Why AI is key for Banks to get Ahead of Customer Expectations

May 25, 20187min

It’s no secret most businesses are playing catch up with their customers. Most organisations have a Customer Experience strategy in place, but our research reveals just 14 percent feel they are ahead of the market’s expectations. 

The banking sector in particular is struggling in this regard. Competition from disruptive brands like Atom Bank, Monzo, and N26 has drawn people away from traditional institutions and towards more user-friendly platforms that cater to the way they prefer to do their banking.

Customer retention has not traditionally been a major concern for established financial institutions, but this is quickly changing and they are now rushing to play catch up. These large companies won’t be able to reshape their entire operating model overnight, but they can adopt new technologies to help them regain their stronghold in a challenging market.

That is why many are exploring the possibilities of Artificial Intelligence (AI) to improve the customer experience. The Economist Intelligence Unit recently found that one fifth of global banks believe AI will help them boost their customer experience, and this proportion will only rise as new use cases for the technology are discovered. There are three ways in particular that organisations can take advantage of AI today:

Improving customer service

By allowing customers to interact with a chatbot or digital agent, banks can not only streamline their own operations but serve more people, more quickly. It’s important to not just replace agents with AI-powered software in these cases; instead, banks should augment existing service agents by allowing them to access relevant information and expedite answers quickly. A human-centred approach is and will always be essential.

Some financial institutions have found the best approach is to put a face on their AI-offering. Canada’s ATB Financial Bank worked with Avanade to introduce a four-foot robot concierge named “Pepper” in its branches. Pepper greets ATB’s customers, recommends products and services, poses for selfies, and even dances. The response has been incredibly positive, with foot traffic up across the business, and ATB is now looking to enhance Pepper with even more AI functionality.

Automating business processes

Often, to better serve customers businesses need to look inwards first and find ways to work smarter. This is not about replacing workers with automated processes, but rather to use cognitive software to more quickly categorise requests and escalate complicated scenarios to the right people for the best possible decision-making.

One UK firm replaced its onerous paper forms with a simple, compliance-friendly online tool for independent financial advisors, but realised it needed a further technology leap to keep up with customers’ needs. The company used Blue Prism RPA to automate key back-end processes, cutting the time required to manage these so it could respond to customers more quickly and reliably.

Getting more from data and analytics

Data has become the currency of business and the key to better understanding customers. With a workforce trained to understand this information, companies can then use machine-learning tools to drive new customer acquisition, retain existing customers, and increase customer value over time.

We are only just beginning to explore AI’s potential in delivering better customer service. According to one Accenture report, more than three-quarters of bankers believe AI will allow financial institutions to create simpler user interfaces and deliver a more human-like customer experience. Four out of five also predict that AI will revolutionise the way banks gather information and interact with customers, and three-quarters believe banks will deploy AI as their primary method for interacting with customers within three years.

The challenge for financial institutions will be to implement AI in a way that works. There is a great deal of hype around the technology, but companies shouldn’t invest in AI without a sound strategy and understanding of how it can help their business.

Crucially, they cannot focus on AI alone – successful technology implementations work when human and machines are managed together, and in the case of AI software this becomes doubly important. In the words of Jeanne Ross, principal research scientist at the MIT Centre for Information Systems Research, “Companies that view smart machines purely as a cost-cutting opportunity are likely to insert them in all the wrong places and all the wrong ways”.

A human-centred approach to AI is about augmentation, rather than replacement. Some simple tasks might be fully automated, but the end game for companies should be to help customer-facing teams serve people more quickly, more easily, and to a higher standard.

Change will not happen overnight, but as banks like ATB Financial have shown even simple tactics can have significant results in the short term. By building on some quick wins with a long-term AI strategy, established financial institutions can get back to building the strong connections with customers that set them apart in the first place.

Stanley Louw

Stanley Louw

Stanley Louw is part of Avanade’s Digital business in the UK, where he assists industry leaders with navigating the increasing pace of change by focusing on digital disruption, customer-centricity and innovation. Prior to joining Avanade, Stanley spent 6 years at Accenture where he headed their Digital Mobility and Digital Financial Services practices for Africa.

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