Financial institutions can couple AI with “behavioral banking” to grow revenue, industry experts say. 

Behavioral banking is a strategy that banks are exploring to analyze consumer data as a way to present timely products to customers to increase loyalty alongside bank revenue.

Banks usually sell the same financial products at about the same price, Dorel Blitz, vice president of strategy and business development at fintech Personetics, told Bank Automation News. To differentiate their products, banks must create personalized services and offerings — and this can be achieved through AI and behavioral banking, he said. 

Behavioral banking uses analytics to understand consumers’ financial needs to provide them with the right products at the right time, Carl Rutstein, global head of advisory services at Visa, told BAN. 

Gabriela Vogel, vice president analyst at research and consulting firm Gartner, told BAN that this data “is the key to unraveling the driving forces behind customer behavior and their impact on a business’s bottom line.” Gartner expects that coupling AI and behavioral banking strategy can give banks a competitive advantage. 

AI-driven real-time analysis  

Banks are using AI to analyze their customers’ data in real time and suggest personalized products to them, Personetics’ Blitz said.  

“AI can also help in analyzing transactions, anticipate and truly predict” which services and financial products a customer might need in the future.  

Banks collect a great deal of data on consumers — including transactional and savings data — and can analyze it to bring them deeper into their ecosystems, Visa’s Rutstein said. For instance, if a bank sees a customer is buying a house, it can offer insurance, cross-selling to boost revenue, he said. 

Behavioral banking in action 

The $1.2 trillion BMO announced in September that, with the help of Personetics’, adoption of the bank’s automated savings program offered to targeted customers is growing and could yield 600% returns on investment on the solution over five years, according to previous BAN reporting. 

Rutstein is similarly optimistic. Nine out of top 10 major U.S. banks are working with Visa to explore and implement behavioral banking in their operations with many other banks showing interest in the technology, said, without disclosing which banks specifically. 

And Gartner’s Vogel predicts that “By 2030, 75% of operational decisions will be made within an AI-enabled application or process. Integrating AI with behavioral science will enhance the ability to provide real-time, personalized recommendations and interventions, improving customer experiences and business outcomes.”