Artificial intelligence: credit card system will be easier for customers

Some major credit card providers are using artificial intelligence to make it easier to not just choose your rewards, but offer the rewards consumers want the most. In this drive for hyper-personalization of our rewards, artificial intelligence banking is benefiting all parties involved.

According to a recent study, 33 percent of customers who abandoned a business relationship did so due to lack of personalization. But artificial intelligence in banking is changing that.

Deployed by major banks including HSBC and Bank of America, AI and predictive analytics make it easier for banks and loyalty program issuers to determine what rewards consumers will want at any given time and offer those rewards, along with incentives to use their card for future, similar rewards.

Just as social media marketers use ad retargeting to deliver more relevant ads to users, banks and credit card companies can design rewards programs based not just on basic demographic information, but on your past redemption activity and buying behavior.

AI needs lots of data to work effectively. Fortunately, the majority of consumers are willing to share personal information if it means improved services or products, according to a digital banking report sponsored by Personetics, a digital banking solutions provider.

HSBC has already rolled out a pilot program that uses AI to deliver more relevant rewards and seeing redemption rates of 70 percent based on the AI-generated recommendations. To determine the best rewards, the software analyzes the user’s purchasing and redemption history.

But the potential of an AI card goes far beyond the typical or expected predictions. While a human being might assume that someone who redeemed their rewards for a flight to Orlando in the past might do so again, AI can aggregate all their past spending habits and recommend other offers that could be an even better fit.

And that’s only a fraction of the data programs could use to make rewards recommendations.

Tapping into location tracking on your phone, your AI card could deliver promotions via text with location-specific offers, from tickets for tourist attractions in a city you are visiting to gift cards for stores within a shopping center.

Several of the major banks are already using AI banking for hyper-personalization and improved customer service.

HSBC is on the cutting edge, putting together a Client Intelligence Utility with 10 petabytes of corporate and institutional data from 1.6 million clients.

For reference, there are 1 million gigabytes of data in one petabyte. A single petabyte of storage can hold 13.3 years of HD video, and the entire written works of all time would take up 50 petabytes, according to this Gizmodo infographic.

HSBC’s program, so far, is experimental, but it’s safe to assume that the company’s top tier rewards cards, like the HSBC Cash Rewards Mastercard® credit card, will soon employ AI to make the best rewards recommendations, if they aren’t already.

In fact, more targeted rewards choices and hyper-personalization could help make up for the card’s relatively modest 1.5% unlimited rewards. If HSBC impresses users with proactive, useful rewards suggestions that make redemption easy and provide more value, it could keep customers using the card long after the first-year introductory rewards have been exhausted.

American Express is known for its high-end rewards and its travel concierge service. The charge card and credit card provider is now incorporating AI into its travel services with the purchase of Mezi, an AI-powered virtual assistant and chatbot that provides services normally offered by personal shoppers and travel agents.

Right now, Mezi’s services are offered as a perk to American Express cardholders through an downloadable smartphone app, AskAmex. Many Amex offers, such as rewards redemption and 2X rewards offered through AmexTravel, are not available through AskAmex, yet. But it’s not a stretch to think that integration between the programs could be the next step.

For now, cardmembers can “AskAmex” for the convenience of travel suggestions based on voice queries, and then book through AmexTravel using their American Express® Gold Card to maximize their points.

Right now, the capabilities include searching for transactions, transferring money, or checking account balances.

In general, the more data AI-powered software can gather, the more effective it will be. Credit card issuers, with a world of consumer data at their fingertips, stand in a strong position to provide their customers with the best options for their lifestyles.

Banks are already using AI to make banking easier and help consumers make the best choices to get out of debt.

Hyper-personalization, more relevant rewards and even better choices for bonus points are the future, and the present, of AI-powered credit cards.