The inflationary pressures driving the cost-of-living crisis may have eased in recent months but many households are still struggling to make ends meet every month.1 Around four in 10 adults are struggling to pay energy bills2 and more than half are relying on credit to meet daily expenses.3 This not only impacts the wellbeing of families and communities but it also undermines the UK’s long term financial resilience.

For banks, the convergence of a deep cost-of-living crisis with the emergence of powerful AI tools creates a unique opportunity to engage customers, provide different types of personalised support and use this to build greater lifetime value from each customer.

Danske Bank's Head of Product - PFM, Kenneth Bo Thomsen on forming a truly lifelong partnership with customers

There are ethical issues, however. Michael Anyfantakis, Chief Architect & Head of Product, UK at Capital One, raised a scenario where someone orders a takeaway and pays for it using a Buy Now Pay Later option because they don’t have the cash. ‘What’s the responsible thing to do there?’ he pondered. ‘Should we use this moment to give them a nudge and advice not to spend £50 on a takeaway but rather spend £10 buying food to cook themselves?’

For some customers, this would be considered an invasion of privacy and overshoot of a bank’s function. But for some, including many vulnerable customers, it might prove a useful intervention for their financial wellbeing. And there does appear, certainly among younger demographics, to be an appetite to have a more personal and friendly relationship with their bank – even if that relationship is entirely virtual.

Sujata Bhatia, Chief Operating Officer of Monzo, highlighted press criticism of the bank’s branding, tone of voice and customer engagement during its early days, sharing one headline that read ‘Grow up Monzo, you’re a bank, not our best friend’. ‘The media were full of venom but we knew people were craving this so we doubled-down and the results show it was right,’ said Bhatia, sharing the bank’s many plaudits and best-in-class NPS.

It’s not just a nice-to-have. This connection with customers has enabled Monzo to innovate relevant products that resonate with customers to improve their financial wellbeing. Its accessible savings and investment products, for example, include gamification techniques to get people to build virtuous habits – and enabled the bank to access a whole new customer base with its products..

30 per cent of the customers who are investing with us are doing so for the first time, and that rises to 45 per cent among women. It’s levelling the playing field.

SUJATA BHATIA

CHIEF OPERATING OFFICER, MONZO

Using AI to power personal financial management tools is another leveller when it comes to smarter money management. ‘Robo-advice can be a fantastic tool to drive much greater financial inclusion,’ said Paul Szumilewicz, formerly Chief Customer & Operations Officer at C. Hoare & Co.

Alina Agurida, Head of Customer Experience and Design at Raiffeisen Bank, also expects generative AI to enable chatbots to engage in conversational banking. ‘It will help improve our relationship with money, which can be very complex’ she said.

Danske Bank's Head of Product - PFM, Kenneth Bo Thomsen on his idea of the future

As banks get ever closer to their customers, guiding, engaging, listening and nudging them towards better financial habits, it opens opportunities to offer services and products beyond financial services and become more of a lifestyle brand like Apple.

The only way to approach this is to stay close to your customer. You need to earn that right by building trust and I’m not sure we’re there yet as an industry.

PAUL SZUMILEWICZ

FORMERLY CHIEF CUSTOMER & OPERATIONS OFFICER, C. HOARE & CO.

As inflation recedes and customers breathe a little easier, banks are hoping the CX and financial support provided during the hard times will translate into most trusted financial buddy status for the good times ahead. MoneyLIVE will report back on how this plays out.

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