Customer service has undergone a dramatic transformation over the last year—a change only accelerated by the demands of the COVID-19 pandemic. Consumer preferences have evolved fast, with the younger generation leading the way with their desire for digitally-enabled customer service.
However, financial providers have their work cut out for them as they embrace digital solutions, facing obstacles such as a lack of trust among customers as well as data and security concerns. And while innovative technologies like AI are helping to improve efficiency within teams, it’s clear that the human element of customer service remains essential.
Statistics about communication channels
Customer attitudes towards different communication channels shifted significantly following the start of the COVID-19 pandemic, with in-person meetings no longer possible, and this change is expected to endure. However, even now, not all remote communication channels are positively perceived by customers. While they appreciate social media and messaging, voice-response bots and chatbots have so far failed to gain customer approval.
Consumers are demanding a more flexible journey with 71% now preferring multichannel interactions. 25% want a fully digitally-enabled private banking journey with remote human assistance available when needed (McKinsey, 2020).
The shift towards online interactions has already begun. In fact, in the first few months of COVID-19 alone, the use of online and mobile banking channels increased by 20 - 50% and is predicted to remain like this even after the pandemic subsides. (McKinsey, 2020).
Some customer engagement strategies are more successful than others. The only customer engagement strategy that a majority of respondents rated as “Excellent", for example, is social media, at 51%, followed by messaging at 48% (Unblu, 2020).
At the other end of the spectrum, voice-response bots and chatbot customer service are the worst-rated channels. 34% of respondents rate them worst or below average (Unblu, 2020).
Statistics about customer loyalty
Gaining and retaining the trust of customers has been particularly difficult during the pandemic, with private banking clients, in particular, finding themselves disappointed by their financial provider’s customer service. Digital-centric consumers are among those most likely to switch banks following a negative experience. However, both financial education and a better onboarding experience have the potential to improve customer loyalty.
Private banks risk losing customers if they don’t adjust their value proposition. A third of high-net-worth clients say they are unsatisfied with the quality of financial advice offered by their main bank, leading to one in five moving their assets to another bank during the pandemic (McKinsey, 2020).
Financial education is one powerful way for banks to improve customer loyalty. 82% of retail clients say they would place more trust in their financial institution if it provided annual continuing education that helped them to better understand financial products.
Patterns of loyalty are also evolving. ‘Digital-centric’ consumers, for example, are significantly less likely than ‘branch-dependent’ consumers to say they “definitely will” reuse their primary bank for their next financial services product purchase (55% vs. 61%) (J.D. Power’s Retail Banking Advice, 2020).
Banks can also improve certain aspects of the customer experience to boost satisfaction and loyalty. According to one study, customers who are onboarded, for example, have a significantly higher customer satisfaction score than those who don’t (878/1000 vs. 802/1000) (J.D. Power’s Retail Banking Advice, 2020).
Statistics about digital transformation in banking
The pandemic exposed the need for digitally-enabled customer service. As a result, digital transformation gained new momentum over the last year, although issues surrounding data and security continue to impede banks’ efforts to go digital. The most impactful digital solutions in this transformation include Cloud technology, while collaborations with fintech firms will also play a role.
We are witnessing a major acceleration in digital transformation programs among financial institutions with 75% of financial organizations naming digital banking transformation as their number one priority for 2021, followed by customer experience improvements at 51% (Forbes, 2021).
But successful digital transformation is not always straightforward. Among services decision-makers, 25% say that data issues are one of the biggest obstacles to digital transformation while 24% claim security is a major impediment (Forrester, 2021).
84% of banking business executives believe that Cloud technology will play a transformative role in banking (The Economist Intelligence Unit, 2020).
And out of those financial service companies considering third-party collaboration, 47% wanted to collaborate with a fintech firm (PwC, 2019).
Statistics about millennials
The younger generation of consumers has different preferences and demands from previous generations—something that financial institutions are only just starting to realize. Even before COVID-19, Millennials felt under-served by their financial provider. Better financial education, interactive online tools, and robo-advisors are among the solutions that could win back the loyalty of this increasingly powerful segment of the population.
Even in the pre-COVID-19 world, only 14% of Millennials felt strongly that their primary financial institution helped them to improve their financial health (U.S. Financial Health Pulse, 2019).
Millennials want guidance on reducing debt and managing their money better. They’re also attracted to interactive financial tools online or mobile apps — advice in the form of so-called “quick tips”, for example (J.D. Power’s Retail Banking Advice, 2020).
Younger consumers are increasingly interested in digital services. According to BlackRock, 4 out of 5 Millennials who know about robo-advisers—algorithms that give basic investment advice—are keen to use them.
Statistics about artificial intelligence
Artificial intelligence adoption among financial providers is on the increase, although the use of AI for advisory services remains minimal with providers preferring to maintain the human element of customer support. Instead, AI is being used to improve productivity, streamline operations, and allow for better decision-making.
While self-service transactions are undoubtedly a priority for most financial institutions, advice-giving remains primarily human-led. Rather than attempting to replace advisors with technology, the focus is on communication tools that allow advisors to offer guidance remotely (Deloitte, 2020).
Nevertheless, among leading financial institutions, the use of advanced AI technology is increasing—largely in the form of robotic process automation for operational tasks (36%), virtual assistants or conversational interfaces for customer service teams (32%), and machine learning techniques for fraud detection, underwriting, and risk management (25%) (McKinsey, 2020).
37% of financial providers use AI to reduce operational costs, for better predictive analytics to improve decision-making, and for greater employee capacity for volume-based tasks (The Economist, 2020).