Artificial Intelligence (AI) is rapidly transforming customer expectations across industries, and the banking and financial services sector is no exception. In fact, 68% of financial services customers say they’re already using AI to some degree for banking.
When done right, conversational AI banking can be a powerful tool for streamlining the customer experience and improving brand loyalty. Below, we go over what AI is, the consequences of poor customer service for banks and the advantages of AI in banking customer service.
What is the cost of poor customer service for banks?
Around the world, banks lose one in five customers due to poor customer experiences. Poor customer service can come with a huge price tag. It’s estimated that poor customer service collectively costs businesses as much as $1.6 trillion per year.
Additionally, the cost of poor CX goes beyond money - it can also impact your customer churn rate. Research shows that one in four customers has considered switching banks. That means if your bank fails to meet expectations, there’s a risk that 25% of your current customers could walk out the door. So, what does poor CX look like for customers of financial services institutions? Some examples include:
- Siloed customer support that creates inconsistent experiences
- Lengthy wait times to speak to a service agent about an issue
- Legacy contact center systems that create friction in the customer journey
- Lack of strong in-app customer support
At the end of the day, good customer service is no longer a nice-to-have, but a must-have for financial institutions that hope to improve retention and boost their bottom line. Conversational AI banking is becoming a critical tool for differentiating your brand.
What is AI?
In the simplest of terms, AI refers to computers that can mimic human thinking in order to solve problems. Contrary to popular belief, AI is far from new. The concept of AI can be traced back to the 1950s. Alan Turing, a British mathematician, devised the Turing Test to evaluate a computer’s ability to “think.” His test is still used today in AI research and innovation.
You probably use AI in most of your daily life without realizing it. You might use spell checkers to edit a report, or use facial recognition to unlock your phone. All of these are examples of how AI is quickly becoming an integral part of our day-to-day lives.
How is conversational AI different from traditional chatbots?
Using tools like conversational AI chatbots can be a powerful way to improve customer service. This technology is very different from traditional chatbots, which often rely on recognizing specific keywords to deliver pre-scripted answers. However, if the customer doesn’t use that specific keyword, the chatbot may not be able to answer their question or fulfill a request, leading to customer frustration.
Conversational AI chatbots are different. They use large language models (LLMs) to better understand the context of a customer’s request and provide an appropriate response. This means customers don’t have to use a specific keyword or phrase (such as “reset password”) for the chatbot to serve up relevant information.
Because of advances in AI, it’s estimated that chatbots could soon handle up to 80% of customer interactions. While AI won’t replace humans at your bank, it will drastically reshape customer expectations and the customer experience.
How can banks use AI to improve customer service?
AI is becoming a critical tool for finance leaders exploring how to improve customer service in banks. Below, we go over a few use cases for AI in banking customer service.
Give customers instant access to support
In 2012, Andrew Kahn broke the world record for the longest time on hold, at a staggering 15 hours and 40 minutes. While your customers likely aren’t waiting over half a day to speak to an agent, speedy customer service is vital for improving the customer relationship. Research by HubSpot found that two-thirds of customers expect businesses to respond to their communications within five minutes.
However, as your customer base grows, meeting the demand for fast responses can be difficult if you rely solely on employees and older chatbot models. Tools like conversational AI in banking let your customers skip the call center queue and access instant support.
This can have numerous potential benefits for your business. If customers have instant access to reliable support, it can eliminate much of the friction and frustration in the customer journey. This, in turn, can improve net promoter score (NPS) and other key metrics. Additionally, as more customers have positive experiences with AI tools, your contact center's call volume may decrease as digital adoption rates increase. In short, this can create a win-win situation for banks and customers alike.
Tailor customer support to the needs of Gen Z
There’s no doubt that Gen Z is rapidly transforming customer service. Gen Z, also known as zoomers, are people born between 1997 and 2012. These people grew up in an era of smartphones, grocery delivery and instant streaming.
The environment zoomers grew up in plays a huge role in shaping their expectations when it comes to banking and customer service. This generation heavily favors mobile banking. In fact, 99% of Gen Z have used a mobile banking app in the last 30 days. Additionally, Gen Z doesn’t want to pick up the phone when they need assistance with making a payment or resolving an issue. Less than 20% of zoomers say they want to call to speak to a customer service professional.
With an estimated $360 billion in spending power, this generation is too valuable a customer base to ignore. So, how can you ensure you’re crafting an experience that attracts and retains these customers? Again, this is where AI can help.
As digital natives, zoomers prefer mobile apps and are largely comfortable with tools such as chatbots. Nearly one in three Gen Zers say chatbots are their preferred customer service channel.
Not only does conversational AI banking help meet these customers where they are tech-wise, but it also allows them to access speedy support. After all, these customers grew up with access to instant everything at their fingertips. They don’t like to wait. In fact, research shows Gen Z will hang up after waiting less than a minute on hold. Finance leaders exploring how to improve customer service in banks should consider adopting AI customer service tools to tap into this valuable customer base.
Create more personalized customer support experiences
Personalization is becoming critical for financial institutions looking to differentiate themselves from the competition. More than three-fourths of customers say they’re frustrated by the lack of personalized interactions with businesses.
So, what does personalized customer service look like in action? Some examples of tailored customer experiences include:
- Delivering self-service content in the customer’s preferred language
- Using the customer’s name in email and other communications
- Recommending products based on a customer’s previous interactions with your institution
- Providing support options on the customer’s preferred channel (also known as omnichannel customer service)
Some of the key advantages of personalized customer service include increased profitability and improved customer satisfaction. In fact, research by McKinsey found that businesses that implement personalization can see revenue increase by as much as 40%. As a result, companies often see higher customer retention rates. This is critical to business success, since it’s cheaper to retain your current customers than to acquire new ones.
Conversational AI banking is the future of good CX
The successful CX strategies of the future include using AI in banking customer service. Conversational AI banking can help financial institutions improve customer retention and profitability by providing customers with instant, tailored customer support. By following the examples outlined in this guide, your business may reap the benefits of AI customer support tools.
Are you looking to learn more about how to leverage AI to improve the customer experience? Download our free e-book on how to use AI in your customer service strategy. Grab your free copy today.
