A focus on the changing Retail Banking Landscape – Part 2
Why managing AI risk presents new challenges
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The difficult of using AI to improve risk management
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How to bring AI into managing risk
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Pros and cons of using AI to manage risks
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Benefits and opportunities for risk managers applying AI
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In the banking industry, marketing and selling based on ‘offers’ refers to the orchestrated marketing efforts designed to attract prospects or existing clients to buy and use their products and services. For existing customers, campaigns are generally run at the account level where the main objective is to ensure that customers receive relevant information about suitable products and services with the right-price at the right time, and this means when the need has arisen, or is predicted to arise. As an example, when a mortgage is completing, the payment amounts can be used for future investment purposes, and the bank should be ready with the appropriate products and services at the time when they are needed. In addition, the transition from lending to investment based products must be easy, and so digital channels must play a key part in order to make the buying experience seamless.
There are five aspects that are critical to the success of these types of marketing campaigns:
- The offer must be relevant and tailored to the customer needs
- The offer must be attractive enough for customers to buy
- Customers accepting the offer must create tangible value for the bank
- The products and services offered must create tangible value to the customer
- The offers must not adversely impact customer journeys or experiences.
Banks must therefore develop the capability to structure offers that deliver real value for both customers and the bank. This is a paradigm shift away from product-centric to customer-centric thinking. The customer value paradigm is now based on realtime insights into customer behavior, needs, and preferences which can collectively be harnessed to expand the footprint of products/services they consume.
The bank’s ability to run such campaigns depends on procuring new modern systems such as EPM from ArcOne that can provide a holistic and real-time (or near real-time) view of the customer’s relationship with the bank that transcends transactional views at the level of individual products and services.
Many banks run on legacy core banking systems that make it almost impossible to achieve such holistic views. This is why the best practice is to use a specialized offer management solutions that can overcome architectural limitations imposed by legacy software.
