Transforming customer experience in financial services industry
04 Sep 2023
an increasingly competitive landscape, financial institutions recognize that
providing exceptional customer experience is no longer just a differentiator
but a necessity. With technological advancements, changing customer
expectations, and increased competition, financial institutions are compelled
to reimagine their approach to customer service. This shift requires
organizations to rethink their strategy and embrace innovative strategies that
prioritize personalized experiences, seamless interactions, and proactive
delivering personalized interactions, addressing customer needs promptly, and
proactively anticipating their requirements, financial institutions can
cultivate customer loyalty, customer stickiness, and ultimately drive business
growth. Therefore, understanding the importance of customer experience and
continuously improving it is essential for financial institutions to drive
their business growth.
need to enhance the customer experience-
institutions have made developments in improving their customer’s experience
mainly through providing digital
offerings but there is still a scope of improvement. Typically, financial
institutions are slow in adapting new-age technologies and understandably so
because they need to be watchful of the impact and toe the regulatory line
otherwise one wrong move can have serious ramifications. However, being
cautious has also resulted in them being not able to leverage the power of
new-age technologies which can redefine the way their customers interact with
are exposed to multitude of services across industries and their digital
experiences have been impeccable. Groceries are getting delivered in less than
10 mins, then why does it take more time to reach to a customer executive to
answer their queries or doubts. With the advent of such experiences across
industries, customers expect the same level of experience and services from
their financial institutions as well, even though the nature of FIs is far more
leading causes of customer pain-points:
back-end systems - Legacy systems in banks are inflexible and incompatible with
new technology, making it difficult to integrate new solutions for customer
service. Integration of tech solutions can be challenging due to different platforms
used in the existing CRM, sales, and billing systems.
of cohesive information sharing across channels – Due to the lack of
omni-channel strategy in many cases, a customer data is not exposed to
different teams and as a result it creates an underwhelming customer experience
especially in cases of customer support. Also, teams spread across multiple
systems creates communication issues and delays in query resolution, while
multiple handoffs between internal and external teams increases the risk of
errors and results in a lack of ownership.
to customize solutions for customers – Implementing a customizable customer
service system is complex, requiring the identification of customer segments,
designing solutions, and integrating multiple systems integration. Failure to
provide customized solutions can lead to poor customer experience and increased
of technology scalability leading to inability to access products - There are
many instances where RBI has imposed penalties on Banks due to their tech
of financial products – Financial institutions, typically, would like to cater
to the safe customers – customer with a steady source of income, high credit
score etc. This has led to a poor experience when customers visit a financial
institution resulting a loss of business.
situations have resulted in scenarios where customers, especially the
disgruntled, underserved, and unserved ones have taken their business
elsewhere, which has given room to increased competition, sometimes from
unexpected quarters, and has resulted in new players entering and capturing the
market not only in India but across the globe.
– One of the known neo banks especially in the European market has more than 7
million customers and has won multiple awards for its innovative products and
financing services – Amazon has ventured into lending services for its MSME
sellers in the US market. It provides four different types of products to suit
the varied needs of the merchants.
- A Brazil based neobank offers multiple products for both its retail and
corporate customers ranging from account services to cards to lending services.
It has a total customer base of more than 79 million users globally.
Bank – It boasts of more than three million accounts across four account types
and had the most profitable year in 2023. It provides mainly current and
business account services in UK market and is known for its excellent customer
service. It was ranked No.1 in overall service quality and were named Britain’s
Best Current Account in the Finder Customer Satisfaction Awards 2023.
of customer experience and the pivotal role of technology –
today expect seamless interactions, personalized experiences, and quick
resolutions to their queries and concerns especially the Gen-Zs and Gen-alphas.
With exposure to the best in-class customer service from other industries, the
expectations have carried forward to the financial services industry as well.
Some of the questions being asked by the customers are and rightfully so - If
my shopping, OTT content and social feed can be customised, why can’t my
banking be customised? Why can’t my banking needs be predicted? Why do I have
to tell my issues again if a customer agent changes or if I change the channel
through which I am interacting?
services companies have been able to leverage the power of technology to ensure
that there is a shift in the customer’s banking behaviour and the way they
interact with their financial institutions However, now that a foundation has
been established, FIs should harness the power of new-age technologies to
ensure that customers are provided with the best-in-class support and services
while introducing new innovative products which can differentiate the
the past few months, ChatGPT and generative AI have been the talk of the town.
ChatGPT, launched by OpenAI, is an AI powered chatbot designed to provide
conversational assistance. Pundits are calling it as one of the biggest
disruptions to have ever happened in the technology industry. It took only two
months for Chat GPT to garner 100M users. Google has launched its rival, Bard,
which is also an AI driven chatbot While
on one side generative AI was being lapped upon by global banks, Apple also
launched its new product line – Apple vision pro, which is a spatial computer
that blends digital content with the physical world. These examples suggest the
interests and investments that these companies are making to make these
technologies more prevalent and ubiquitous. Financial industry stands to gain a
lot from such advancements, if they are ready to acknowledge, accept and be
agile in implementing the same. Some of ways these technologies can be
technology can transform lending as we know it. AI/ML can not only help in
credit underwriting but also help companies understand who is more likely to
default. Advanced ML algorithms can help analyze alternative data sources, such
as social media activity, utility bill payments, or rental payment history, to
build comprehensive borrower profiles and make more accurate credit assessments.
power of AI/ML and RPA can also be leveraged across the customer lifecycle.
Right from credit decisioning to a personalised chat bot for all queries to
proactively cross selling any other product basis the lending history.
can also help Banks and NBFCs especially in auto loan segment. FIs can tie-up with
multiple partners and dealers and when a customer points his or her mobile at a
car, the app will be able to detect the model and suggest where the nearby
dealers where it can be available and the possible financing details including
eligibility, ROI etc.
It is expected by 2030, digital lending can
offer an opportunity of approximately INR 104 trillion. This provides an
immense opportunity to financial institutions to capture the market by
providing differentiated services while giving a unique experience to its
interfaces within embedded finance platforms that provide immersive and
interactive experiences for users to visualize financial data, simulate
investment scenarios, and explore investment opportunities in a more engaging
and intuitive manner. AR can be used to provide visual representation of a
products, its complete details, features etc and can also present the buyer
with multiple payment options on how they can avail the product. It can be in
the form of loans, BNPL, or no cost EMI options.
metaverse, the companies will be able to provide its customers the same value.
Also, by using voice-enabled financial assistants integrated within embedded
finance platforms companies can securely process voice commands, authenticate
users, and execute financial transactions.
through AR interfaces can provide lending services when a customer scans a
product while showing the customer’s financial overview and health
personal financial management tools would analyse user financial data, provide
real-time insights, offer personalized budgeting recommendations, and help
individuals track and optimize their financial health.
algorithms can analyse user financial data, risk tolerance, and long-term goals
to generate personalized savings and investment strategies, helping individuals
plan for their future financial needs.
and ML algorithms can examine customer debt data, spending habits, and income
streams to offer tailored debt management techniques, budgeting suggestions,
and repayment schedules.
regulatory compliance tools can offer in-the-moment direction, ensuring people
stay in compliance with their financial commitments
Banking and offerings:
AI may provide real-time insights that can determine which features are
presented to a certain individual based on their personalities (which can be
recognized by their spending, purchasing behaviours, income level, and
language processing and generative AI-powered advanced chatbot systems that can
interpret complicated consumer enquiries, participate in dynamic discussions,
and give personalized financial support, including account information,
transaction history, and product suggestions.
may use advanced data analytics techniques to collect client data from a
variety of sources, such as transaction histories, spending trends, and digital
interactions. Banks may create client profiles, segment their customer base,
and provide customised banking experiences by evaluating this data.
intelligence-powered recommendation systems can evaluate client data to provide
customized product suggestions basis the spending habit, income, existing
debts, repayment history etc.
AI models paired with natural language processing skills enable chatbots to
comprehend and respond to human input in a more contextually relevant and
emotionally intelligent manner.
integration platforms can allow chatbots to connect to a variety of data
sources and systems, such as customer relationship management (CRM) systems,
e-commerce platforms, or personal finance management tools, enabling
comprehensive and individualized support.
can be other example, where a personalized support stores can be opened through
which support may be provided in terms of finances, investment etc. where
generative AI powered models can present them with different financial and
following exhibit offers insights into the evolving interest of Indians over
time. While there has consistently been interest in loans and government
schemes, a noteworthy observation is the increasing interest in AI. This trend
presents a golden opportunity for financial institutions to harness its
potential and establish a compelling value proposition for their customers.
are global financial players harnessing the power of AI and other new age
global finance industry is experiencing a significant transformation as key
stakeholders embrace the adoption of generative AI and other state-of-the-art
technologies. This critical juncture signifies a pivotal turning point, wherein
financial entities are strategically utilizing these tools to propel their
organizations towards unprecedented growth and advancement. By integrating such
technologies, global financial institutions are embarking on a transformative
journey to explore new pathways for growth, optimize operational processes, and
deliver enhanced value to its clients. Some of the ways these institutions are
leveraging the power of such technologies are:
has a dedicated AI research team and a program to develop solutions that are
most impactful to the firm’s clients and businesses using cutting-edge research
in AI ML. Some of their aspirational goals are:
to Predict and Affect Economic Systems: Understanding the players in a complex
economic system and develop strategies to manage unseen/extreme situations.
to Eradicate Financial Crime: Sending an alert before a financial crime even
are also developing a Chat GPT like service which can provide investment advice.
Stanley is using chatbot based on GPT4 to enable its advisors to query the vast
knowledge repository that the organisation has. This has allowed over 200
advisors to tap into the thousands of research papers it publishes annually to
derive insights almost instantly and help their clients.
Sachs is currently using generative AI to assist developers in their coding
which is in the proof-of-concept phase.
Bank has entered into a long-term collaborative endeavour with NVIDIA, aimed at
harnessing the power of AI and ML in financial services. The partnership
focuses on risk management, interactive avatars, and data insights. By
utilizing NVIDIA AI Enterprise and Omniverse, the bank seeks to elevate
efficiency, customer service, and overall user experiences.
a fintech firm, will be launching AI-powered tools for CFOs and their teams.
These tools have been developed using advanced ML and NLP technology from
OpenAI. These features will provide relevant insights on corporate spend and
answer critical business questions all in real time.
Investments has created a virtual word called StockCity where the stock
portfolios of clients can be turned into an immersive virtual 3D city.
Although, these usages are niche, it shows that there can be many more such
untapped use cases.
next for Indian financial institutions:
financial institutions in India have always demonstrated prudence in adopting
emerging technologies and rightly so, it is an opportune moment to tap the
power of these next-gen technology, with the objective of introducing
innovative financial products and features. This will not only result in
enhancing the customer satisfaction but also in new customer acquisition.
believe that companies need to reimagine the way they serve their customers for
a sustainable impact. By seamlessly integrating banking services and rendering
them imperceptible to customers, companies can strive for enhanced customer
experiences and operational seamlessness.
Author: Shishir Mankad, Managing Partner & Head – Financial Services, Praxis Global Alliance
Co-Author: Sandeep Ghosh, Senior Manager - Financial Services, Praxis Global Alliance