When it comes to banking relationships, personalization is a must-have for building trust. People feel special when they’re remembered as more than an account number. They don’t know AI helps credit unions supplement that personal touch.
In fact, according to a recent announcement from Personetics, “over 70% of consumers want timely and contextual financial advice from their banks, and 84% would likely switch banks to access such services.” Credit unions, in particular, have always championed personalization. But how can credit unions maintain that personal touch at scale?
One of the most significant problems organizations face when it comes to personalization is not a lack of data but too much data. The data avalanche many organizations face today is a challenging problem to tackle at scale – but not when employing AI. This is where Personetics believes it can add value by focusing on what the company calls a “Cognitive Banking Advantage.” In simple terms, AI systems can find relationships in the data at scale that are foundational for loyalty programs, financial wellness and open banking adoption, to name a few.
Leveraging AI in banking is not new; it has been used for quite some time with a focus on fraud prevention. Personetics’ approach, the company says, bridges the traditional strengths of community-focused financial institutions like credit unions with the power of modern AI to be leveraged for personalized insights. This suggests that credit unions can effectively scale their personalized approach, offering members timely and relevant financial insights and offers without sacrificing the human touch.
As AI helps credit unions build stronger relationships with their members, Personetics is helping credit unions take advantage of its power. The Credit Union Connection Founder/CEO Sarah Snell Cooke sits down with Udi Ziv, CEO of Personetics, to discuss these vial trends.
Disclosure: Transcript below is automatically generated
Sarah Cooke 0:02
Alrighty, hello. Welcome to the cranium connection. I am your host, Sarah Snell Cooke, I’m here today with Udi Ziv, welcome.
Udi Ziv 0:12
Thank you. Thank you for having me. It’s a pleasure,
Sarah Cooke 0:15
and he is the CEO at personetics. Why don’t you tell us a little bit more about yourself and the company. I
Udi Ziv 0:23
think the company is more interesting, but I will say a few words about myself. You know, been doing enterprise software, enterprise application, for over 30 years, serving multiple industries, but I would say in the last 1015, years, focusing on financial institutions. And then specifically on the fascinating kind of touch point between the data financial institutions have, understanding their members or customers and making sense out of it, in order to help, at the end of the day, the end consumer that is being served by a business. And obviously, you know, this is very much fit for what person ethics is doing as well.
Sarah Cooke 1:09
Yeah, so you all are involved in cognitive banking. Why don’t you tell me what the heck that is? Tell everybody what the heck that
Udi Ziv 1:18
is. Question. Maybe I’ll start by the reason for cognitive banking, and I’ll get to what what it is, but I think it’s more important to understand the rationale. And with that, you know, I’ve joined person. It’s a little over a year ago. Companies been around for almost 15 years. And you know, when people ask me what attracted me to this company. We have a great business, but, but, but, I think way before I was I was fascinated by the business itself and the metrics of the business, the vision of the company is fascinating, and the vision is to democratize financial wellness for all people worldwide. And if you think about it, only between one and 3% of the world population has the privilege of getting financial advice from either their financial institution, credit union, Bank and others, or from an independent if they’re really wealthy. But what about the other 97 to 99% of the people, that’s most people, most people we know don’t get the privilege of getting advice. And finance is complex. And you know, we just ran a survey over a few 1000 people globally. We are a global company. We serve, you know, financial institutions in over 30 countries. We ran a survey with with consumers, with the members, and asked them and several questions about what’s of interest to them and how their financial institution is serving them. But one specific answer was fascinating, or 50% of people said financial wellness is more important to them than and I’m serious health, family relationships, etc. Now, when someone is ill, obviously that’s more important than anything but, but in their mindset, it’s so complex and so significant to day to day life then it’s, it’s the most important thing, and it’s very complex. And, you know, going back to our vision, the vision to democratize financial wellness for all people worldwide, is a fascinating vision, and it really attracted me. You know, it’s because if we can help people make sense out of it, and be smarter about their financials, and take smarter action that will do a lot of good. And this is the core of what personetics is, and it’s the root of cognitive banking. Because when you think of of that vision, and you think how credit unions and other financial institutions serve, mostly serve their customers, there’s a very significant disconnect. And the disconnect is that we’ve all been as people. We’ve all been conditioned, trained, shaped by Amazon, Netflix, Spotify, to be served in certain manner. Now, when I go around the world and I talk to people and ask them, How many of you think your financial institution is serving you the way Amazon is, or Netflix or Spotify, not in many others, and most people say, Oh, come on. Obviously not. And when I ask the question of what is the main difference, it kind of highlights something very, very basic. You know, all of the brands I’ve mentioned, Amazon, Spotify, Netflix and others basically do very simple things. It’s complex to do, but it’s easy to understand. They they looked a lot of data to basically understand Sarah or Udi or anyone else. Yes, then they provide personal useful. And useful is a big word, informations that is easy for me to continue to consume. They understand my current needs and also predict, depending on the service, predict my future needs, which is a little more complicated and is more valuable, and then, with a click of a button, allow me to take action. That’s all they do, if you think about all of these things now, why are we fascinating? Fascinated by them? Because that’s exactly what how we want to be served. By the way, the last thing they do is actually they learn from our action or lack of action, to make the next cycle smarter. But, but really, that’s what it is. Now, if you think of your financial institution, mostly they don’t do that. They They may show me some financial information, mostly about my transaction, maybe allow me to pay bills. Fine. It’s it’s important, but that’s not very useful. They don’t help me make sense of my family finance. They definitely don’t help me understand my my my current needs and and definitely don’t predict my future needs, and don’t allow me to act with with a click of a button. And that’s the disconnect. Now we’re all frustrated by that, because we’ve been trained and shaped and conditioned to be to get service that way, but, but it’s it’s not how we were being served. And the most important things that thing in our life, which is financial wellness. And this is the birth of cognitive banking. Cognitive banking is actually the combination of two different disciplines that every credit union, another financial institution, fully understand. One is called engagement, or personal financial management, which is the basic sharing of financial information with your member. It’s, it’s a it’s, it’s a must, but it doesn’t bring a lot of value and and everyone does it. So that’s one category, one discipline, and then there’s another category, another discipline, which is called, let’s call it the next best offer category, which is campaign management products that basically had a product in mind, let’s say a loan and have and now that loan is looking for a segment of customers, members that it’s that are a good fit for that loan, and then they send a banner or no or an email or something of that nature. These two things are disconnected, different vendors, almost different buying individuals within a credit union. Now the world operates and everything thing. Everyone thinks it’s great, but, but is it from a member perspective, that’s not how we are used to consume services. We want the whole thing to be a single continuum. We want the financial institution to fully understand me. Yes, we want them to present useful information, sure, but it doesn’t stop there. We need them to understand our needs, predict our future needs, and then allow us to act and cognitive. Banking is the marriage of these two disciplines together, though engagement, the wellness and the what we call needs based offers in context, in a single continuum. That’s the, probably the best definition. Now, for a solution to be a cognitive banking solution, it basically needs to follow the exact same thing that Amazon and Netflix are doing. Look at all your transactions, understand make sense out of them. That’s that requires a lot of AI, of course, with the magnitude of transactions, then present to you, not your list of transactions or and buttons to say you can press this to pay your bill, that’s sure. But, but give me useful information. Give me things that are digested in a way that I understand why you’re showing this to me, and what is the meaning of that? I’ll give some examples in a set. Then they need to understand my needs, current needs, what is it that I may need now from a financial perspective, and then, more importantly, predict what will be my needs tomorrow, next week, next month. And then, in context, allow me to act and add learning to that kind of the positive feedback. Look, that’s all that COVID banking is about. And when a financial institution applies that there’s significant value, which we can talk about. But I’ll pause here, Steve, there’s other questions around
Sarah Cooke 9:49
this. Yeah, well, actually, you started to answer it. What is the major benefits to the institution as well as the consumer? And if you have some examples to share, I’d love those, too.
Udi Ziv 10:01
Yeah, so let me, let me give you two fairly basic examples of a use case so, and then obviously, I’ll talk about, so, what is the benefit for, I guess, for everyone. So I talked about in cognitive banking. First step is analyzing all of your financial transaction to make sense out of it, to fully understand your financial profile, present useful personal information as a second step. And then I want to talk about understanding current needs and predicting future needs, which is kind of step three and four in this so let me give you an example of understanding current needs. One of the hottest topics is subscriptions. We all have many subscriptions to many services, many of which, at least I am not even sure I have them or don’t remember I have them. So identifying subscriptions is is a significant thing. So it’s not only showing me a list of transactions, but show me a nice tracker of my subscriptions just to highlight them too. That’s important by itself. That’s useful. But then let’s make it even more useful, let’s say that I can identify that you have two subscriptions that are of a similar service, maybe Spotify, Netflix. Now that may be something you planned, and it’s fine, but it may be that you forgot you had a Spotify, not sorry. Let me restart that let the siren. Then I was distracted by the siren behind me, which you probably can hear as well. Let it pass, and then I’ll continue. Should I start the whole question, the whole answer? Or how do you want to run this?
Sarah Cooke 12:00
You can, do you want to start it? I mean, you can, whichever is easiest for you. You want to start? Let me
Udi Ziv 12:08
start over, okay, once the siren is completely gone, yeah, it’s
Sarah Cooke 12:12
interesting because I can hear it when it picks up your voice, I can hear it, but like when you’re not speaking, I don’t hear it. So,
Udi Ziv 12:18
yeah, it’s, it’s the, yeah, the microphone knows how to screen it out when there’s no other voice. Okay, so, so let me maybe start by sharing a couple of use cases, and then talk about the value that they bring, both to the financial institution and to and to the member, so just kind of remember what cognitive banking is all about. First step is analyzing all of your transactions to make sense out of the data and to fully understand your financial profile. Obviously, a lot of AI is involved in that. Second step is to present useful information in a personal manner, and then it goes into identifying current needs and predicting future needs. And I want to give example of each one of these. So let’s talk about current needs. One of the hottest topics is subscriptions. We all have many subscriptions, at least, I don’t remember quite a few of them. So it’s very useful for people to get a list out of the full transactions that they have. You get a list of here are your recurring subscriptions. That’s very helpful, but even more helpful, if I can identify that two out of these services are of a similar service. Let’s say Spotify and Apple Music, both are music streaming. Now I may have done it on purpose, and I may have forgotten that I had Spotify and I’m still paying while I’m only using Apple Music, so that’s becoming even more useful to basically identify not just the subscriptions, but also the discrepancies. And now, making it even more useful is if right next to the list of subscriptions and pointing out that you have me have a duplicate, is to give you a little button that says, Click here to initiate canceling that, and that is the marriage of identifying a need in a useful manner and allowing you immediately to act upon it. So that’s one basic example which is very valuable and explains the need for cognitive banking, the need for the continuum between understanding data, presenting in any useful manner and allowing you to act. It becomes even more interesting when you talk about predicting future need. So I’d say my balance in the account is positive, but let’s say I don’t know, $2,000 which is fine. And now if I see that all fine, I move on. But wait a minute. I. We can analytically by looking at your transactions, looking at your pattern of pattern of expenses in the past, and pattern of income, we can predict that within seven days, you will be running out of cash and getting into an overdraft situation. You as a member now presenting that to me in a nice visual manner is very useful, because if I know that I’m you know, seven days away from being in an overdraft, I may want to do something about it, putting a button right next to it saying, click here to get a bridge loan. That is not just very useful. It’s also basically saving me from an overdraft situation, and that’s the example, again, of predicting future needs. But immediately within cognitive banking, this continuum from showing you just very useful information to allowing you to act in closing the loop. Now, when this is applied, and you asked about value, we call it the magic, magical Win. Win. Two things happen. And I’ll start by talking about the financial institution. They see a very significant increase in business on multiple dimensions. This could be digital sales, which is always a challenge. We have customers reporting 10% increase in digital sales just by that approach, by showing useful information, allowing you to act in context. We see again, from customer reporting value five to 10% in account balance growth, actually getting more funds into that improve retention, significant improvement in retention. You know, the fight for primacy is probably a very significant challenge that all financial institutions are facing. When you’re giving the member that type of experience, they’ll stay and the digital engagement, which is measured by how often do you go into your application or website, how often do you interact with the insights you’re being shown is growing by, again, reporting what customers are saying 30 40% that’s extremely significant from all perspectives, short term financial gains and longer term, meaning, lifetime value retention, et cetera. And you know, customers are happy to report our customers, credit unions and financial institutions are happy to report that. But that’s that’s only the first part, because I think the biggest benefit at the end of the day, which creates the flywheel effect, is that their members, and we have 150 million people that are being served by our cognitive banking, the personality banking their members are basically rating their experience. Every single insight that is shown on the screen has a built in rating mechanism, and the member can go in and say, zero to five stars. How happy they are with that. What they’ve seen the average score across one 50 million people worldwide, is 4.6 out of five. 4.6 out of five in banking or in financial institution is is almost like science fiction. Uh, and that’s that’s incredible news, because when members are so happy, they want to do more, they want to spend more time in the application. They choose to use this credit unions service versus another app that they have on their phone or another website they can go to. And that’s very, very significant. And this combination, you know, any business that can say this, that has this Win Win effect, that the business is thriving and its customers are thrilled. You know, it’s bound to be successful. And that’s exactly the experience financial institutions are getting when they’re using cognitive banking. And it’s not surprising, because this is exactly what their members want, and it creates the need, or the the the action from the member that drives business, and that’s the end result that that we’re seeing, or our our credit unions and other financial institutions are seeing,
Sarah Cooke 19:54
yeah, it sounds like you’re talking about open banking to be able to get all that data about different. Different or members with funds other places. And so when is that? What are what do you see? Where it looks I’ll start over. What is the trend? Do you see? When are we going to actually see open banking in the US?
Udi Ziv 20:23
Yeah, well, you’re absolutely right. Open banking is a very significant benefit to cognitive banking, and just to maybe in a couple of senses, explain why the concept of cognitive banking starts by fully understanding your financial profile using a lot of AI and other analytics. That’s fundamental, because only when you fully understand financial profile, you can now present useful information and understand needs and predict needs, etc. A member’s full financial profile is not built out of a single financial institutions, transactions. Nowadays, you know, many of us have multiple financial institutions that we do business with, and just having the siloed understanding of a single credit union transactions of a member may give a very skewed understanding, which is true for that credit union. But you know, if I’m, if I, if I’m in an overdraft situation with this credit union, obviously, I, you know, I may be offered a loan, but I have, may have hundreds of 1000s of dollars elsewhere, so I definitely don’t need a loan. So open banking is a very significant factor in cognitive banking. And for us, any country, and we serve many countries, that has open banking, our customers, the financial institutions, are gaining even more value. And basically they get the full picture, therefore, they present the most complete financial profile with the most useful information to their members, and allow them to be smarter and offer smarter things for their members. Having said that, most countries don’t have a sophisticated open banking environment yet. And you know, in countries that you know, in Brazil or in the UK, where it’s more advanced, there are definitely very significant use case. But also in the US, we have customers. We that financial institutions that have fairly sophisticated open banking strategy, and they use the personality banking in order to basically take advantage of the broader understanding of the member, all the way to the point I’m not going to mention The financial institution name that what they’re basically doing, they identify opportunities within other financial institutions and basically suggest to the member alternative services that basically move funds from the other financial institution to this specific one, which is the holy grail of what they want to do in terms of primacy. So it’s definitely relevant. It’s coming because it’s good for for the members, it’s good for the consumers. I think it’s slower than in the US, than in other markets, but it’s definitely coming because it brings value. And anything that brings value eventually happens.
Sarah Cooke 23:40
Yeah, yeah. I was wondering, because you were, you were talking about, you know, some institutions taking advantage of opportunities they see to offer an alternative service. And so some executives are a little concerned, hey, they’re going to be picking off my members or whatever. How do you get around that kind of thinking, or over that kind of thinking.
Udi Ziv 24:05
Yeah, look, first of all, you’re right a financial institution that is not going to play the game and basically not going to try to get their members to allow them by open banking, to get information from other financial institutions. Will will not have the upper hand because they’ll have less data and therefore less understanding, and they will mostly fly blind or fly siloed, if I not completely blind, and they’re definitely not going to have the upper hand, but it’s all you know, members have to open banking is an elective service. You have to opt in to open banking. You have to allow your financial institutions to to get access. And you know, my point and work. Helping. By the way, we’re helping financial institutions explain the value via our insights. We explain the value to the members of why is it good for you, the member to actually allow your financials, if your credit union to to to get financial data from other institutions, mostly because I will under i The credit union will understand you better and allow and be able to help you better. But it’s all, you know, the member can choose. And if they don’t want to do it, it’s not done. If they want to do it, if they understand it’s valuable, they will opt in, allow you to do it. And then, you know, eventually, and they will measure, are they getting any anything valuable out of this theoretical exposure that they’re that, that they’re willing to give you and and in most cases, there’s so much value out of it that that once people do it, they keep doing it again. It’s good for everyone. And
Sarah Cooke 26:05
so what are the trends that crane should be watching for around this? Everything we’ve talked about today,
Udi Ziv 26:13
yeah, I think the biggest trend is that members, consumers have a choice. You know, their surveys, I can quote a few, you know, JD Power is saying there’s a 60% increase in last few years in account switching something the industry they’ve never seen. Accenture in one of their studies said that overall, the whole the over the whole population, 59% of of the people they surveyed bought a financial product from a new financial provider, meaning, not from their main financial institution. And when you go to Gen Z, same question, 82% so basically, people are, you know, exercising their choice. They have, and they have a lot of choice, all the way, by the way to again. JD Power saying 13% of the people they surveyed in a phenomenal number. 13% of people they surveyed said in the next 12 months they’re likely likely to switch financial institution. That’s an enormous number that the industry never seen in our own survey. You know, I mentioned before a few 1000 people worldwide asking them about how, what, are they expecting from their financial institution? 84% of people we serve, it said they will consider switching financial institution to get personal service the type the Amazon, Netflix, Spotify, type of service. These are numbers that the industry never seen. It’s probably the biggest disruption in the industry’s history?
Sarah Cooke 28:03
Yeah, I’m sorry, I was gonna say 1520, years ago, I remember people creating switch kits because members would complain how difficult it is to change institutions. And now, yeah, big difference.
Udi Ziv 28:16
It’s a click of a button, and the younger generations, I mean, 59% bought financial product. These are full population. That’s a lot. It’s almost 60% of the people experimented, at least in last 12 months with a different financial institution. 82% of Gen Z, ers. It’s almost everyone. People have choice, and people are exercising the right to choose, and if which, to me, is the biggest earthquake this industry ever seen, it’s not about technology. Technology is maybe an enabler that can fight this or help financial institutions overcome this. It’s a societal disruption and a financial institution, large or small, that will not pay full attention to the fact that their members have a choice and not spend significant cycles around what am I doing to differentiate? What am I doing to basically, when they do have a choice, they will mostly choose me versus others. Will see, you know, some tough times. And so I think that’s the biggest trend, which and inertia? Which? You know, most organizations, by definition, operate under some sort of inertia. Inertia is just not going to make it. And even if financial institutions that will say, you know, I’ve been doing the same thing for 20 years, why wouldn’t it work next 20 years? The answer is that they have different members. They have different consumers, you know, maybe the same people. But we’ve been trained and conditioned to expect something different, and we have choices, yeah, and if they don’t adopt a cognitive banking approach from personetics or from others, I guess they will not be able to maintain the upper hand, and it’s true for the largest financial institutions, and we serve some of the largest in the world. But it’s also true for the smallest community bank or credit union, because digitally, they all compete for the same space on my phone or website, and again, I have a choice as a consumer, as a member, and that’s the biggest concern, but also a big the biggest opportunity for the ones who pick it up quickly. And
Sarah Cooke 30:58
credit unions are democracies, so hopefully, understanding people have a choice, obviously, that’s the point, right?
Udi Ziv 31:06
Yeah, and, you know, maybe closing the loop on, you know, our vision and credit unions, you know, democratizing financial wellness. You know, what better vision is there for credit unions? Right? I mean, it’s all about taking care of the members. And yes, while doing this, you create a good business, but, but it’s all about, am I helping the members? Basically, almost get wealth management for free, right?
Sarah Cooke 31:38
So I always let my guests have the last word. So what are your final parting thoughts? Eddie, of all the things we’ve discussed today,
Udi Ziv 31:48
yeah, look, I think the it’s a fascinating time in the industry. I think an industry that has been around for 1000s of years, I’ve seen, you know, empowering world events, as well as all of our day to day lives. I think any industry seen disruptions in the past, I think there’s never a similar magnitude of disruption, never and, and and I think you know you can look at it two ways. You can panic, or you can say, wow, it’s such an amazing opportunity to make a significant change and eventually to the to the better of your members. And I think the financial institutions that that take this as an opportunity are in for a very exciting time where the whole industry is going to shift, not because it’s going to have different products or different interest rates or maybe, maybe that will happen as well, but because that whole dynamic with how they work with their members is going to be changing forever, and it’s extremely exciting. And I’m glad you know personatics And and our cognitive banking solutions are we think at the forefront of of that opportunity in the market. It
Sarah Cooke 33:03
was a powerful opportunity for credit unions and those other guys. Thank you so much. Today, I appreciate your time moody. Thank you for
Udi Ziv 33:12
joining me. Yeah, absolutely. It’s a pleasure. Let’s fight for credit unions. You.