CX Trends Shaping the Finance and Banking Industry in 2024

Over the past decade, the finance and banking sector has taken a major leap towards digitisation, with cost-saving branch closures and off-shoring contact centres long since realised. This shift is hard to miss, especially when navigating the maze of automated services, chatbots, and online platforms.

Businesses that have clearly outlined omni-channel customer experience management (CEM) initiatives typically experience a 91% greater year-over-year boost in customer retention rates compared to counterparts lacking such programs. Additionally, they have an average increase of 3.4% in customer lifetime value. Conversely, organisations without omni-channel programs often observe a decline of 0.7% in customer lifetime value annually.

In recent years, there’s been a big push to ensure that every interaction customers have is smooth and swift, whilst being tailored to the demand for the personal touch, which remains key. The finance and banking industry is working hard to blend the best of digital convenience with human connection, ensuring everything from checking your account to applying for a loan feels as easy as shopping for your food but as personal as talking to someone in-branch. The benefits of getting it right are clear, in fact, brands that deliver a better customer experience (CX) receive twice as many recommendations.

In 2024, the finance and banking industry is experiencing significant changes in customer service driven by technological advancements and shifting consumer expectations. Below we explore the key trends shaping the industry.

1.The Rise of AI:

In 2024, Klarna’s AI assistant is at the forefront of the AI revolution in customer service, handling 2.3 million chats in just a month—the workload of 700 full-time agents. This AI breakthrough reduced repeat inquiries by 25% and cut resolution times by 9 minutes while maintaining customer satisfaction. By implementing its AI assistant, Klarna could potentially achieve cost savings of around £18.48 million annually, based on the average UK contact centre agent wage and assuming additional employment costs. This significant figure underlines the financial impact of integrating AI into customer service operations, highlighting both efficiency gains and the potential for substantial cost reductions.

Operational in over 35 languages, the assistant supports customers with everything from refunds to financial advice, highlights Klarna’s ambition for a fully AI-powered financial assistant. This innovation takes care of a broad range of customer inquiries while maintaining the human touch for complex issues, blending AI efficiency with human insight.

Klarna’s success signals a broader trend: AI is reshaping customer service in finance, balancing automation with personalisation, and setting new standards for the industry in 2024.

Cirrus Founder and CEO, Jason Roos comments, “Seeing what Klarna’s AI assistant achieved is nothing short of revolutionary. We’re talking about handling the workload of 700 agents and still nailing customer satisfaction. That’s the future right there, and it’s happening now. The cost savings are staggering yet totally feasible when you harness the power of AI. This is a game-changer for customer service, showing how we can deliver personalised, efficient support on a massive scale. What excites me most is the balance between high-tech AI capabilities and keeping that essential human touch for trickier situations. It’s about enhancing our human efforts, not replacing them. Klarna’s leading the charge, and it’s a bright indicator of where we’re all headed. The potential for AI in finance to improve service while slashing costs and boosting satisfaction is immense. We’re just scratching the surface!”

2.Personalisation at Scale:

AI technologies, such as machine learning algorithms and data analytics tools, enable banks to sift through vast amounts of customer data efficiently. These technologies analyse customer behaviour, preferences, and past interactions in real-time, allowing the bank to identify patterns and predict future needs. Consequently, the bank can automate the delivery of personalised offers and experiences across various channels, ensuring that each customer receives recommendations most relevant to their unique financial situation and preferences. JP Morgan uses algorithms to analyse customers’ transaction data, investment behaviours, and interactions with the bank to offer personalised financial advice, product recommendations, and investment strategies. This not only enhances customer satisfaction by meeting their expectations for personalisation but also boosts engagement and loyalty, as customers are more likely to respond positively to services that are tailored specifically to them.

3.Omni-channel Integration:

A leading example of omni-channel integration in the UK is Barclays Bank, who were early to the game and have been at the forefront of providing a seamless experience across all its customer engagement channels. The bank allows customers to start a process on one platform, such as applying for a loan on its website, and complete it through another channel, like its mobile app or in a physical branch, without any hiccups. This seamless transition is powered by a sophisticated backend system that keeps track of customer interactions across channels, ensuring that customer service representatives are always informed about the customer’s history and current needs. Barclays’ investment in this integrated approach highlights its commitment to meeting the evolving expectations of its customers, offering them convenience and efficiency regardless of how they choose to interact with the bank.

4.Data Security and Privacy:

In 2023, the UK faced the stark reality of data breaches costing on average £3.37 million each, emphasising the ever-growing need for stringent data security in finance. The landmark 2017 Equifax breach, exposing the data of 147 million people, marked a pivotal moment, highlighting the dire consequences of cybersecurity lapses on trust, regulatory compliance, and financial health. This incident drove a shift towards more robust cybersecurity measures, including adopting AI-driven threat detection and blockchain for secure transactions.

The battle against cyber threats is relentless, with the sophistication of attacks evolving rapidly. Financial institutions are now prioritising advanced technologies and a culture of continuous vigilance to protect customer data. As digital trust becomes increasingly paramount, the sector’s commitment to enhancing data security and privacy protocols is crucial for maintaining customer confidence in our digital age.

5.Trust and Transparency:

NatWest Group has made significant strides in enhancing transparency and building trust with its customers. Following the financial crisis, NatWest has focused on rebuilding customer relationships through clear communication and transparency. The bank has revamped its fee schedules to make them more understandable, provided detailed explanations of product terms and conditions, and adopted transparent reporting practices. These initiatives are part of NatWest’s commitment to restoring confidence and trust in its services, demonstrating the bank’s dedication to fair and open banking practices. The bank’s approach goes beyond merely meeting regulatory requirements; it’s about fostering genuine connections with customers, ensuring they feel informed, valued, and respected. This commitment to transparency and trust is a strategic move to stand out in a crowded market and cultivate long-term loyalty among customers, proving that in 2024, integrity and openness are not just ethical choices but also smart business strategies.

6.Digital Transformation:

Lloyds Banking Group’s digital transformation journey is a compelling example within the UK banking sector. Faced with the dual challenges of evolving customer expectations and technological advancements, Lloyds embarked on a comprehensive digital overhaul. This transformation included updating its IT infrastructure, migrating services to the cloud, and introducing new digital banking solutions. Lloyds has also focused on digital skills development for its workforce, ensuring that employees are equipped to deliver innovative services. Despite encountering challenges such as cultural resistance and the complexity of modernising legacy systems, Lloyds Banking Group’s persistent efforts have significantly enhanced its digital offerings, improving customer experience and operational efficiency. This transformation highlights the importance of digital agility in staying competitive and meeting the needs of today’s digital-savvy customers. As businesses shift towards more advanced technologies utlising AI and machine learning the above challenges Lloyds faced still apply, so it’s imperative that businesses continuously adapt and evolve, integrating new systems into their operations thoughtfully and strategically. Taking this approach not only meets current consumer demands but also anticipates future needs.

Final Thoughts

As we look ahead, the finance and banking sector’s commitment to embracing these CX trends enhances customer satisfaction and loyalty and fortifies its position in a competitive, ever-changing market and socio-economic climate. The path forward is clear: innovate, personalise, and secure, ensuring that every customer interaction is as rewarding as it is secure.