The Bionic Customer is here. Is your business ready?
??This ain't your granddaddy's customer...
I came across a fantastic twitter thread about fully automating personal finances leveraging GenAi and I paused. While applying AI to to finances may seem like a simple extension of long building fintech trends, I see some bigger implications: specifically three intersecting themes that may permanently change the relationship between tech-enabled customers and the companies seeking to serve them.
Better-informed customer, with nearly free access to limitless analytical power (not just search but *summary and synthesis*) and the ability to automate previously un-automatable tasks (like drafting legal-sounding documents to get money back from providers) is a game changer. Customers will know more, expect more, and be able to seamlessly change providers.?
We’ve never before seen this level of customer empowerment in the history of capitalism and companies are not ready.
So how should businesses think about what's coming?
?? 1. Rise of the informed customer: Faster & Smarter
Your customers know more today than they did yesterday. More about their fitness, their relationships, their screen time, their money, and even that new bop on Spotify (thanks AI DJ X!); and they’re putting this knowledge to use. What’s more, anything they don't understand is only a google search, social post, swipe on their For You Page or ChatGPT prompt away.
This means even before they’re paying customers, consumers are also getting better at understanding how effective your business is at serving them and their community. They're beginning to see how you (and your competitors) make, spend and invest money plus how much value you pass on to them; which in turn tells them whether or not they should be (or continue to be) your customer.?
Companies will have a harder time hiding behind fees and recurring subscriptions they hope people forget about. In fact consider this: "Hidden" penalties & fees will no longer be able to hide. Hard-to-understand fine print with unfair terms will be dragged into the daylight, dissected on #finTOK and amplified into the ether.
?? 2. Decision Support for all: a.k.a. Kayak and Credit Karma for everything
The internet + AI leveraging Large Language Models to distill the world's knowledge into well-summarized, synthesized information = highly actionable, super-optimized recommendations for all of us.
Remember what it was like to buy plane tickets in ye days of olde when there was no incentive for carriers to share details on pricing anywhere except in channels they controlled??
Remember trying to figure out different ways to fly somewhere while staying within a budget? Kayak changed that. Not only for the customer but also, by looping search and purchase intent back for carriers and hospitality; creating new ways to compete more dynamically for customer dollars. In so doing, they changed expectations around the table and ushered in a new era of customer choice.
We've watched something similar begin to happen in consumer finance with personal finance management apps ("PFMs") entering the market en masse to assist with everything from budgets to tracking subscriptions to automating savings via "Round Ups".
Certainly better than being on your own with no plan but still too much work. Like paper maps.
And then over the past couple of years we started to see upgrades. Tools sitting across multiple accounts, aggregating and analyzing everything together at a high level; updating you in real time for changing conditions (i.e. changes in income, daily spend, etc). Definitely better than paper maps to help you get to the location you specified…but nothing helping you figure out if you’ve even picked the right destination and then making a plan.
?In 5 more years I suspect we’ll look back at those very same personal finance apps and think of their aggregation and clunky tagging of expenses as quaint. Moreover, we’ll realize they weren’t doing the real job: protecting us from bad decisions and helping make better plans. We’ll chuckle at the fact that even with all those all tools consumers still used to blindly sign credit card, rental car and lease agreements without understanding the fine print; or reflecting on how the average customer used to negotiate with businesses and fight through customer support all on their own.
Being able to look across millions of documents, billions of clauses, and thousands of transactions in order to optimize for specific personal goals (and ways to achieve them) is not something the average customer can do. In contrast,? AI-enhanced bionic customers will be able to see the Matrix of possibilities and easily answer questions like:
They will make better choices all day, every day. And many businesses will lose customers in droves, until they adapt.
Understanding patterns at scale to map optimal strategic personal choices will be a game changer in the power dynamic between customers and providers.
The result: For financial institutions, insurance providers and any industry with very little differentiation at the product level (i.e. a checking accounts is a checking account) companies will be auditioning for their roles every single day, 24 hours a day. Understanding, aligning, and evolving with your customers will become your best competitive advantage. This will look like differentiated services and experiences that haven't even been imagined yet.
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?? 3. Time for some action: Data + Optimized choices + Automation = ??
If "Decision Support for all" is about helping customers understand and make complex choices, this last trend is about overcoming the Action Gap -? the distance between what you should do and what you actually do to follow through.?
Action Gap = the distance between what you should do and what you actually do to follow through
Today a customer may intend to dump you for another company with better rates, or spread their deposits around based on something they heard or read about FDIC. But the amount of friction involved in fully researching competitors, calling customer service to switch accounts, or retaining counsel to claw back an erroneous charge might just feel like too much. So they forget about it and move on.
Decision support services will take the next big jump beyond showing you your choices to acting on those choices on your behalf. When they do, that action gap will go to zero...for everyone.
Slowly at first but as regulatory pressure on big banks and big tech increases requirements for making customer data portable AND usable, there will be a big shift in not only what AI is allowed to read (i.e. analyze) but also write to (i.e. take actions like moving money).
AI-enabled “analysis and action” automation will guide customers through their interactions with most providers in near real-time overseeing basic functions like where to keep money across all accounts; asking for input only when faced with higher stakes or unfamiliar patterns.?
It’ll make day-to-day financial management blissfully boring for most people…and be a huge challenge for institutions stuck in the slow-moving past of dissatisfied customers staying put because of inertia.?
The result will be like a Level 5 self-driving EV that can sense when you need to take over before you do...but for your money.
What might that look like? Maybe Wealthfront. Maybe SpendFriend.AI.
In a world where AI knows stuff like:
……your money will drive itself and tell YOU where to go.?
Your deposits will flow seamlessly from one account to another optimizing for the right combo of time-based availability and risk-adjusted returns. You’ll never again let a company that overcharged you keep that $20 just because you're too busy to sit on a call for 30 minutes. You won’t even be the one calling. Your AI will handle it for you.
Most businesses will need to reconsider drivers of long term growth to address this empowered, bionic customers who sees right through them and expects more.
Final Thoughts and a challenge question
How will smart businesses cultivate loyalty in an infinitely optimizing world of bionic customers? I believe they will:
And that's just the beginning...
This may be the biggest shift of power in the customer-provider dynamic we’re going to see in our lifetime.
What are you doing to get ready for the Bionic Customer? What experiments are you running? What are you learning?
Tell me what you think. Push back. Share examples of how this is playing out in your world.
If this is particularly interesting to you, drop me a note. I’ve spent years in this problem space and am always happy to chat about what we’re seeing in our work at Co-Created helping organizations figure out bolder, better futures.
Investor | Advisor | Analytics Leader | Founder, Carmel Advisory LLC
1 年Very insightful!
Tufts Biopsychology | Founder at BLK Incubator and W3
1 年Thank you for this. Very relevant and timely!
Product, Strategy & Operations Leader | ex- Greenlight, Citi, Goldman Sachs | Columbia MBA
1 年Love this! And it really encapsulates what you’ve been talking about for a a while - the idea that our financial services tech will get super smart and do stuff for us given what’s poss now with AI. I think it left me wondering what brands can do given that the customer is more empowered than ever to bounce. And you captured that at the end but it almost didn’t feel satisfying enough. Like is it really just as simple as radical transparency and hyper focus on the customer needs? As you know, you can be focused on customer needs all day but you still make a bit of a leap of faith in what you decide to build and how you build it. So maybe giving more tangible examples at the end of what brands could do could help me better visualize how to respond to our bionic(!) customers would be helpful.
On Air Host at CBS
1 年Great read. I love how you paint the picture of a more empowered customer that can leverage AI to make better decisions. It's so true that these financial institutions are going to need to step things up if they hope to keep up!?
Senior Product Manager | ex Spotify, Venmo
1 年Great thoughts in there. By point #3 I started thinking “Wealthfront” and you name-dropped them shortly after, so they must be doing something right. You touched on it in the article, but the tl;dr is ignorance is bliss; you don’t know wether you don’t know, and you can’t ask what you don’t know. Companies can offer a differentiated experience by proactively asking/foreseeing the right questions given a user’s circumstances, and offering solutions (at scale), with zero friction. Wealthfront for instance, when given the access, has insights into your idle cash, and offer valuable info like “you could be making $x per year if you moved that cash”. Now that’s actionable, important info, and it can be done seamlessly. I think that’s one of the most important parts - reducing friction to eliminate the inertia after providing some useful information. Great article ????