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How to Deliver Better Banking CX in the Era of Digital Disruption

How to Deliver Better Banking CX in the Era of Digital Disruption

6 min read

Vijai Shankar, VP of Product Growth & Marketing for Uniphore, recently sat down with renowned fintech guru, Brett King, to discuss how new digital trends are disrupting the banking experience. Couldn’t attend the live event?  Read the recap below to get caught up.

What is the state of banking today?

One thing is for sure—it isn’t what it used to be. With the rise in digital banking services, financial tech—or simply fintech—companies are giving “big banks” a literal run for their money, stealing sizeable market share by untethering customers from brick-and-mortar institutions.

“Financial services is no longer the domain of simply financial service companies anymore,” explains King. “Yes, we have banks and payment companies and credit companies and so forth; but increasingly, we see strong technology players coming into the space, enabling wallets [and] enabling various elements of the core ecosystem that’s going to be needed for 21st century economies.”

Just how much is fintech impacting the state of banking today? According to King, one in five venture capital deals is currently in fintech, with roughly $438 billion deployed in fintech projects around the globe.  Over the next few years, we’re really going to see this ecosystem develop in respect to the fintech landscape.”

Digital disruption around the globe

The fintech revolution isn’t just limited to a few digital-friendly markets. 2021 saw record-shattering investment across the globe: China-based WeBank reached $70 billion market cap; UK-based Revolut raised $900 billion; Varo raised $850 billion to become the second-largest bank in the German market; and Latin American NuBank reached $50 billion market cap, becoming the largest bank in Brazil.

“What makes NuBank unique is it is showing us a pattern over the next few years of how fintechs are going to increasingly dominate the [banking] space,” states King. “On average, they’re acquiring new customers for a cost of just $5. It costs banks like JPMorgan Chase $350 to acquire a new customer through their branch network.”

That brings us to our first major trend in banking today: how digital service is reducing the cost of customer acquisition.

Cutting the cost of customer acquisition with digital CX

While NuBank’s rock-bottom customer acquisition cost is remarkable, it’s certainly not the exception to the rule. Today’s digital customer experience (CX)—which is increasingly powered by artificial intelligence (AI) and automation—is making it easier and cheaper for businesses in all industries to acquire new customers. Using AI, banks can better identify prospective customers and automate outreach and follow-up tasks with greater consistency and efficiency than through human agents—and it can do so at scale at a fraction of the cost.

“This issue of digital scalability and the ability to acquire new customers digitally is the new super strength of these fintechs that is really differentiating them in the market,” explains King. “The fastest-growing financial institutions and players in the space today share one thing in common: it’s the ability to scale their customer base digitally. Digital scale is what is reshaping the market share around fintech, banking and payments today.”

Driving customer loyalty through digital engagement

Acquiring new customers is only one piece of the puzzle. As we’ve mentioned before, customer loyalty today is at an all-time low. With more banking options available than ever before, customers are increasingly spreading their holdings across multiple accounts rather than consolidating them under one brick-and-mortar (or digital) roof. They are also much more likely to defect from a brand due to a poor customer experience.

King believes better digital CX is the key to bucking this trend. Unlike legacy banking tools that merely record a user’s transaction history (think credit and debit cards), digital wallets offer users greater context into their purchasing behaviors, cash flow, potential bills and payments and any suspicious activities. They also increasingly use AI-powered customer service tools to drive engagement.

“Day-to-day engagement and awareness of how you use your money is becoming increasingly important in building healthy relationships with your customers,” says King. Sharing the example of TD Ameritrade’s TD MySpend app, he reveals that for customers that use this technology, the retention rate is 600 percent higher than those that don’t engage digitally.

Creating hyper-personalized, differentiated experiences with AI

Building on the trend of driving loyalty through digital engagement, more and more banks are also seeing the benefits of highly personalized service. Here too, AI offers an easy, cost-effective solution for banks to differentiate themselves by leveraging customer data to create truly bespoke experiences. Instead of offering boilerplate, one-size-fits-all financial advice, AI-enabled banks and fintechs can tailor their advice—including recommended actions and additional services—to the unique needs and preferences of each customer.

“The advice that [traditional] banks talk to us about is really product selling or product positioning,” King explains. “Whereas the advice we’re getting from the API layer in our bank accounts is definitely going to be much more highly personalized and dedicated to your personal experiences.”

When it comes to delivering hyper-personalized service, context is key. King explains how today’s AI technology can understand human language-based context better than ever before:

“In 2017, we reached the milestone where NLP-based AI algorithms matched the performance of humans in understanding language. This is a really significant milestone because now if someone is talking to a chatbot of chatting with a chatbot via text, the ability of that chatbot to understand the context of that question has been improved dramatically.”

The future of banking in the digital-first world

The meteoric rise of digital banking and fintech services over the past few years offers a glimpse of things to come. As customers become increasingly comfortable with and, consequently, dependent on digital CX, we’ll see more digital entrants entering the space. We’ll also see “big banks” scrambling to meet the new, digital-first appetite of their existing customers.

“By 2025, we’re going to be a lot more reliant on our smart bank accounts [and] our mobile wallets than we are the bank artefacts of today, because the intelligence of these bank accounts is going to be integrated into our lives,” predicts King. “This is going to affect the way people do their banking. They won’t be walking into bank branches nearly as much as they have in the past, because all the tools will be available through this technology suite.”

This suite will include a mix of self-service and live assistance channels—all unified under one AI-based platform. In terms of self-service, we’re already seeing the impact of AI-driven CX in the case of WeBank. “WeBank can now handle 96 percent of customer service or support inquiries using artificial intelligence,” King shares. “This is a combination of chatbots and other conversational AI within their frameworks.”

On the live assistance side, the advent of real-time conversational AI is enabling contact center agents to consistently deliver the positive, personalized experiences customers today expect. Today’s top agent assistance software gathers, analyzes and leverages contextual customer information—including past behavior, predicted intent and even emotional data—to give agents richer insights into each interaction and guide them on next-best actions. And according to King, it’s about time.

“The people manning calls centers are going to have to have better tools and be better trained to cope with this type of engagement,” he states, referring to the rise in complex customer service engagements in the wake of the global pandemic. He also offers some advice to traditional, branch-based banks coping with the new digital-first reality:

“Think more of the branch as a supporting channel for digital rather than the other way around. That’s really what flipped during the pandemic—that digital has become primacy and that the bank and those traditional channels have become supporting channels.”

You can watch the video recap of “Digital & Customer Experience Transformation in Banking”

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