According to a December 23, 2023 article in Forbes Magazine, “large numbers of people will be getting a life-changing amount of money, a last gift from a parent or grandparent that meaningfully alters their circumstances. That shift is already in the works, and will continue for a couple of decades. According to wealth management firm Cerulli Associates, some $53 trillion will be passed down from boomers to their Gen X, millennial and Gen Z heirs, as well as to charities. That includes both gifts during their lifetimes and inheritances afterward.”
Now, how much of that “grandma and grandpa” wealth actually gets transferred to Boomer children and grandchildren remains to be seen. There’s speculation, too, that the cost of healthcare for these senior Americans will have a significant impact on their wealth, leaving less to “hand down.”
As a community banker, it has become more important than ever – as we all know – to offer a customer experience that can capture those young customers as they now comprise nearly 50 percent of the U.S. population. We also know what an impact technology, AI in particular, can have on building that experience. So, what exactly, should community banks be looking to do with the GenAI in order to attract and retain GenZ and GenX customers – those individuals who are tech-savvy, value personalized experiences, and expect seamless integration of technology into their daily lives?
1. Personalized Financial Insights
GenAI tech solutions excel at the analysis of vast amounts of data and transforming that data into valuable insights. Those insights can then be used by community bank marketers to greater personalize their banking experience. Community banks can utilize AI and ML (Machine Learning) algorithms to understand individual spending patterns, saving habits, and the financial goals of their younger customers. By offering personalized financial advice and tailored product recommendations, they can further solidify their position as trusted financial partners; a position they must own in order to compete with the large nationals, regionals and non-banks.
2. 24/7 Virtual Assistance
GenAI-powered virtual assistants such as chatbots can provide immediate responses to queries, guide users through transactions, and offer real-time support. As we all know, younger customers, accustomed to instant information access, value round-the-clock availability. Research has shown, in fact, that not only do younger customers value virtual assistants, but many actually prefer them to human beings! AI-assisted customer experience not only enhances customer satisfaction, but also frees up human resources to focus on more complex, revenue generating tasks.
3. AI-Driven Fraud Detection
Security is paramount in banking, and GenAI can play a crucial role in enhancing fraud detection measures. ML algorithms can analyze transaction patterns, identify anomalies, and flag potentially fraudulent activities in real time. This proactive approach not only safeguards younger customers' assets but also instills confidence in the security measures implemented by the community bank.
4. Personal Finance Management Apps
GenAI can power intuitive personal finance management apps that go beyond traditional banking services. These apps can provide budgeting assistance, track expenses, and offer insights into financial behaviors. By empowering younger customers with tools for effective money management, community banks can foster a sense of financial literacy and responsibility.
5. Chatbots for Seamless Communication
Chatbots driven by GenAI can be integrated into various communication channels, including websites and mobile apps. These bots can assist with account inquiries, transaction history, and general banking information. Their conversational nature mirrors the communication preferences of younger generations, providing a user-friendly interface for quick problem resolution.
6. Targeted Product Recommendations
GenAI algorithms can analyze customer data to identify behaviors, patterns and preferences. This information can then be leveraged to offer highly-targeted product and service recommendations, such as credit cards, loans, or savings accounts. By presenting relevant offerings, community banks can increase the likelihood of younger customers engaging with additional financial services as they move along their life-long financial journey. How important is personalization? A survey by McKinsey & Company found that personalized product recommendations can increase conversion rates by up to 300%.
7. Facilitating Digital Onboarding
Simplified onboarding processes are crucial for attracting and retaining younger customers. GenAI can streamline account opening and verification procedures, reducing the friction associated with traditional onboarding. This not only improves the overall customer experience but also positions the community bank as forward-thinking and tech-friendly.
8. Gamification for Financial Education
To make financial education more engaging for younger customers, community banks can leverage GenAI to incorporate gamification elements into their apps. Interactive simulations, quizzes, and challenges can educate users about financial concepts, encouraging them to develop sound financial habits.
Navigating the future of community banking with GenAI
As community banks embrace the era of GenAI, the potential for transforming the banking services experience for younger customers is almost limitless. By harnessing the power of AI-driven technologies, community banks can not only meet the expectations of tech-savvy customers, but also differentiate themselves in an increasingly competitive landscape.
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