"Best action to take" strategies and technologies balance growth with risk for banks, while strengthening customer relationships.
By Tim Broadhurst*
A major challenge for banks has always been balancing the need to grow with the level of risk they are willing to take to achieve it. In today's almost fully digitized market, this challenge is compounded by customer expectations for more personalized interactions, especially when it comes to offers, promotions, and customer experience.
The natural tendency is to go all-in to meet these demands, although it must be balanced against the real risks. To be profitable and resilient, financial institutions need to use real-time data, analytics, and decision-making at scale to determine the best action to take for each customer.
One of the ways major banks are successfully achieving this is by implementing "best action" strategies, in combination with technologies that use artificial intelligence (AI) and machine learning to automate and improve the contextualization, personalization, and delivery of options, offers, and information to employees and customers.
Best Action to Take: Become Smarter and More Capable
Banking customers increasingly expect the service they receive across channels, both online and offline – website, mobile app, phone, text message or bank branch – to be consistent, seamless and personalized. They also want to be rewarded for responsible financial behaviors, such as paying their bills on time or spending less than they save. To turn these desires and behaviors into long-term loyalty, banks must have a detailed understanding of their customers' situation, both in difficult times and in times of prosperity, and have the ability to act accordingly.
Most banks are not designed to meet the modern digital demands that consumers expect today. Many have to deal with legacy systems and lack the capacity to implement a robust "best action" strategy, which requires technology capable of centralizing data and decision-making.
Artificial intelligence (AI) and machine learning significantly enhance "best action" strategies, as they allow banks to process larger volumes of data, make more complex decisions, and learn from the results of past decisions in ways that previous generations of technology could not. This allows organizations to become smarter and more experienced throughout the process, as well as better understand the context of customer interactions and behaviors. As a result, financial institutions can present hyper-personalized offers to the right customers, at the right time and place.
A deeper understanding of customers
A bank's portfolio of services is very diverse. It's just as important to identify profitable areas as it is to personalize and deliver the right offers to customers who are in a better financial situation. These opportunities are very subtle, and it is difficult to define the right approach and supply conditions, especially in inflationary environments.
Financial institutions need a detailed view of each customer to gain insights that allow them to proactively determine the best action or experience to take, whether to expand, repair, or strengthen the relationship. A "best action to take" strategy helps expand customer relationships as it increases the level of interaction and relevance according to their circumstances at the time. By meeting those needs at the right time, banks can benefit from stronger relationships, greater loyalty, and better customer engagement.
Technology like FICO's monitors customer behavior and generates analytical insights to maximize growth opportunities. Use both traditional and real-time data to create a 360° view of each customer. Within this vision is an accurate profile based on risk, financial resilience, circumstances, preferences, transactions, and digital behaviors.
Ultimately, the success of any "best action to take" strategy will depend on the technology that powers it. To be profitable and resilient, a bank needs to fully leverage its real-time data, analytics, and decision-making capabilities at scale.
FICO's best-action strategy seeks to improve customer experiences and expand relationships, as well as balance profitability and risk. By monitoring customer behavior and enhancing analytical information, FICO's technology maximizes growth opportunities through careful, risk-aware offer selection. The FICO Platform uses mathematical optimization to balance customer demands with the organization's business objectives. This ensures that each interaction becomes part of a strategic, data-driven pattern of offers and customer service according to the best action to take for each situation.
*Tim Broadhurst, Senior Advisor to FICO
