Artificial intelligence is making inroads into people’s everyday lives. More and more consumer goods producers are equipping their devices with it. But not everywhere is the use sensible and the technology welcome.
Networking and artificial intelligence are not per se an advantage for customers.
Consumers have long been used to artificial intelligence (AI) through voice assistants such as Siri or Alexa. Things like lighting or heating can also be controlled in the home in this way. And anyone who is thinking about buying a new washing machine or a new refrigerator will notice: The Internet of Things (IoT) has become one of the main focuses of consumer goods manufacturers in the last ten years. There is hardly a device without an internet connection and app control. Smart devices with AI support wherever the eye can see.
Samsung, for example, writes on its website: “With the help of user habits and complex algorithms, the networked refrigerator is to simplify recipe and shopping planning as a nutrition manager in the future, while being able to respond even more to the needs of individual family members.” Or the washing machine with AI: “Using deep-learning technology, the machine compares the data thus collected with more than 20,000 data sets – such as information on how much detergent, water and which programme the machine uses for similar washing cycles.”
The goal: Intelligent products should convert one-off purchases into long-term customer relationships that are supported by data and offer the possibility of up- and cross-selling.
Customers rather reluctant to network in the home
But what may make strategic sense for a brand is not necessarily well received by consumers. While 80-90 per cent of the appliances sold by LG Electronics come with internet-enabled “smart” features, the company disclosed that less than half of the smart appliances sold stay connected to the internet. And even when customers do join in, as with Amazon’s Alexa, it doesn’t automatically mean the company benefits. 10 billion dollars down will lead to a planned 10,000 layoffs at Amazon. Customers probably make few (revenue-generating) purchases and use it more for weather information or music playback.
Wrong target for AI?
By all accounts, consumers see the “true value” of AI differently than companies. As Harvard marketing professor Theodore Levitt once put it, “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.” Products are not an end in themselves but must serve to solve a customer problem.
The potential to bring enormous benefits to people through the interconnectivity of everyday objects in our homes, cars and general lives is arguably there. But you still have to fill a washing machine or a refrigerator yourself. Even the most intelligent AI will never be able to do this. In this respect, it still seems difficult for companies to convince customers of the benefits of AI and IoT.
Consequences for financial institutions
Banks want to be partners in everyday life and support their customers in financial matters. Data and apps play an increasingly important role in this. Data security and data protection are important factors in protecting reputation and not jeopardising the trust that banks enjoy.
However, it will be crucial that customers see a benefit in letting their bank take a look at their everyday life. This will not succeed with clumsy product advertising based on a supposedly recognised need.
To become the financial optimiser of their customers, banks must understand that their main task is to increase the purchasing power of their customers, i.e. to help customers increase their wealth and liquidity. This can be done through loans or investments. The resulting approaches are numerous and very concrete, e.g. in the form of a financial management tool or through comparison platforms for certain aspects of everyday life. In particular, the recognition of key moments in the lives of bank customers plays an important role for shopping advices.