Banks have long relied on delivering customer service via traditional channels such as in-person interactions, calls and e-mails. However, as product lines expanded, this approach resulted in fragmented customer journeys until the advent of new-age digital solutions (think virtual assistants and chatbots) powered the shift to a more seamless, omni-channel customer engagement.
Flawless Customer Experience (CX) can exponentially impact business outcomes in banking and financial services. According to Forrester1 , a mere one-point improvement in the CX Index score of a large multi-channel bank can translate to a USD 123 Million increase in revenue. Furthermore, a commissioned Forrester study shows that banks that successfully develop and apply customer insights in a digital ecosystem grow 3.2 times faster than competitors.2 CX is thus proving to be the strategic differentiator, with leaders outperforming laggards in terms of higher shareholder returns, accelerated growth and lower costs.
Banks have several avenues to enhance CX, such as effective self-serve options and personalized customer journeys using data and analytics. However, using Artificial Intelligence (AI) can ensure true end-to-end digital transformation, and the practice is gathering steam. With the advent of Generative AI (Gen AI), this technology is poised to take a giant leap forward.
Gen AI as a Transformative CX Enabler
Gen AI, propelled by advances in deep learning algorithms and neural networks, particularly Generative Adversarial Networks (GANs), is set to become more than just a co-pilot.
The mainstream adoption of multi-modality, incorporating text, images, sounds and videos, will create highly personalized experiences. The ongoing enrichment of Gen AI’s capabilities, coupled with its rising adoption by financial institutions, has led experts to forecast an expansion in the market size of Gen AI in financial services at a compounded annual growth rate of 28.1 percent over 2023-32.3
Source: Generative AI in Financial Services Market Size and Share 2024 (marketresearch.biz)
Figure 1: Global Growth Forecast for the Generative AI Market in Financial Services
Use Cases Demonstrating Gen AI’s Potential to Enhance Banking CX
Gen AI is gaining momentum in banking and financial services, demonstrating myriad uses and many more emerging steadily. In pursuing differentiated customer experience, Gen AI can be leveraged to provide greater personalization, efficiency and security, ultimately strengthening customer relationships and retention.
Hyper-personalized Banking
- Understand individual preferences, spending habits and financial goals
- Offer tailored product recommendations and investment advice
Cognitive Financial Assistant
- Enable natural and context-aware interactions
- Get assistance with fund transfers, bill payments, account management and other tasks
Agent Assist
- Extract answers for questions and prompts to provide real-time assistance with queries
- Classify and summarize documents from knowledge bases
Quality Automation
- Provide sentiment analysis using customer feedback, reviews and social media interactions
- Categorize feedback and prioritize issues for resolution
Gen AI will be instrumental in evolving customer journeys by simplifying and personalizing processes at each customer touchpoint. The figure below illustrates how such augmented AI could enable a bank to engage a retail customer throughout the day.
An Overview of Gen AI’s Challenges
As with any groundbreaking technology, Gen AI demands regulation and governance so banks can successfully adopt it without exposing themselves to critical risks. As part of their Gen AI strategy, organizations need to ensure they have mechanisms in place to deal with digital and ethical considerations such as:
Security
Malicious actors may exploit advanced AI models for fraudulent activity through the creation of synthetic identities
Data privacy
Gen AI models are trained using vast amounts of data, which pose data privacy concerns such as the leakage of sensitive customer information
Bias
Gen AI models reflect the biases present in the training data, which may cause discriminatory decision-making
Black box workings
The internal workings of Gen AI models are not visible to users, and the logic that produces a specific decision or output cannot always be explained
Overdependence on AI
The convenience of Gen AI can cause an overdependence on technology to solve problems, leading to a lack of human oversight, which is essential in the banking and financial services industry
The Way Forward
Gen AI in banking will elevate personalized customer service and deliver superior CX. Backed by Natural Language Processing (NLP) and customer analytics, it will streamline back-office operations and enhance query resolution. This will not only increase customer retention manifold but also save precious time, effort and money for organizations. The promising growth of financial services through AI-assisted CX indicates an imminent and comprehensive transformation in how banks and FinTechs interact with their customers.
Embracing Gen AI is imperative to keep up with customer expectations, and early adopters are likely to gain a competitive advantage. Partnering with industry experts specializing in Gen AI solutions is the right starting point to re-imagine digital-era customer journeys. Such collaboration enables financial companies to contextualize state-of-the-art models, industry know-how and high-quality data to their particular needs and goals while accounting for potential biases and other ethical implications.
Click here to learn how banking and financial services organizations can craft a customer experience strategy to stay ahead of the Generative AI curve.
References:
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US Banking CX In 2022: Who Does It Well And Why It Matters (forrester.com)
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Kameleoon_Banking_OSnap.pdf
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Generative AI in Financial Services Market Size and Share 2024 (marketresearch.biz)