AI Facilitates Member Conversations

Recognizing the growing popularity of digital banking – and a coinciding decrease in branch visits – USALLIANCE Financial adopted Micronotes’ artificial intelligence-driven marketing automation platform to communicate with its members through concise, one-on-one conversations.

The $1.75 billion, Rye, N.Y.-based federal credit union, which began in 1966 to serve IBM employees, has over 118,000 members, including employees of American Express, PepsiCo and Big Blue. USALLIANCE has since expanded throughout the Northeast and now offers a full range of financial products and digital banking services.

“The increasing popularity of digital banking – and the corresponding decline of branch visits – affects all credit unions and banks. Fewer branch visits mean fewer opportunities for our team to engage with members,” Kristi Kenworthy, assistant vice president of e-commerce for USALLIANCE, said. “This can be an impediment to our mission of building a strong member community as well as meeting our institution’s growth objectives.”

With a conventional in-branch member engagement strategy no longer being effective, USALLIANCE considered two options: 1) Keep doing what it had been doing and hope for better results, or 2) Take a completely new approach.

“As part of our strategy of putting our members first and always seeking new ways to serve their evolving needs, we had been looking for a new way to connect with members who prefer digital banking to branch visits, and who ignore banner ads. That is why we decided to deploy Micronotes in 2013,” Kenworthy recalled.

USALLIANCE chose the Boston, Mass.-based Micronotes to enable engagement with digital users through brief virtual conversations during, or at the end of, online or mobile banking sessions. “Micronotes is a sales enablement tool that helps financial institutions engage with the customer and drive product adoption,” Christian Klacko, COO and co-founder of Micronotes, said. USALLIANCE selected two Micronotes modules: Predict, which delivers forecasts about digital banking users’ preferences; and Net Promoter Score, a method for measuring, comparing and improving customer loyalty.

The brief one-on-one conversations help USALLIANCE learn members’ needs and preferences, which in turn allows USALLIANCE to stay connected with members. Micronotes also enables USALLIANCE to deliver personalized offers to members, and immediately follows up with those shopping for specific products or services.

In addition, Micronotes gives USALLIANCE the chance to interact with members who no longer do their banking at branches or ignore digital banner ads; use machine learning to engage in targeted digital conversations with each of its members; automatically deliver individualized offers based on conversation responses; and leverage digital traffic to generate “warm,” segmented, actionable leads in real time. Micronotes also helps USALLIANCE identify members at risk of attrition and accounts in danger of delinquency.

According to Micronotes, financial institutions have tried to engage digital users and interest them in new products and services by placing banner ads on online and mobile banking sites. But results have been poor, with an average banner ad click-through rate of less than 0.1%.

“We engage users inside online banking applications – we target them with conversation,” Klacko said. He explained instead of using targeted banner ads, the financial institution asks the user something like, “Good morning Roy, are you planning to buy a car this year?” The Micronotes machine-learning algorithm continues the dialogue based on the response and answers to subsequent questions.

When it was first deployed, Micronotes collected six months of USALLIANCE’s member data to produce propensity scores that the credit union used to deliver specific dialogs with each member. **The first week of the marketing automation platform implementation, USALLIANCE conducted thousands of digital interviews, achieving an engagement rate above 7%. The interactions produced actionable leads along with obtaining insight into members’ financial preferences and needs. The leads allowed the credit union to deepen existing relationships as well as sell the right services and products based on members’ needs.

Then, as more conversations took place and new responses were collected in real time, the Micronotes Predict module fed new data into its machine-learning solution to fine-tune predictions for the next series of conversations.

Klacko noted after the first set of member interviews takes place, Micronotes uses the interview responses with a new set of data the financial institution provides to the platform on a daily basis. “It can be follow-up conversations from the ones we had last week or they can be new conversations about new products or services we believe you are in the market for.”

Klacko explained that Micronotes scores every credit union member probabilistically across all the product lines using its algorithm, then validates whether those people are indeed in the market for targeted products before turning over the leads to the credit union. “In other words, we score, we validate, we act and we learn.”

In the half-dozen years using Micronotes, USALLIANCE has conducted some 250,000 personalized conversations with members and seen its engagement rate rise to a monthly average of 20% in the past 36 months or so.

“The most important benefit is that Micronotes provides a great way to hear the voices of our members, so we can learn their needs and meet them with the right products and services,” Kenworthy said. For example, USALLIANCE ran a campaign in mid-2018 to let members know about a great rate it was offering on CDs. “This campaign generated $1.2 million in new CD deposits in just a few weeks, which means a lot of members started earning a higher yield on their savings.”

USALLIANCE now has an overall conversion-to-lead rate of 47%, which in turn empowers it to transform potential buyers to revenue at a rate above the industry average. Because Micronotes digests information directly from USALLIANCE, it can track leads through product acquisition. More than 8% of all leads at USALLIANCE convert to sales, which allows for a tangible ROI calculation.

“The insights we gain about what they need enable us to automatically deliver individualized offers based on conversation responses,” Kenworthy said. She emphasized in the “old days,” when all transactions took place at a branch, the team had ample opportunities to talk with members about meeting their needs. “Now, with Micronotes, we have taken that level of personalized service into the digital age, with outstanding results.”

The credit union has also enjoyed the benefit of using Micronotes conversations to support its giving programs. Kenworthy said, “Each year, USALLIANCE employees run the Boston Marathon to raise money for charities. We invite the member community to contribute to this and other worthy causes we support. It is a great way to easily involve members in our fundraising activities while we embrace the cooperative spirit and strengthen our community ties.”

USALLIANCE plans to continue working with Micronotes and use intelligent conversations in the digital space to better understand its members’ needs. The institution’s stated goal is to interview everyone in its fast-growing member community. Kenworthy said, “One of the most important things any credit union can do is build a strong member community by asking them about their lives, so we can help them achieve.”

Klacko emphasized credit unions use Micronotes in a unique way. “They love to use the platform not necessarily just as a cross-sell tool but more of a community engagement tool. They love to launch a lot of campaigns, which are educational.”

He added, “What really differentiates us from other technologies is, with banner ads for instance, they are always trying to sell something. That is not very successful. I don’t see any banner ads that ask, ‘Do you have enough money saved if you get laid off from your job?’” Klacko maintained that is an important distinction, because a credit union’s mantra is to help members become smarter about finance.

Klacko noted the cloud-based Micronotes services, hosted on Microsoft Azure, could transform into a premises solution. The company recently announced it is teaming with the Austin, Texas-based Kony, a provider of digital banking and low-code platform solutions, using the Kony DBX digital banking platform.