The Growing Customer Service Challenge In The Financial Sector
Customer service may have different meanings across industries, but the underlying objective always remains the same, which is customer retention and loyalty.
Essentially, the financial services sector is all about customer trust and loyalty and financial institutions that can deliver great customer service can stand out from other competitors. So, what makes customer service important in the financial sector? As digital technology continues to evolve rapidly, banking customers have come to expect ‘personalized’ and consistent services across all digital channels. They expect to get experiences similar to those their consumer apps provide them. Also, the world of banking, insurance, and other financial services is seeing the emergence of digital-first solutions providers, designed to deliver great customer experiences and service. No wonder, financial institutions need to keep pace with digital technologies when it comes to handling customers.
The risks of not doing so are real. For instance, private banks risk losing their customer base if they don’t improve or evolve their services. One-third of high-net-worth customers expressed dissatisfaction with the quality of financial advice offered by their banks, resulting in 1-out-of-5 customers moving their assets to another bank during the 2020 pandemic.
Despite the benefits, there are plenty of challenges in the path to providing excellent customer service in the financial sector. Let’s discuss some important challenges that need to be addressed:
- Increased call volumes and call times during the pandemic
During the disruption caused by the 2020 pandemic, customers mostly interacted with their banks using phone, chat, or email. As a result, banking call centers witnessed a major increase in customer calls.
Further, the rapid and unplanned transition to remote work exposed some critical shortcomings in older “legacy” systems and technologies used by most financial institutions. For instance, a customer contact center reported a call volume increase of 37% as compared to 2019, while another government agency experienced an 80% surge in the early days of the pandemic.
An increase in call volumes has a direct impact on the customer’s waiting time, particularly among direct banking customers. High waiting times can be frustrating for customers. Research from Deloitte Digital found that an unsatisfying customer service experience during the pandemic (specifically slow or unavailable call center services due to high call volumes) was the leading reason for consumers switching to other financial institutions.
- Personalized customer experience
Today’s smart banking customers are more informed than ever before and expect a high degree of personalization and convenience in their banking experience. A McKinsey report suggests that 25% of banking customers want a digitally-enabled private banking experience with remote human assistance available when needed.
Moreover, customers are also looking for personalized advice from their banks, which is designed around their financial goals or needs. A personalized virtual assistant in the form of a chatbot can improve customer service.
For example, Erica, Bank of America’s app-based chatbot, helps customers with their problems without the need for a live operator. Around 10 million customers have interacted with the chatbot, which has become an integral part of the bank’s customer personalization strategy.
- Complete transparency
Growing frauds in the financial sector mean that today’s customers look for more visibility and transparency when dealing with their banks. Financial service companies need to work toward providing transparency, which poses a special challenge in the digital marketplace.
A 2019 Pew Research Center survey found that 79% of Americans are concerned about how companies are using their data. Over 80% of customers believe banks collecting their data pose a risk for them, while another 81% feel they have little or no control over data that is being collected.
When consumers were asked about issues of trust with their banks, only 2.6% of the banks were listed in the “financial institutions with the most satisfied customers.”
Banking consumers are also perceptive to the way a financial organization responds to a data breach, which can also change their perception of data privacy. Consumers not only want their data to be safe and secure but also want to be notified if and when there is a major breach.
- Negative social media
Social media platforms are the easiest outlets for ‘disgruntled’ customers to vent their frustration with any bank or financial institution. Effectively, even a few ‘negative’ posts about a financial institution can be a PR nightmare and can bring a bad reputation to the brand.
On their part, banks and FIs need to respond quickly and appropriately to dissatisfied customers and try to resolve their concerns. This requires constant monitoring of their social media pages and responding immediately to dissatisfied customers.
Technologies like interaction analytics can analyze the spoken conversations between the customer and customer service agents and help in identifying which customers are likely to post negative comments on social media channels.
- Omnichannel experience
Today’s banking customers expect to access their financial accounts and perform different transactions anywhere, anytime, and on any device. This has complicated the mix of channels through which service must be provided.
According to the CEB TowerGroup research, consumers still prefer a human touch to their banking experience despite an increase in digital transaction volumes. A McKinsey report found that 71% of consumers are demanding a more flexible journey like multi-channel interactions.
Most financial institutions are still limited in providing a multi-channel (or omnichannel) experience to their customers. The challenge to implementing omnichannel strategies is the presence of “siloed” business systems that work independently and are not integrated. To overcome this challenge, financial services companies will have to implement an entirely new technical infrastructure with enhanced data capabilities.
Moreover, these companies also need to facilitate data exchange across digital channels to acquire knowledge about customer journeys and interact with their customers in real-time.
How do financial service companies overcome most of these challenges? The right implementation of data analytics can help. Let us see how in the next section.
How Customer Analytics can resolve Customer Service challenges
With an unprecedented volume of financial transactions every day, the financial sector has access to a growing volume of customer data. Customer Analytics can help the finance industry to leverage this data for valuable insights that can fulfill ever-changing customer expectations.
Here are some of the benefits of data-backed customer analytics:
- Provides a better understanding of customers
By aggregating customer data, analytics provides an in-depth, holistic picture of each customer and their future requirements. FIs can leverage these insights to determine their target audience and personalize their customer offering.
- Helps in monitoring frauds
Customer Analytics can help identify patterns in social media interactions and transactions and recommend appropriate actions on part of the service provider. AI-based tools and techniques can be used to recognize data patterns and trends and use these patterns to automate and monitor financial risks.
- Helps devise marketing strategies
A holistic customer view allows FIs to target them with the right products and services and design their overall marketing strategy. For instance, American Express is a great example of how the adoption of advanced data analytics helps retain customers. The global financial services company relies on big data tools and techniques to empower business decision-makers. It also analyzes cardholders’ spending patterns to provide customized offers and retain customers.
Financial services can keep up the customer confidence and trust by elevating their customer service infrastructure. We have seen how effective data analytics can play a key role in enhancing customer service and overcoming the major challenges in the financial sector.