Financial companies that want to improve marketing performance are increasingly turning to leading-edge technologies such as artificial intelligence (AI) and augmented / virtual / mixed reality (AR / VR / MR) to improve the return on their investment. This article will focus on emerging developments in retail banking: Finfluencers and the increasing use of technology such as AI powered chatbots and digital humans.
The Rising Trend of Finfluencers
For many marketing industries, such as beauty/fashion, influencer marketing is an established method and has been yielding positive results for years. Indeed, recent reports state that the Influencer market was worth $10 billion in 2020. However, retail banking has been relatively slow to adopt influencer marketing for their own activities. In just the past few years, however, the banking sector has taken more steps towards influencer marketing. This has given rise to financial influencers, or Finfluencers, for short.
The Finfluencer trend has since been on a steady rise and banks across the globe have been paying social media influencers to promote their products. An early example of a Finfluencers dates back as recently as 2017, when Loot, a UK-based digital banking and money management company paid a number of Instagram influencers to promote its student cards using the hashtag #ThisIsLoot.
American digital bank Step, recently partnered with TikTok star Charli D’Amelio, for the launch of its app and personalized card. Because the fintech company is primarily targeting teens and Gen-Z, it does not come as a surprise that it chose to partner with D’Amelio, who has over 100 million TikTok followers. D’Amelio will work with the bank as a Finfluencer to promote its card and services on both TikTok and Instagram.
Another example of retail bank using Finfluencers is Mumbai-based HDFC. For the second year in a row, the bank has partnered with several well-known Indian influencers on Instagram for Diwali campaigns aimed at informing the public of promotional offers on the bank’s debit and credit cards during the festive period. Krystle D’Souza is an Indian actress and Instagram influencer who partnered with HDFC in 2020 for the bank’s Diwali campaign. With the influencer marketing industry poised to reach $15 billion in value by 2022, one can only expect the Finfluencer trend to continue to grow and become more widespread.
Technology is Reshaping Marketing in Retail Banking
Rising customer expectations are forcing retailers across many industries, including banking, to adapt by delivering simpler and more intuitive solutions to their customers, with a seamless connection between the physical and the digital worlds. Banks are increasingly investing in technologies such as artificial intelligence, augmented reality, virtual reality and mixed reality to meet those expectations and improve customer experience.
Before exploring the various marketing applications of AI in retail banking and the impact on the future of marketing, it is important to understand what AI is.
AI is the simulation of human intelligence by machines, allowing them to perform tasks that would typically require human intervention. It is a branch of computer science that replicates human intelligence in machines through a series of algorithms. It integrates technologies such as machine learning (ML) and natural language processing (NLP), among others, to operate properly. Simply put, ML allows computers to operate without programming; the machine improves automatically and learns from experience, without being told where to look for information. NLP, on the other hand, is technology that allows computers to process and generate human language.
Retail banks primarily use AI in marketing for two main reasons: hyper-personalization of their product recommendations and customer experience improvement. Regarding hyper-personalization, thanks to AI, banks can analyze their customers’ previous and current purchasing patterns and identify which products are best suited for a specific customer’s needs and the ones they will most likely purchase. Toronto Dominion (TD) Bank, one of Canada’s largest banks, acquired AI start-up Layer 6 in 2019 in an effort to provide customers with more personalized experiences. The technology allows the bank to analyze data and recommend relevant products depending on customer behavior. For example, mortgage solutions may be recommended to a customer directly from an app based on spending patterns that suggest they are planning to buy a house.
AI is also helping TD bank provide personalized and relevant solutions for its customers during the COVID-19 pandemic. AI and machine learning allows the bank to identify customers who are likely to face financial distress, based on variables such as transaction patterns or account balances. Customers who might benefit from support are then sent a notification saying “If COVID-19 has you concerned about upcoming payments, we have options to support you.” Upon clicking, customers are taken to a Web site where they can find relevant information about TD and government initiatives aimed at helping customers experiencing financial hardship due to the pandemic. The bank is expected to fully integrate AI capabilities within its app in the future, which will give it more opportunities to improve customer experience.
AI-powered digital humans are another use case of AI in retail banking. They are a form of conversational AI that further personalizes customer experience through face-to-face interactions with emotionally responsive machines. By using digital agents, banks are able to uncover their customers’ specific needs and therefore offer banking products that will meet those needs. Mia, Australia-based UBank’s digital human is an example of how banks are starting to adopt the technology.
Mia was created by UneeQ, a company that specializes in creating digital humans for companies operating in different industries. She was specifically designed to be a home loan assistant. As Mia learns more from the bank’s customers through repeat interactions, she is able to provide hyper-personalized advice to home buyers and propose adequate products. What makes AI-powered Mia even more convenient is that she is available 24/7, speaks with customers and answers their questions in real time.
Augmented, Virtual, and Mixed Reality
Augmented reality is technology that enhances the user’s current environment, while virtual reality creates an entirely new one in which the user is immersed in a simulated environment. Mixed Reality (MR), on the other hand, is technology that merges the real and digital worlds and allows the user to interact with and manipulate both. In a sense, MR can be thought of as a bridge between AR and VR.
A use case of MR marketing in retail banking is the user interface designed by UXDA. The agency, which focuses on providing tech solutions to the financial services industry, recently unveiled a design concept that combines AR and VR for mobile banking. Although this concept hasn’t become mainstream yet, it is expected to grow and expand at a rapid pace once AR and VR headsets become widespread. The following short video to shows this innovative solution in action in retail banking as the user puts on a headset:
The main advantage of this technology is improved customer experience. The user has a better visibility (quite literally) of their finances and performing basic financial transactions becomes a lot easier and less time-consuming. Future opportunities for financial marketers through Mixed Reality include the ability to advertise and promote products directly within the interface while customers have their headsets on. Additionally, allowing customers to interact and buy products in real time, further reduces friction and enhances experience.
In the future, banks can also use AR and VR technologies to turn their print marketing materials such as flyers and posters into interactive materials. Virtual holographic banking assistants would allow customers to view and better understand product features and do cross comparisons or request additional information. European Bank, PNB Paribas is already using an interactive print app to help its personal banking staff retrieve specific product details. Specifically, the app recognizes photos of employees and overlays videos on these photos explaining various products of the bank. The same technology could be utilized for customers by allowing them to point their mobile devices at a bank’s flyer and immediately see credit or debit card features or information on loyalty programs. Another example is a customer who would be able to learn more about special offers from their bank’s partners simply by pointing their mobile device’s camera at the logo of a store to see what cashback offers are available, instead of having to log into their accounts to access such information.
Technological advances, as well as the increasing digitization of financial services, present financial marketers with an excellent opportunity to revolutionize their activities. As social media continues to gain popularity as a marketing channel and as devices such as VR headsets become mainstream, one can expect to see more banks taking advantage of these marketing technologies.
Master of Marketing student
Schulich School of Business