Generative AI Transforms Banking Personalization: Temenos

Generative AI (GenAI) is proving to be a transformative technology across various industries, including banking. Temenos, a banking software company, explains how GenAI is revolutionizing the financial sector by elevating product personalization to new heights.

“Generative AI goes beyond interacting with users; it has reached an inflection point that allows banks to offer products based on consumer preferences and enables customers to design and shape their products according to their needs. This consumer-centric approach is redefining personalization and, consequently, the relationship between the financial system and individuals,” said Alejandro Masseroni, Regional Sales Director for Latin America, Temenos.

GenAI's popularity has surged due to its ability to generate text, audio, image, and video content. However, its application extends beyond these uses, impacting business development and various areas of the banking value chain, from the front office to the back office. This technology can identify valuable customers and predict their likelihood of attrition, enabling financial institutions to make proactive business decisions. It can also personalize offers, interact with users, and enhance proposals, creating unique experiences for each consumer.

Traditionally, banks have lacked advanced analytical capabilities to effectively personalize services according to customer needs. Instead, they have tended to implement very general value offers, such as offering savings accounts to everyone when interest rates rise, perhaps with minimal price adjustments. However, GenAI transforms personalization into a genuine experience by deeply analyzing data to quickly create tailored products and communicate in natural language with customers. The business impact is tangible, as it helps financial institutions identify performance indicators for preventing attrition and increasing portfolio profitability.

“AI can detect if a customer is not using their account and work to retain them,” said Masseroni. “The technology not only supports all players but also integrates with data infrastructure and analysis, which is crucial for enhancing product profitability.”

Financial inclusion, according to Temenos, must be digital. “The integration with data infrastructure is key, and AI's use in investment banking combines bonds with certain risk profiles, all according to the client's profile,” said Ari González-Pella, Marketing Director, Temenos.

However, implementing GenAI in banking is not without its challenges. “There are many regulations in Mexico, with more processes needing to be implemented,” Masseroni noted. “As a global company, we already have much stricter regulatory processes.”

For banks to lead in personalization, it is vital to implement Generative AI effectively, ensuring it is transparent, explainable, and allows for the verification of produced results. Success in this new era of personalization in banking depends on the safe and responsible deployment and use of AI models, ensuring explainable and reliable decisions for financial institutions, regulators, and customers. “AI is being used less than it should be because there is a lack of knowledge beyond its mainstream use,” Masseroni said. “It is seen as a black box, but it isn't. It needs to be safe and regulated to collect data.”

Many question the security of artificial intelligence in terms of data collection, but “the use and deployment of these tools offer greater transparency in results, allowing users and regulators to verify information. Similarly, integrating these solutions with data infrastructure can exponentially transform efficiency, operations, and product manufacturing in banking,” added Masseroni. “It will improve in terms of false positives and rejections, but we need to educate the platform with information.”

Generative AI has the potential to transform banking personalization by providing deeper insights, reducing errors, and optimizing product offerings. "We have more than 15 clients with over 15 years of experience with us, and using AI for updates now allows them to innovate and modernize faster, directly impacting their efficiency," Masseroni explained. The adoption of new technologies is iterative and continues to evolve, driven by the pandemic and varying implementation strategies in Mexico.