Here’s What Financial Institutions Are Missing When It Comes To CX 

By Elizabeth Tobey, Head of Marketing Digital Solutions, NICE

As consumers demand more digital banking options and financial services, organizations grapple with uncertain global financial markets; it often feels like the banks have their hands tied. When you throw in the explosion of new startup financial institutions gaining popularity, the traditional banks that have commanded the market for years cannot rely solely on their trusted brand names to succeed. The banking landscape is entirely different than it was ten or even five years ago, and it keeps changing just as we think we have it figured out.

To stay ahead, FIs must embrace a digital-first strategy at the core of their business. This means something other than starting a new digital initiative or pulling together a task force. It requires something much bigger: an organizational shift. FIs need to take a holistic, strategic approach that considers digital’s impact on all aspects of the business, leading to a complete change in how things are done. It is no small feat.

As FIs scramble to figure out their digital strategy, it is easy to gloss over things when pursuing change at breakneck speed. The first thought when thinking about digital transformation is providing digital banking, usually a smartphone app. However, that is just one step to transforming operations.

Overlooked Actions in Digital Strategy

Most financial institutions have dealt with the public for decades and have a reasonably predictable way of doing business. Here are five market issues that FIs could be underestimating in their pursuit of a smooth and customer-centric digital transformation.

Delivering an omnichannel approach: As banks work to become more digital-first, it is essential to remember that many customers still prefer face-to-face banking. Whether it is a newly married couple getting a loan for their home or new parents opening their baby’s first savings account, people sometimes prefer the in-person experience. However, banks still need to meet their customers on their preferred channels, and occasionally, those preferred channels may need to be digital. Banks must offer exceptional service on both in-person and digital channels through agent-assisted and unassisted interactions.

Educating your customers: As banks invest more in digital banking apps, a new world has opened up for banks to disseminate information to their customers. With these new banking methods, there are new systems for customers to adopt and learn when managing their finances. Banks can assist their customers by providing all the information they need at their fingertips. For example, FIs can offer an effective AI-powered “FAQ bot” that can answer customers’ questions instantly and accurately. This can significantly reduce call volumes as customers do not need to call in to have a question answered, they can get it answered in minutes while they are still online.

Operating in siloes: A report from WBR Insights found that one of the three most significant barriers to innovation in banking is data siloes. Furthermore, the study found that 85% of IT staff in FIs spend 25% to 50% of their time helping other staff access the required data and insights. True digital innovation cannot happen if data is siloed. This is especially true because artificial intelligence (AI) requires easy access to data to generate valuable insights. Data management should be on the shortlist of operational reviews.

Focusing on brand names: Traditional, well-known banks dominated the industry for decades, but that is not necessarily the case anymore. The rise of digital has ushered in new names in financial services competing directly with traditionally known banks. According to the digital finance platform Plaid, the popularity of neobanks is on the rise. Plaid estimates that global users of neobanks could reach 350 million by 2026, up from 146.2 million users in 2021. Another report from BAI found that two-thirds of FIs are seeing an increase in consumer deposit competition. The competitive landscape in banking has forever changed and requires innovative marketing strategies to stay ahead and retain customers.

Ensuring compliance: A report from Deloitte found that since 2021, outstanding supervisory findings have been on the rise in the US. Banks are facing more pressure than ever to meet regulatory and supervisory expectations. This is nearly impossible to do with legacy solutions and manual monitoring. AI can transform risk management, real-time monitoring issues, reporting on findings, and offering tangible solutions to fix the problems. It also provides a robust paper trail to outline to regulators what an FI is doing to mitigate risk. Examining one’s approach to compliance and the potential power of AI should also be on the shortlist for review this year.

Checklist for Success

As AI is democratized across organizations and industries, 2024 will become a turning point for Fis, and it may become more difficult for legacy banks to stand out. This is undoubtedly the year the next era of leading FIs will be defined. Banking leaders need to map out their digital strategy now. But where should Fis begin their process?

Here is a short checklist to get things started to begin to build a powerful strategy for success:

Number one—Purpose-built AI: FIs cannot use just any AI. AI trained on the open internet will not give FIs what they want. Banks need purpose-built AI trained on industry-specific data and built with the proper guardrails for brand language. This ensures that the insights generated by AI are accurate, appropriate, and relevant. It also drives intelligent bots. Purpose-built AI helps create bots that respond to customers’ needs and precisely what they seek. This equates to premier digital banking.

CX is the perfect example of a function that needs purpose-built AI, particularly with respect to a financial institution’s specialized concerns. Supporting customers and employees requires a unique approach to be baked into any solution, differentiating it from garden variety or generic AI applications.

Number two – Check Omnichannel: Banks must meet their customers on every channel, including digital and voice. A sizable portion of the population still craves face-to-face interactions compared to another significant portion of the population that only wants to interact digitally.

Number three – Cloud platform: Banks need a cloud platform to manage customer service interactions. This also provides the training ground necessary for AI, which learns from all the interactions managed on the platform. A cloud platform eliminates siloes, opening data sharing across teams and making sure that everyone in an organization is on the same page.

It can be overwhelming thinking about what digital transformation entails, but after putting a few essential pieces together, it doesn’t have to be a significant lift. FIs must create and execute their digital strategy now to stay ahead of growing competition. The days of relying on your brand’s reputation name are gone.

Consumers demand concrete digital enhancements to a bank’s CX repertoire across all channels. FIs can define their future and success by implementing a comprehensive digital transformation that benefits their business and customers.