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Whether it’s understanding our customers' spending patterns and investment habits, or their financial struggles and aspirations, we’re harnessing the opportunity of AI to be the banking partner that they need.

Greig Cowan
Our Head of AI and Data Science for Innovation

Knowing our customers better

Our customers’ behaviours, habits and expectations are evolving faster than ever before. Being a trusted partner for our customers throughout their lives is about knowing them better, and our use of artificial intelligence (AI) is a key part of this.

AI has been a core element of delivering for our customers for many years now. It has helped us provide enhanced and efficient customer journeys and has helped us to detect and prevent fraud across a range of our products.

And as our customers ask for improved, adaptive experiences, we believe AI has the potential to be even more central to our thinking and decision-making.   

Whether it’s understanding our customers' spending patterns and investment habits, or their financial struggles and aspirations, we’re harnessing the opportunity of AI to be the banking partner that they need. Vital to this is how we’re using AI to understand ‘customer lifetime value’ (CLV).

Responding to customers’ needs

Customer lifetime value is an established marketing concept used by companies to help them assess their future business growth and plan how they can adapt and respond to customers’ needs.

Rather than looking at the value of one-off individual transactions, CLV places value on all potential transactions made during a customer relationship timespan. For NatWest Group it helps us know how, when and where we can invest in products and services our customers will need, based on historic and likely customer actions. 

Understandably, this involves processing a huge amount of our customer information – over 30 discrete data sources, each with up to 400 billion rows, and more than 10,000 lines of code. 

By leveraging state-of-the-art machine-learning techniques we have turned this vast amount of data into a focused 360-degree view of our customers.

State-of-the-art machine-learning

By leveraging state-of-the-art machine-learning techniques we have turned this vast amount of data into a focused 360-degree view of our customers, helping us to make smart predictions about future trends and refine our product offering.

This AI-powered implementation of CLV estimation at NatWest Group has marked a significant milestone in the practical application of marketing science to the retail-banking industry.

The methodology has already made a substantial contribution to current academic research on the commercial deployment of AI and has been operationalised to deliver tangible business results at scale for NatWest Group, influencing a material change in our AI and data strategy.

Providing immediate insight

For example, through our CLV modelling and data assets we quickly identified the need to engage with customers earlier in their lifecycle, surfacing a deeper understanding of their requirements, views, and ambitions at a younger age.

The insight generated by our CLV framework, coupled with demographic projections and increased competition from FinTechs and challenger banks, has led NatWest Group to acquire and tailor more products for digital-savvy youth customers.

Specifically, in October 2021, NatWest Group purchased Rooster Money, a provider of a pocket money and financial education app for children. Now branded ‘NatWest Rooster Money’, the product provides the group with a unique youth and family proposition.

There is a simple ‘on-ramp’ for parents/guardians (onboarding in less than five minutes); safe and flexible parental controls, which can be personalised per child; real-time notifications on spending; the ability to set flexible spending limits; saving pots introducing children to the concept of budgeting and a set of digital-engagements, which help equip parents with the knowledge to build positive money habits for their children.

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Identifying value

Elsewhere, improved precision in CLV estimation has been instrumental in optimising marketing campaigns and guiding relationship managers in our wealth business, enabling them to engage customers with more personalised and effective financial solutions.

For instance, the top 10% of wealth customers ranked by their propensity to take up investment products were found to be 3.2 times more likely to do so than a customer chosen at random[1]. This precision in marketing not only optimises resource allocation but also heightens customer satisfaction by ensuring product offerings are more closely aligned with individual customer needs.

This CLV-driven messaging is also better targeted to the micro-segments of customers who we know will respond positively. The initial success of the approach presented in our work has led to the development and deployment of additional CLV models across the Retail, Commercial & Institutional, and Private Banking segments within NatWest Group.

As well as informing NatWest Group’s strategy, our CLV modelling has also been used to improve the way we support our customers. In particular, CLV insights have enabled us to deliver personalised customer communications that are more relevant and delivered at key decision-points in people’s lives.

It means that if used in the right way – with a thoughtful and ethical approach – AI has the power to bring us even closer to our customers.

A blueprint for the future

The implementation of CLV modelling methodology at NatWest Group represents a clear evolution in our development and deployment of AI, enabling us put customers at the centre of our thinking.

As well as already having a significant influence on strategic decision-making for the bank, it showcases the power of combining AI and marketing science to drive business value and customer engagement, while also serving as a blueprint for the insights we can unlock from our data sets.

This in turn can open all kinds of other possibilities, such as rapid personalization, innovative new product launches and interactions with customers across non-banking channels and platforms.

It means that if used in the right way – with a thoughtful and ethical approach – AI has the power to bring us even closer to our customers.  

About the author

Greig Cowan is Head of AI and Data Science for Innovation at NatWest Group. He has led the transformation of how the we build and deliver AI, machine learning and data-led solutions to the organisation, and the cloud infrastructure that powers them.

Follow Greig on LinkedIn

[1] Modelling customer lifetime-value in the retail banking industry. [2304.03038] Modelling customer lifetime-value in the retail banking industry

The material published on this page is for information purposes only and should not be regarded as providing any specific advice, or used by consumers to make financial decision. Terms and conditions apply to any products or services mentioned.

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