Enterprising customer loyalty and retention in financial services

Foreword

The financial services market is on track to sustain a compound annual growth rate of 9.6 percent until 2026, by which time it will be valued at US$37.3bn. This is driving fierce competition between financial services institutions and fintechs alike to attract and retain customers and market share.

As such, it is critical that financial services organizations take steps to differentiate themselves from the competition and optimize customer experiences. They are doing this through automation and artificial intelligence, but there is a clear division in the ease of deployment between the organizations that are cloud native and those that are legacy-bound.

In this report, experts from across the financial services space identify the tools being used to respond to the customers’ demand for intuitive and seamless experiences, which encompass convenience, empathy and efficiency. The report explores the tools that drive customer loyalty and retention and assesses how these various technologies can help financial services businesses to separate themselves from the increasing competition.

Driving customer loyalty and retention

Customer loyalty and retention are key factors for organizations to drive for when seeking to maintain success in environments that are increasingly competitive. When customers have numerous options available, ensuring that they have no desire to look elsewhere is critical for maintaining and expanding market share.

According to Bhavana Rana, director of marketing, financial services and insurance at Talkdesk, the expectations of customers are rising and meeting them is key to earning customer loyalty.

She says: “Earning customer loyalty pays off dividends for financial institutions in higher revenues, stronger brand reputation and sustainable growth. To improve customer retention, financial institutions need to meet clients’ rising expectations for self-service, digital-first, personalized and omnichannel experiences.”

As revealed at CX Network Live: CX in Financial Services 2022, an effective method for smoothing customer experiences is the removal of friction from key areas. Joshua Tye, senior customer operations lead at Cash App, notes that businesses can build customer trust and confidence which will lead to enhanced loyalty and retention due to the removing of friction from the following areas:

• Areas with high emotional impact on the customer.
• Points where customers seek general access to support.
• Areas of escalation, grievance or service recovery.
• Where internal errors or gaps have caused a problem for the customer.

“Financial institutions need to ensure they have the right tech stack, including cloud-based, AI-infused CX solutions, to deliver a seamless customer journey.”

Bhavana Rana, Director of marketing, financial services and insurance at Talkdesk

One of the most effective methods for smoothing customer interactions is to automate them, utilizing technology to refine journeys in a way that strengthens trust and enhances the competency of the institution in the eyes of its customers.

Rana explains: “Financial institutions need to ensure they have the right tech stack, including cloud-based, AI-infused CX solutions, to deliver a seamless customer journey.”

She adds: “Organizations need to look beyond the trend line and envision the future-state of exceptional customer experiences. It is time to utilize automation for smarter interactions, predictive analytics to anticipate client needs and activate unstructured data for a better CX strategy. This is what will result in higher customer lifetime value and life-long client loyalty.”

The next section of this report takes a deeper look at automation and how it optimizes the customer experience. It examines the complementary technologies that are key for building great customer experiences in financial services, assessing the value of cloud-native systems and the advantages they offer over legacy systems.

Applying technology to drive quality customer experiences

Automating different aspects of the customer experience can smooth customer interactions, which offers improved speed and convenience when engaging with financial services organizations.

Shirley Campbell, director of CX at digital payment platform Payoneer, says that technology must reflect the core values of the experience, rather than aim to replace it.

She says: “Digital experience investments must be made around the core of CX. When customers choose your digital channels, they look for an easy, personalized, fully self-serviced experience. If your company is looking to stay up to date with digital CX trends, I strongly suggest making it about choice. Focus on personalization, on end-to-end self-service flows and allow automation that will simplify the process for customers and reduce their efforts while interacting.”

Delivering on this convenience is critical, as if customers cannot attain it with their current brand, they will not hesitate to seek it elsewhere.

Vinod Srinivasa, operational excellence professional at a US-based multinational bank, noted in a report by CX Network’s sister portal PEX Network: “Customers are looking for digital convenience for most of their day-to-day financial transactions and are expecting their complex and critical scenarios to be handled seamlessly.”

The Global State of Customer Experience 2022 revealed that 44 percent of CX practitioners believe customers are willing to spend more on convenience and this trend is particularly evident in financial services as well as other industries such as hospitality.

For brands to capitalize on this Cash App’s Tye recommends examining the effort levels required of customers in interactions while minimizing friction points.

Tye explains that a key method for financial services organizations to reduce friction is by automating the initial analysis of customer enquiries. At Cash App this is done through a support bot augmented with sentiment analysis capabilities.

“Our support bot utilizes a human-centered design process when customers are reaching out, particularly outside of normal business hours,” Tye notes. “The bot will field the enquiry and [using sentiment analysis] will assess the pain points and sentiments behind that enquiry, understanding the emotional state the customer arrives in.”

The support bot offers major benefits regarding convenience. Not only can customers still receive support outside of normal business hours, but the sentiment analysis allows for prioritization of enquiries.

The support bot analyzes the level of emotional volatility for each customer to determine who is most in need of support and prioritizes the enquiries to ensure that they receive it as quickly as possible.

The next section of this report explores the role of cloud-based IT infrastructure to support the delivery of competitive experiences.

Cloud native vs. legacy systems

Not all new technologies require an organization to rework its entire IT infrastructure. Organizations that run on cloud-based infrastructure have more agility than their legacy-tech peers when deploying new solutions.

Cloud-native systems are also important when equipping employees for customer interactions that are informative and empathetic, as Rahul Kumar, senior director of strategy, banking at Talkdesk, outlines.

“Agility and commitment to continuous innovation is needed more than ever as customer expectations from their financial service institutions continue to evolve,” Kumar remarks. “Businesses now realize the importance of time to value and are no longer willing to wait multiple years before seeing return on investment.

“Legacy tech debt is by far the biggest drag and inhibitor of innovation and financial service institutions need to prioritize investments in modern technology stacks that are open, flexible and scalable. Cloud-native and software-as-a-service (SaaS) solutions offer a much faster path to transformation and will enable businesses to future-proof growth,” he adds.

In the cloud, these applications are not tied into a legacy architecture, so they can be worked on individually. This means that businesses do not have to rework their IT architecture every time they adjust applications, making it far easier to scale and improve them.

According to Rana’s experience at Talkdesk, cloud systems also have a positive impact on employee engagement. She explains: “Since cloud contact centers are built on open, flexible platforms, they are easy to integrate with critical financial services systems, allowing easy access to information and a unified view of the customer journey.”

Rana highlights three benefits for financial institutions when AI and automations are added to the mix:

• The ability to streamline processes.
• A notable reduction in manual tasks and resource demand.
• Availability of actionable insights for higher employee satisfaction and engagement.

She adds: “This can have a profound impact on employee retention and quality of interactions with clients.”

The next section of this report looks at what the future holds for the financial services sector and assesses how AI could transform customer experiences and set a new standard.

Why AI is the future of financial services

Given the increasing competitiveness of financial services and how brands are responding to differentiate themselves, it is likely that a significant shift will occur in the status quo for financial services.

According to Kumar, financial services will only become more prevalent in the lives of customers.

“Financial services will be embedded deep into every aspect of our lives, which will blur lines between industries particularly in retail, healthcare and financial services,” Kumar notes.

“Non-traditional players are emerging and capturing market share while competition for wallet share continues to rise between traditional players,” he adds.

“In all of this, customer experience will help financial service institutions differentiate and the ones that will be able to ‘wow’ customers in every interaction will emerge as winners.”

One of the ways practitioners believe that financial services organizations can differentiate themselves by driving quality CX is through the use of AI. It was revealed at CX Network Live: CX in Financial Services 2022 that 85 percent of practitioners believe it is important to leverage AI now and 89 percent believe that it will still be important four years from now.

This illustrates the fact that AI is going nowhere and adoption for this technology will only increase as businesses continue to realize the benefits.

Kumar notes that the current conversation around AI in CX is generally focused on its conversational capabilities, like understanding the reasons customers are calling in or being able to engage with customers on their preferred channels.

He explains fintechs are much further along with regard to AI maturity than the larger, more well-established banks and credit unions who generally remain at the adoption stage. Kumar believes that the next 12–18 months will be telling for the financial space as more is invested in AI deployments.

Some opportunities to leverage AI will most likely come in the form of agent assistance.

AI can be applied to agent assistance to analyze and assess real-time conversations between agents and customers. It acts as a personal assistant for the agent that listens, learns and provides intelligent recommendations in every conversation. This application of AI offers contextual recommendations, and next best actions for agents during live interactions, taking some of the burden away from the agent so that they can focus on listening, helping and delivering an empathetic experience.

Conclusion

Driving customer loyalty and retention in financial services “Financial services will be embedded deep into every aspect of our lives, which will blur lines between industries particularly in retail, healthcare and financial services.” Rahul Kumar Senior director of strategy, banking at Talkdesk With the financial services industry becoming more competitive, there has never been a better time for brands to begin considering how they can leverage experience to set themselves apart in an increasingly crowded marketplace.

Financial services organizations need to focus on driving customer loyalty and retention by removing friction from, and adding convenience to, customer interactions. There are several areas this work should focus on, including: areas with high emotional impact for the customer and when internal errors have caused a customer problem.

Brands can achieve this in many ways by automating the right areas of the customer experience and shifting to cloud-native architectures to empower their employees.

When it comes to CX in financial services, however, the greatest gains are likely to be found in the application of AI. It allows for processes to be streamlined, manual tasks to be reduced and actionable insights to drive higher employee satisfaction and engagement.

CX leaders know AI-powered tools are key for determining customer sentiments and giving agents the information required to deliver an engaged and empathetic experience.

As confirmed in an audience poll during CXN Live: CX in Financial Services 2022, 85 percent of practitioners believe it is important to leverage AI now and 89 percent believe that it will still be important four years from now.

Therefore, brands that do not take sufficient steps to ensure that customers receive a quality experience, will likely find themselves losing customers to those that do.

“Financial services will be embedded deep into every aspect of our lives, which will blur lines between industries particularly in retail, healthcare and financial services.”

Rahul Kumar, Senior director of strategy, banking at Talkdesk

Key takeaways

• AI-powered tools are key for determining customer sentiments
• Of the CX practitioners questioned by CX Network, 85 percent said it is important to leverage AI
• Financial services customers require an engaged and empathetic experience from the institutions they do business with
• To meet this demand, financial institutions must analyze engagement, sentiment and intent at scale.
• It is not possible to do this without advanced tools and the cloud-native IT architecture that supports distributed, real-time data analysis and action