In today’s rapidly evolving business landscape, the key to success lies in understanding and meeting customer expectations. This requires a deep understanding of customer preferences, behaviours and needs. The integration of technology, particularly Machine Learning (ML) and Artificial Intelligence (AI), has revolutionsed the way businesses approach customer-centric strategies. Non-Banking Financial Companies (NBFCs) have been at the forefront of leveraging these advancements to create more personalised, efficient and impactful experiences for both – their companies and customers.
Consider an NBFC that specialises in personal loans. By analysing the spending patterns and credit histories of its customers using ML algorithms, the company identifies that a significant portion of its customer base frequently uses credit cards for travel-related expenses. Armed with this insight, the NBFC tailors its loan offerings to include travel-specific loans, effectively meeting a previously unaddressed customer need.
ML practices: Unveiling customer insights
ML has emerged as a gamechanger for NBFCs seeking to gain a comprehensive understanding of their customers. By analysing vast amounts of data, ML algorithms can uncover patterns, trends and correlations that provide invaluable insights into customer behaviours, preferences and purchasing habits. This enables NBFCs to segment their customer base effectively, tailor their offerings and develop targetted marketing strategies.
An NBFC employs ML algorithms to analyse its customer data and discovers that a particular segment of customers frequently pays off their loans early. Recognising this trend, the company introduces an early repayment discount for this segment, attracting more customers and increasing the overall loan repayment rates.
This information empowers NBFCs to offer personalised loan and investment recommendations, ultimately leading to higher customer satisfaction and loyalty.
AI applications: Transforming customer engagement
AI amplifies the potential of customer-centric strategies by automating and enhancing various aspects of customer engagement. Chatbots, powered by AI, provide real-time responses to customer queries, ensuring round-the-clock support and quick issue resolution. These virtual assistants can handle routine inquiries, freeing up human agents to focus on more complex tasks that require emotional intelligence and critical thinking.
For instance, an NBFC integrates an AI-powered chatbot on its website and mobile app. A customer who needs to check his/her loan balance and repayment schedule engages with the chatbot. The chatbot swiftly provides the information, saving the customer’s time and effort, and enabling human agents to allocate their expertise to more intricate customer needs. This information helps companies proactively to address concerns, identify areas for improvement, and maintain a positive brand reputation.
Automation through AI: Streamlining processes for efficiency
One of the most significant advantages of AI in the customer-centric approach is process automation. Manual tasks such as document verification, credit scoring and risk assessment can be automated using AI-powered algorithms. This not only reduces the risk of errors, but also accelerates decision-making processes, enabling NBFCs to provide faster and more accurate services to their customers.
Few NBFCs are using AI algorithms to automate the credit assessment process for loan applications. As a result, loan approvals are expedited, and customers receive decisions within hours rather than days.
Automation is not about replacing humans, it’s about enhancing human potential by delegating mundane tasks to machines.
Advanced features: Elevating customer experience
The integration of advanced features driven by AI and machine learning has a direct impact on the overall customer experience. For instance, AI-powered recommendation systems can suggest relevant financial products based on individual customer profiles. This enhances cross-selling and upselling opportunities while ensuring that customers are presented with options that align with their financial goals.
Moreover, personalised financial planning tools empower customers to make informed decisions about their investments, savings and loans. For example, when a customer logs into his/her NBFC’s online portal to apply for a personal loan, the platform utilises AI to analyse the customer’s financial history, income and preferences. Based on this analysis, the system not only suggests a suitable loan amount and term, but also recommends an investment product that aligns with the customer’s long-term financial goals.
Benefits to NBFCs and customers alike
The adoption of technological advancements in a customer-centric approach yields a multitude of benefits for both, NBFCs and their customers.
For NBFCs, the benefits include:
- Enhanced customer engagement: AI-powered chatbots and automated customer service processes ensure consistent, efficient and personalised interactions; like instant responses through chatbot.
- Improved risk management: ML algorithms analyse creditworthiness and assess risks more accurately, leading to reduced default rates and improved loan portfolio quality.
- Efficient operations: Automation streamlines internal processes, reducing operational costs and increasing efficiency. For example, document verification and loan processing times are halved, allowing the NBFC to serve more customers in less time.
- Data-driven insights: Advanced analytics provide actionable insights into customer behaviours, enabling better decision-making and strategy formulation.
For customers, the advantages are equally compelling:
- Personalized experiences: AI-driven recommendations and personalised financial planning tools empower customers to make well-informed decisions. Think of a young professional who receives tailored investment recommendations from an AI-powered platform, aligning with their risk tolerance and financial goals.
- Faster services: An entrepreneur gets instant approval on a business loan application, thanks to AI-driven automated credit assessment.
- 24/7 support: A customer gets quick answers to their loan queries at 2 AM from a helpful AI chatbot on the NBFC’s website.
- Financial empowerment: A family confidently plans for their child’s education using an AI-driven financial tool that forecasts tuition costs and suggests suitable savings options.
Conclusion
In the era of digital transformation, NBFCs that prioritise a customer-centric approach fortified by AI and ML are poised to lead the industry. The seamless integration of these technologies enables NBFCs to not only meet, but exceed customer expectations, fostering loyalty, trust and long-term partnerships. By leveraging the power of technology to truly understand their customers, NBFCs can pave the way for a more prosperous and mutually beneficial financial landscape.
