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If banking was a horse race

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It is clear by now that limited and standardised banking services are no longer the rule, and that embracing transformation is a must if you want to thrive in any business. Financial institutions are by no means the exception. As consumers, we are now very familiar with convenient, high-functioning digital tools in all areas of our lives, and when it comes to banks and payments, we demand the same flexibility.

Today, If we are seeking to communicate with brands, we choose among a wide range of channels. We turn to all kinds of platforms, apps, and websites to do activities that we enjoy in our spare time, and of course, to carry out our daily routines. Digital trends and changes are reshaping the world we live in and how we interact with it.

With this in mind, and in an effort to secure customer loyalty in the digital era, nearly all banks have decided to move with full force and apply digitisation as a strategy to compete with banks and fintechs that are up for the challenge.

However, many of their digital solutions still fail to fulfil customers’ expectations in terms of how they translate banking tasks and experiences. In fact, according to this Bain & Company snap chart, “Direct banks generally outperform traditional banks on loyalty, in part because direct banks offer a more simple and digital experience”. Also, “Banks that lead in Net Promoter Score®, a metric of the likelihood a consumer would recommend the bank to others, outperform laggards in net interest income growth”. As a result, 28 per cent of traditional banks were highly rated by respondents, in contrast to 92 per cent obtained by direct banks

In a few words, emerging digital technologies, a wide variety of consumer preferences and a growing competition are just some of the new challenges that banks are facing today. So, how to keep the pace and make it to the finish line?

The dark horse

Voice-assistants have become a very strong trend when it comes to technology in consumer markets, yet not fully exploited by banks. Despite including innovation in their agendas, only a handful of banks have tapped this trend, a fact that clashes with the percentage of consumers that are already using this kind of technology. Nearly half of U.S. adults (46 per cent) said they now use voice-controlled assistants to interact with smartphones and other devices, according to Pew Research Centre. In addition, and according to Gartner Research, after implementing a Virtual Customer Assistant (VCA) organisations state that there is a reduction of up to 70 per cent in call, chat and/or email. They also report increased customer satisfaction and a 33 per cent saving per voice engagement.

Also, according to BrightEdge, survey respondents identified consumer personalisation (29 per cent), AI (26 per cent), and voice search (21.23 per cent) as the next big marketing trends. These top three responses, which total 75 per cent of all AI applications, demonstrate that AI is more pervasive and prominent than respondents realise and that, not so long from now, this trend will definitely be patted.

Not so fast

Innovation also requires knowing when to slow down and where to put your energy in an era full of transitions. Paradigm changes are not meant to happen overnight, and while we head towards an all-around digital era, past, present and future will still share the spotlight and overlap in time.

When it comes to bank branches, it is hard to believe that they will vanish overnight. Customers are still not ready to do without them. As a matter of fact, 75 per cent of consumers still consider a traditional institution with branches to be their primary financial services provider, according to The Financial Brand. However, customers are in the search for branches that combine both the physical and digital for a better experience and in a seamless way.

It is certain that automated consulting on banking services is becoming more predominant, but the aim is not to replace human advice completely. Everyday transactions and operations like deposits, transfers and account openings will migrate to digital, while branches will be the place to go to for problem resolution and complex advice.

This is due to customers' declared interest in turning to human advisors when seeking for advice on products such as mortgages (61 per cent) or the ability to make a complaint (67 per cent), despite the growing interest in automated support and technological innovations.

Branches will definitely transform to play different roles, as a lot of banks have already ventured with ATM-only branches, tech-enabled hubs with modern digital integrations and some with just a few or not clerks at all.

The winning bet

When it comes to banking, Customer Service agents have historically taken on a number of tasks and customer-facing functions that could be otherwise automated. Costs of maintaining this department running were also a fact to consider until AI chatbots solutions came along.

As a consequence, the number of banks embracing automated conversational agents has increased in the last couple of years. In fact, an industry survey shows that “3 out of 4 financial institutions view chatbots as a lucrative investment opportunity”, as it provides support around the clock while reducing costs.

Apart from cost reduction, this serves a growing base of tech-adept consumers, who as customers can request services or ask questions using natural language through their preferred channel. 24/7 availability and immediacy have become a standard customer expectation today, and chatbots allow customers to solve their issues on their own time, rather than having to wait around for a company to reply. According to American Express, more than 60 per cent of Americans prefer solving basic customer service issues through a self-service website or app. And a study by Edelman Digital that more than half of consumers expect a response from customer service within an hour, even on weekends.

Even though AI has a lot of room for improvement, it aims to provide customers with fast service and support when it comes mostly to daily operations: transactions, balance inquiries, bank account details, loan queries, and other tasks. In that way, customer service representatives are left with more time for complex issues.

AI's continuous development is paving the way for chatbots to become more than customer service support and information base tools:  they are becoming real financial advisors. Understanding spending habits, creating tailored financial tips for customers and helping them manage and save money will be the result of integrating chatbots with the right historical data, predictive behavior software and other intelligent analysis platforms.

The race to the finish line

Transformation is certainly not a one-time thing, but a never-ending process. So, when it comes to financial institutions and the future, how do we define success? Success is not defined by crossing the finish line once, but rather the improvement in between races.

Provide outstanding customer experience in the financial industry means solving customer problems quickly, in a pleasant and personalised way, encouraging loyalty and trust even after “crossing the finish line”. Whether it is a problem with our credit cards or routine bill payment, there is a wide variety of transactions and banking tasks that we perform on a daily (and not so daily) basis. All these scenarios demand different management strategies, and each customer deserves its own special treatment. Experience will be defined by consumers, time after time, lap after lap.

At the end of the day, banks will seize every opportunity involving self-service and automation, as time is valuable for both parties. They will poke us to try self-service ad go digital as they improve integrations with other types of customer service, such as phone, messaging, face-to-face, and developing a more omnichannel approach to banking, providing us with options to choose from.

Embracing an agile and flexible system is vital in order to create value for customers. Want to become an intelligent and competitive bank of tomorrow? Welcome the innovations that technology allows today. Know your horses, take care of your troop and get ready for the next race.

Martín Frascaroli, founder, Aivo

Martin is the founder of Aivo and self-made entrepreneur with over 14 years of experience at the forefront of customer service, AI and technology.