In the traditionally relationship-driven field of financial services, Artificial Intelligence (AI) was until recently seen as a frightening development, with conventional wisdom assuming that customers would never trust their financial futures to a machine.
These days, the entire industry is reliant on AI for customer engagement and service, with a 2021 NVIDIA study finding some 83% of professionals in the field “agreeing that AI is important to their company’s future success.”
With customers increasingly comfortable interacting with AI-powered tools such as conversational interfaces, it is clear that the future of service within the industry is going to continue to evolve, with an ever-shifting balance between human and AI engagement necessary for meeting the needs of both consumer and business going forward.
All of which raises a number of questions for firms, not the least of which is how individual companies can embrace this ever-shifting paradigm with an eye on driving results now and in the future. To fully answer this, it is necessary to look both to the tech stack and beyond, to the company’s understanding of the nature of customer service, and the needs of individual customers. While this is a daunting task, choosing the right approach, coupled with the appropriate tools and partnerships, can bring a bold, transformative vision to life for any company in the industry.
For much of the 20th century, “customer satisfaction” and “finance” typically only belonged in the same sentence for corporate and high-net worth clients. The majority of smaller-dollar clients tended to conduct the majority of their transactions with local institutions and, with few options for them to switch providers, coupled with a high degree of inconvenience, improving customer experience simply wasn’t a focus for many. For those larger-dollar clients, meanwhile, institutions tended to rely on a mixture of results and relationships to ensure that their best customers remained within the fold.
Even with the advent of online services, many financial institutions were slow to improve their digital offerings and customer service. As a result, many are still struggling to effectively harness the power of data to inform and improve everything from prospecting and customer journeys to upselling and client retention opportunities.
Several key facts bear this out, while also pointing to a brighter digital future for the industry—with the coronavirus pandemic emerging as an unlikely driver of positive change in customer service focus across the industry.
Consider that:
Taken together, these facts clearly indicate that digital services and interactions with consumers are not only the future of the industry—but key to unlocking customer satisfaction and retaining business. As such, the coronavirus pandemic can be seen as something of a force multiplier for this digital transition, with consumers adopting digital-first banking out of necessity, rather than merely by choice.
All of this presents a significant opportunity for financial institutions to collect more data than ever before about customers. But in an environment where digital-only upstarts are beginning to divert market share away from traditional competitors, simply gathering this information is not enough: Institutions must learn to leverage it for retention, upsell, and cross-selling opportunities.
Case in point: As barriers to entry come down for consumers, account or provider switching does not appear to be accelerating—at least, not if financial services providers are looking at
closed accounts.
Writing in Forbes in 2019, Ron Shevlin, Managing Director of Fintech Research at Cornerstone Advisors, noted that consumers rarely take the time to close out accounts, even when they’re unhappy with service. Instead, they simply open new accounts, using existing accounts as “paycheck motels” to temporarily house their money before dispersing it to other locations—a phenomenon Shevlin dubs “deposit displacement.”
Among the beneficiaries of this type of displacement: other banks, savings accounts,
credit card providers, P2P payment apps, investment apps, and more.
Further McKinsey & Company research, meanwhile, indicates that providing better customer service may lead directly to higher deposits, as well as better returns.
As we have seen, there is a clear feedback loop in financial services between customer service, customer satisfaction, and business growth. In any other business, this would not be seen as a remarkable proposition—as evidenced by inbound marketing, sales enablement and customer service platform HubSpot’s “Flywheel”—one of the best-known framings of this virtuous cycle.
As can be seen in this model, growth does not begin or end with the acquisition of new contacts, or when they are converted to leads, or even customers. Instead, as HubSpot notes: “With the flywheel, you use the momentum of your happy customers to drive referrals and repeat sales. Basically, your business keeps spinning.” This works just as well in financial services as it does in any other customer-centric business.
While the approach to driving better results through customer satisfaction seems intuitive—as in the HubSpot model presented above—there are several factors that tend to hold financial services outfits back from being able to fully “flywheel-ize” their businesses. These include:
By following the principles of attract-engage-delight, the following financial services companies have all seen improvements in customer engagement, as well as to their bottom lines.
AES International Increases Leads by 7.5X
Katapult Earns Consistent 4.4-Star Customer Reviews
F1F9 Revolutionises Its Lead Generation Process
One major use case for AI in Customer Engagement is its ability to offer real-time personalization, particularly in providing individually tailored offers to prospects and existing clients at exactly the right moment.
The key to harnessing this potential: data. Any AI is only as good as the data it relies on. With enough data on customer journeys—including touchpoints across both the digital and physical realms—AI-powered solutions can help to revolutionize both offerings and outreach, creating solutions and experiences that both engage and delight consumers.
Potential offerings include:
For many consumers, financial planning and management are sources of stress and frustration. With an appropriate AI solution, financial institutions can help to alleviate these worries by learning from consumer habits to provide tools for budgeting and planning for major events, warning consumers when their spending starts to veer off course, and even suggesting products or services that are better fits for their specific needs.
By leveraging machine learning, financial institutions can perform compliance-related tasks such as verifying identity without having to make a customer visit a branch or jump through hoops. Tools that can verify identity from a passport or driving license not only cut down on time and administrative burden for financial institutions, but also help to reduce frustration and improve satisfaction for the consumer.
Machine learning can also be leveraged to monitor consumer accounts for unusual behavior and provide real-time fraud detection.
As we have seen, customer service and engagement are not optional extras in financial services—but core pillars for a holistic growth strategy. As such, choosing a partner to help place service and engagement at the heart of your business is a critical business decision. Here are a few success factors to weigh in any potential partner: