Why Behavioural AI is the Future of Finance in the ‘New Normal’

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We’re past the halfway mark of the current year and the ‘old normal’ already feels like a different era. Like it has for many of our peers, the pandemic has forced our teams to swiftly navigate a steep learning curve in order to adapt to quickly changing market conditions. At 3LOQ, we specialize in building behavioural AI solutions for the financial sector, so we’ve been working particularly hard to keep up with changing customer behaviour - our clients need agile technologies that can meet the current needs of a volatile market. In our experience, the past six months have unequivocally underlined the fact that financial behavioural analysis is no longer a nice-to-have; it’s a must-have.  

We are noticing that banks and financial institutions are feeling the pressure to not only retain primary patronage among vintage users, but to also activate primary patronage in the rest of the user pool. Product and marketing teams can no longer be satisfied with single-event spikes that result from ‘next-best action’ strategies; they need to build long-term customer relationships, a behavioural change which isn’t easy to achieve. Take the current pandemic scenario, for instance. Many institutions predicted, quite logically, that the lack of access to physical services will necessitate customers to shift to digital banking. While it is undeniable that such a shift has taken place, some reports are suggesting that digitization hasn’t grown at the expected rate. A May 2020 McKinsey report on US banks remarks, "Many organizations have predicted that a tsunami of new customer demand would cause a swift shift to digital banking. In fact, McKinsey surveys suggest that retail-customer preferences are largely unchanged."


Image courtesy: McKinsey & Company

 This signals huge potential waiting to be tapped. How can banks and financial institutions guide their customers in making a lasting shift to digital service platforms? Or, taking a look at the bigger picture - how can they facilitate the behavioural change they need to scale their business in a sustainable fashion? At 3LOQ, we believe utility is the key. Show customers the utilitarian value of making a consumption change and it will happen if users see the benefit. And that's where behavioural AI plays a huge role. It has the power to derive product usage patterns, anticipate user needs and prescribe user journeys that guide customers to new features that are immediately useful. In fact, product and marketing teams are increasingly looking to behavioural AI to extract crucial user insights that facilitate sticky product experiences. From our own experience with clients, we’re seeing that behavioural AI improves financial user engagement across all key metrics - log-in frequency, transaction volumes, transaction variety and even portfolio value. It’s not a short-term improvement either; teams are seeing that AI can drive sustained growth for as much as six months from the initial deployment. 

Whether it is a legacy financial institution looking to retain its primary customers, a neo-bank looking to activate new customers or a non-traditional financial institution looking to cross-sell financial services to vintage customers - behavioural analysis is the need of the hour and behavioural AI holds the key. We only expect this trend to grow.