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August 13, 2020

Can AI Help Improve Your Customer’s Financial Lives?

In this installment of Thoughtline, we discuss conversational banking and how AI can help deliver personalized financial insights and advice.  

Full Transcript

Boris: [00:00:00] Good morning. Good afternoon, everybody thank you again for joining us for a weekly series of in person interviews today. We’re lucky enough to have Jody Bhagat on the line or in person with us talking a little bit about digital transformation and personalization through digital channels. Uh, Jody, thank you very much for coming in to see us today..

Jody: [00:00:30] Thank you, Boris. Nice to be here. 

Boris: Jody. You and I have had an extensive conversation regarding this particular topic. What I’d love to do is introduce yourself to the audience. Give a little bit of your background, if you wouldn’t mind. Jody. 

Jody: [00:00:51] Sure. So, I’ve had three different parts of my career. Um, my first part of the career in, uh, where you and I met Boris was in banking. I was at Wells Fargo, Citizens Bank and U S Bank in various digital, and channel leadership roles. Second part of the career was at McKinsey where I was a partner in the financial institutions group in Silicon Valley.

Jody: [00:01:10] And now, the third part. Um, and let’s say one of the most exciting aspects is being part of a FinTech called genetics, where I’m president of the Americas. 

Boris: [00:01:36] Great. Thank you for that background. Jody. Now Jody, on our topic of digital personalization, we of course know that a lot of financial institutions at this point in time are going through a digital transformation and that’s really sort of a heavy word, if you will, right. It encompasses many parts of an organization. Uh, however, one of the things that we’ve talked about, um, was the fact that there are important pieces today in every digital transformation. And if you wouldn’t mind providing some folks with an overview of what you think those are, but maybe perhaps beyond just that, what are some pieces of a digital transformation that financial institutions may be overlooking today?

Jody: [00:02:02] Yeah, good question, Borris. You know, we’ve seen the research over the last few years with so many banks undertaking digital transformation that now 70% of them don’t achieve their goals, but it’s useful to dig deeper and understand also what they’re focused on. So what we’ve seen is that there’s actually been tremendous progress around applying digital capabilities to drive greater efficiency and fulfillment.

Jody: [00:02:28] And also simplifying and improving the front end experience. The gap has been in how data is being leveraged to bring value to the customer interaction. We feel this is the next horizon for, for the entire industry and it’s enjoying significant investment. 

Boris: Can you give folks maybe a little bit of a practical example of how the data of any financial institution can be really turned into gold or your thoughts on how this data could be better?

Jody: [00:03:00] You know, data is, uh, access to customer data is one of the real strengths and assets that the industry brings to better deliver a customer experience to create better economics for the industry and in fact, defend off competition as well. So, with the advancements, both in data capture and storage, as well as analytical tools in AI models, we believe that this can really be applied to how banks are interacting with customers to create an interaction model.

Jody: [00:03:35] And really redefine the model to show that banks are on the side of customers, looking out for them, helping them make better decisions, improving their financial wellbeing, both in the moment, by understanding what’s happening with the customer situation right now, as well as helping them accomplish what their financial goals may be.

Jody: [00:03:56] We bring a unique vantage point to this because Personetics is really the category leader, or let’s say they introduced the category of data-driven personalization. And that’s the area where we see that by leveraging the advancements around data and the environment, as well as the AI analytics and tools banks can deliver highly effective use cases that benefit the customer and benefit the bank through deeper relationships.

Boris: [00:04:26] Yeah, Jody, I think everything that you’re saying makes absolute sense and it seems like many financial institutions, you know, would be very, very eager, uh, to move in that direction. But maybe the question, you know, if we kind of take a step back, why is the timing now?

Jody: [00:04:47] Well, it seems like our whole society is in the midst of change. You know, the pandemic and social unrest. I think broadly it points to people expecting more from their [00:05:00] institutions that are designed to protect and support which the banking industry is a, is a prime example. In addition, as I mentioned, there’s a new entrance as well, fintechs there’s growing, let’s say.

Jody: [00:05:14] Um, activity around fintechs that are capturing, let’s say some of the, the, the population around the profit pools around direct digital banks and small business lending, but there’s a lot of there’s growing noise from the big tech players as well. And when they enter it’s, uh, it’ll be in a, you know, in a big way, and they will seize on inefficiencies in today’s model, those inefficiencies in terms of the customer experience.

Jody: [00:05:42] In terms of how data is being leveraged and in terms of value delivery. So we believe that, but when banks, you can leverage the great asset they have, which is around customer data and the trust that banks have built [00:06:00] in service and security. This can be translated into delivering insights and advice to help customers improve their day to day banking.

Jody: [00:06:11] And really demonstrate that you’re helping customers be more successful. We believe this will criticize, we’ll create the right kind of dynamics in terms of the, the banker customer interaction. It’ll provide deeper relationships and it’ll also have the industry be much more effective at fending off competition.

Jody: [00:06:34] Fair enough. So, so it’s like, you’re basically saying it’s a combination, right? You should do this today because yes, there’s new entrance challenges that are going to be coming into the marketplace that really quickly figure out sort of inefficiency. But this also could be a strategic growth play, uh, in order to be able to create a better value to the consumer and capture additional market share.

Boris: [00:06:55] This makes absolute sense. Now my question to you, what does personalization really mean for personality beyond what we’ve all already kind of achieved in some of our digital or marketing channels. 

Jody: [00:07:00] Let’s start with what it’s not. Yeah, just knowing someone’s birthday and saying happy birthday. Is not really an advanced form of personalization and also having a campaign engine that looks at how customers are browsing your site and making targeted offers while while effective in terms of driving product conversion is not, it doesn’t fully, fully meet the goals around data-driven personalization with just a focus on trying to sell more stuff.

Jody: [00:07:40] So when we talk about data driven personalization, we are scoping it around, truly understanding your customers and to take a step back for us, you know, while so much has changed in the world, in terms of digital activity and behavior, our capabilities, there are some fundamental tenants that have not really changed, [00:08:00] which is in terms of customer expectations to, to know me, to value me.

Jody: [00:08:08] And to advise me that is based on truly understanding your customer’s activity by looking at their financial transaction data, understanding what situation they’re in now, what actions should they take now? Not necessarily what product I should sell you now, but what actions should they take now to better manage their day to day banking?

Jody: [00:08:31] This can be things like transactions I should be aware of. So for instance, if I don’t typically make a dual transaction or a duplicate transaction, and I see a duplicate transaction, then I want to be flagged for that and be aware of that because it may be a fraudulent duplicate. We all have, you know, a multitude of subscriptions.

Jody: [00:08:52] We don’t know when they’re coming off renewal, when we’ve got competing subscriptions, have my bank manage that for me because they can see [00:09:00] what kinds of things. Subscriptions that I have out there and which ones are coming off of renewal for the, for the next year as well. So more sophisticated things such as identifying liquidity issues of liquidity constraint, because I may be in a, coming to a low balance situation based on my expected pattern of activity.

Jody: [00:09:20] And I should remediate that situation or liquidity surplus, where I’m actually not saving enough and I’ve got excess liquidity in my checking account, so I can do a better job. Of improving my savings behavior. These are all the things that banks can leverage. The customer transaction data provides both the insights and the advice, and you can see how that changes the interaction.

Jody: [00:09:46] It changes the appreciation and the level of satisfaction and loyalty. That your customer franchise will show towards the bank. It’s like somebody is almost like watching out for you at a much deeper level, more so than watching [00:10:00] out for you. You do recommend the next product. It’s sort of a, I now understand that that’s sort of more intimate, more watchful, the late relationship.

Boris: [00:10:09] That’s pretty interesting that at this particular time, you know, during the, this particular Covid crisis, that’s something, a tool like this. Could be potentially pretty handy for a lot of people who have probably seen uncertainty from a, uh, from a job or an employment perspective. We’ve heard from banks traditionally about how their bankers will go above and beyond and make heroic efforts to do outreach to customers and help them in a particularly difficult situation.

Jody: [00:10:41] Our goal is to make that kind of advice. Available to all customers, not just your best customers, not just the ones that you can afford to do outreach to, or the most profitable ones, but to make intelligent insights and advice [00:11:00] available to all customers. And we think that’s a, that’s really part of this part of this movement.

Boris: [00:11:07] Yeah, absolutely. And. And I guess maybe the question is what institutions that have adopted this. What have been their early signs of success, the benefits in three dimensions, the customer impact and the financial impact and the recognition, the brand recognition across our entire customer base. We evaluate the level of engagement that customers have with the insights.

Jody: [00:11:37] So we track across 50, 60 million plus end customers.How they’re rating insights, how they’re interacting with insights, what kind of actions are they taking? And we consistently see a score of about 4.4 out of five ratings. Now, part of that is also self fulfilling because customers are seeing. [00:12:00] The kinds of insights and advice that they appreciate.

Jody: [00:12:03] That’s part of the machine learning algorithm. So it is a self fulfilling, fulfilling kind of a virtue. The second aspect of that is that we’re seeing 30 to 40% of the customers engaging with the insights every month. There’s a far departure from, let’s say traditional, um, Uh, let’s say kind of PFM like capabilities where you have a very modest percentage of customers engaging.

Jody: [00:12:33] And we believe this is because customers are really finding value. Plus our clients are embedding it as part of the experience so that it is quite prominent as well. So the first part of this is improvements in digital engagement and NPS scores. The second part is around the financials. And every week we’re seeing more and more data of how our customers are driving bottom line impact, which is a clear, clear [00:13:00] outcome from this program.

Jody: [00:13:03] One regional bank conducted a test over the course of a year, a controlled test where they delivered insights to one group and withheld from another group. And they found over the course of the year, they did a balanced scorecard, attributing value to it. There was 10% more value for the financial action that those customers receiving insights were taking financial actions, including things like.

Jody: [00:13:29] Opening accounts, digital card, swipes, Forex transactions, the combination of things measured on that on a balanced score. It’s pretty interesting. It’s making me think Jody, right? Like how personalization is taking a different shape from sort of that digital channel evolution, uh, how we can also permeate of course, other channels that consumers are also adopting today.

Boris: [00:13:51] Now, what are the consumers saying? It sounds like they’ve had positive responses. Based on, um, a deeper level of engagement with financial institutions, [00:14:00] but are they thinking that this is this I’m willing to share this data? What’s been sort of the take on the consumer side from all of them. 

Jody: [00:14:18] You know, it’s a fascinating dynamic because as I mentioned, we’re us, we’re tracking how customers are engaging because that’s part of the model to optimize on their behalf, right? Digital customer, the kinds of insights and advice that we’re seeing. And we. We also see comments, but the part of the business that I love the most is when our clients share some of the social media feedback. For instance, when you, when you just have this idea about the auto savings. There’s a broad swath of customers that have real challenges saving actually 40% of the U S us and Canada population, you know, cover an emergency expense according to the federal reserve of $400.

Jody: [00:14:51] When you help these customers save 150 to $200 a month, and they’ve been able to put away. 1,808, [00:15:00] uh, $1,800, $2,000 over the course of the year, which is some of the numbers that we’re seeing, um, that has a material impact, not just in terms of satisfaction, but on the customer’s livelihood as well. So we see, we see the kinds of response, the kind of, let’s say delighted surprise.

Jody: [00:15:22] The customers have when they engage in programs like this, or when you flag a duplicate transaction and the customer says, you know, it wasn’t a duplicate transaction because I actually made two purchases, but I really appreciate you looking out for me. Those are the kinds of things which create a different kind of dynamic.

Jody: [00:15:43] And we believe we are just as powerful as the depth of relationship, the new accounts and the increasing balances. 

Boris: [00:16:00] That’s great insight and great to see something happening that has like that kind of a positive impact on people’s lives. Um, you know, what’s interesting, Jody, of course, is where this is all heading.

Boris [00:16:03] We’re living in a world where we expect a lot of things to be tailored and personalized to us. And I think for you guys, this is just a fact in that direction, you know, we can of course see technology getting even even more and more sophisticated. So what is your prediction maybe, or what is your general trajectory of how you think?

Jody: [00:16:22] Um, the space is going to get even deeper insight and provide even deeper value back to the consumer? Well, we’re at an exciting time right now. I think that this crisis has foam today, a really a compression in the trajectory of digital activity. I think it’ll accelerate digital activity by three years because of the behavior that we’re seeing.

Jody [00:16:48] Um, we also believe that insights while insights themselves are innovative. And we’re the, we’re the global leader in the, in the space. We believe that basic [00:17:00] insights will become table stakes. As more leading banks deliver the solution to customers, customers will expect it of their banks and other banks will follow.

Jody: [00:17:13] And we believe this kind of capability. Shouldn’t just be delivered by the most sophisticated banks. It should be loaded by all banks. Hmm. So we believe that, uh, the basic insights will become table stakes, but thanks. We’ll continue to be able to differentiate what we call actually creating their own, uh, personalization, IP, their own intellectual property around verbal personalization, above and beyond table stakes.

Jody: [00:17:41] We are focusing heavily on customer resilience. We feel that. As an industry while we’ve done a lot to serve our customers, we need to take more accountability, more accountability for having our customers become resilient. Resilience means the [00:18:00] ability to withstand financial hardship. And that means that I have emergency savings.

Jody: [00:18:06] I can manage my budget wisely and I have the capacity to borrow, to be able to have the capacity to borrow. It means like I also have to be able to pay down. Right. My interest. And then the third aspect that we’re focused on is the multichannel capability where bringing the synergies, not just kind of replicating capabilities, but bringing the synergies of the digital and the assisted channels together.

Boris: [00:18:36] That means that the intelligence that you derive from your digital interactions combined with the empathy of the branch and assist channels and bringing that to bear for the benefit of the customers. It’s interesting that you’re mentioning sort of how digital channels are combined with I’ll call it non [00:19:00] digital channels, whether that’s of course the voice or email arrests mastery or some of the other channels.

Boris: [00:19:04] And that kind of overlays the question that I was going to ask you about Jody. Which is what you mentioned around the changing role of the, uh, of the banker today or the imperson banker today. And so I’d love to get your perspective of how you think the role of the banker will change given the fact that now there is a lot of insight of already being sort of bubbled up and provide it to the, to the banker.

Boris: [00:19:28] This is such an important question because what the industry before this crisis probably had, let’s say. A couple of years to determine, and to position now has been accelerated because we know that branch traffic is down at branch productivity and will need to be reevaluated. And so these questions have now been put at the forefront of, uh, and are really pending in terms of, [00:20:00] of, of determining.

Boris: [00:20:01] How to really kind of respond in the role of the banker in this new environment in the past, bankers have been supported by let’s say somewhat, um, some useful tools, but also, um, uh, based on let’s say campaign activities. So the campaign lead lists some next best action. The more progressed with the next best action.

Jody: [00:20:28] What we believe is that bankers should be empowered through a curated set of insights that it’s helping identify what their customers are seeing today. The actions and advice that those customers are being, uh, are, are being exposed to bankers doing outreach and walking me through what my options are.

Jody: [00:20:51] And perhaps my options are I can transfer money in externally, or I can take out a. Um, and overdraft protection, or I can take out an unsecured [00:21:00] line. That’ll help me. That’ll help. Then I’m pre approved for that’ll help me through this, uh, kind of smoothing out my cash flow. Those are the kinds of conditions now where you’re bringing not just a lead list, not just a next best action, but I said curated insights and actions for the banker to take, to engage that customer.

Jody: [00:21:23] That needs their help at this moment in time, we believe this will change the way that bankers interact with customers, as well as drive banker productivity and be an important part of the new Mo. Correct. That’s interesting. You know what you’re mentioning there is almost like practice customers, sorry.

Boris: [00:21:40] Right. It’s the reach out by the banker to the consumer in real time to say, Hey, you know, we noticed this pattern or we noticed this situation based on a real time event. Yeah, we should probably have a conversation about this. That’s really, really interesting. I mean, Jody, this conversation has been absolutely fascinating.

Boris: [00:21:58] I love learning about new [00:22:00] technology and where companies are going specifically in the digital transformation and the personalization space. It was great having you on the show. Hopefully you’ll come back and visit us soon. Jody, thank you so much for having me. Thank you so much for being here. Thank you everybody.

Boris: [00:22:17] Thanks for joining us today. 

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LiveVox (Nasdaq: LVOX) is a next-generation contact center platform that powers more than 14 billion interactions a year. By seamlessly integrating omnichannel communications, CRM, AI, and WFO capabilities, the Company’s technology delivers an exceptional agent and customer experience while reducing compliance risk. With 20 years of cloud experience and expertise, LiveVox’s CCaaS 2.0 platform is at the forefront of cloud contact center innovation. The Company has more than 500 global employees and is headquartered in San Francisco, with offices in Atlanta; Columbus; Denver; New York City; St. Louis; Medellin, Colombia; and Bangalore, India. To stay up to date with everything LiveVox, follow us at @LiveVox or visit livevox.com.

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