.

"With behavioral and transactional data, we aim to enhance the entire customer lifecycle — from product issuance to disbursement and customer service, where AI is becoming increasingly important."

Anuj Bajpai, Co-Founder and CEO of Liquide, echoes this sentiment, emphasizing AI's profound impact on wealth management.

"Today, we can understand customers in greater depth — potentially even better than a human could. Take wealth, for example: traditionally, the wealth management industry has been defined by the amount of money you have. An high net-worth individual (HNWI) wealth advisor operates differently from one managing affluent clients. But now, we have a single layer, a unified engine that can tailor its behaviour to suit each investor and user."

Thomas Schickler, Chief Revenue Officer at Zafin, further expands on this, stating: "Many of you may already be aware that the AI revolution we’re witnessing right now is just the beginning. The next phase, which is right around the corner, is poised to be even more transformative. While AI started in the cloud, it’s rapidly moving to edge devices, meaning we’ll soon experience large language models (LLMs) and generative AI running directly on our phones, even without cloud connectivity. If the advancements in AI so far have been groundbreaking, just imagine the impact when we no longer rely on terabytes of data stored in distant servers. Instead, small language models (SLMs) will be embedded in our everyday devices, leading to profound benefits — particularly for privacy and personalisation.”

AI’s ability to offer individualized financial advice is a game-changer for both high-net-worth individuals and everyday investors.

Bajpai highlights: "For the first time in our country’s history, we are able to address two key complexities, particularly in wealth tech — significant wealth disparity and language complexity in India. AI is addressing both of these challenges in a profound way, with widespread effects across all functions."

Enhancing Customer Service, Financial Risk Management

The role of AI is not limited to personalisation. It is also transforming customer service and financial risk management. AI-powered chatbots and virtual assistants have become essential tools in customer service, making interactions more efficient and contextual.

Pandita points out, "AI helps maximize revenue through cross-selling, up-selling, and improving customer retention. It enhances customer service capabilities through advanced tools like chatbots and virtual assistants, making interactions more contextual. Additionally, Generative AI further enhances this by making customer interactions even more conversational."

AI also plays a crucial role in managing financial risk, ensuring that financial institutions can provide credit services to a wide range of customers while maintaining regulatory compliance. In this evolving landscape, the ability to manage risk efficiently and predict customer needs is essential for staying competitive.

Privacy and Personalisation: Can They Coexist?

While AI's potential for personalisation is immense, it raises important questions about data privacy. As financial institutions gather more personal data, concerns about how this data is handled are growing. Schickler believes that edge AI offers a solution to this conflict between privacy and personalisation.

"What we currently see is that personalisation and privacy are often seen as conflicting, but edge AI is changing that narrative."

Edge AI allows personal data to be processed directly on the device, ensuring that sensitive information doesn’t need to be transferred to external systems.

"One of the remarkable things about edge AI is its ability to process relevant personal data directly on the device, without the need to transfer that information to the cloud. This means we can maintain privacy while still offering personalised services. In fact, for the first time, personalization and privacy can coexist," Schickler explains.

This approach enables financial institutions to offer highly personalised services while ensuring that customer data remains secure. "In essence, my phone can analyse my data privately and determine the right services or offers based on my location, income, or other factors, all while keeping that data secure," Schickler adds.

"This is what makes edge AI the next revolution—it protects privacy while enabling highly personalised experiences."

—kushmita@khaleejtimes.com