Customer experience (CX) drives revenue. Bank of America’s Q3 2024 earnings is just one example on this point. The bank directly credited its organic growth in that period to CX improvements. However, many financial institutions aren’t capitalizing on this opportunity. By some measures, banking CX quality in the U.S. has fallen three years in a row.
Financial transactions span a wide range of complexities from straightforward balance inquiries to opening new investment accounts and managing fraud. A one-size-fits-all CX approach won’t serve all customers, and many banks and credit unions are struggling to find the ideal formula.
One report found financial institutions are losing one in five customers due to poor customer experience, and a Zingly consumer survey revealed that 64% of consumers would switch brands after just one poor experience.
The timing couldn’t be worse: More than half of bank customers are uncertain if they will remain with their bank in the coming year. To turn the losses into growth, financial institutions must reimagine their CX experience, prioritizing relationships over transactions.
What people want from customer service
People have a fear of reaching out (I call it FORO). According to Zingly’s survey, 71% of consumers say dealing with customer service is as stressful — or even more stressful — than the original problem. More than half hesitate to contact customer service because of long wait times, the need to repeat themselves and being bounced between multiple departments.
At the same time, more than half of consumers use mobile banking, an increase of 18 percentage points in just three years. Customers now average 150 mobile touchpoints annually.
Despite these statistics, going all-in on automation is not the answer. Many people still crave human interactions. Zingly’s survey found 59% of respondents believe the phone is the most trusted channel for serious issues, with in-person discussions ranking second.
Financial institutions can respond to these varied needs by building omnichannel, seamless, personalized customer journeys.
The winning formula
For decades, CX was primarily a human endeavor. If someone needed help, they called the 1-800 number and waited for a live agent. This model created long wait times and contributed to FORO.
Automated menus helped manage call volumes but contributed to additional frustration as people navigated a maze of impersonal prompts trying to reach a human. The internet brought more channel options, including email and chatbots. But consumers faced the same challenges — overwhelmed agents and endless automated loops.
Today, financial institutions are increasingly investing in digital experiences, but too often, the main focus is cutting costs rather than improving service. This approach makes CX look like a cost center rather than a revenue generator.
Smart institutions don’t see it way. They know that good CX is the key to growth.
The ideal CX experience requires a blend of technology and humans. Only one-quarter of people trust AI for financial decisions, so implementing the technology in the right places is critical to keep it from becoming just another iteration of a phone menu: frustrating and impersonal.
AI and automation can handle routine tasks, like checking account balances and determining loan eligibility, giving customers the self-service capabilities they desire. Human agents must be available to assist with more complicated or regulated queries, such as opening new accounts or investment guidance. The value of the human touch cannot be overstated — 63% of consumers have stopped doing business with a company after being unable to reach a human.
Financial institutions must build a system that seamlessly escalates a customer from a chatbot to a live agent at the right moment. Accomplishing this requires integrated systems and a centralized database with collated customer data from all touchpoints, ensuring that agents have access to the complete interaction history. AI assists agents by summarizing chat interactions, offering relevant knowledge base articles and suggesting responses, allowing agents to be empathetic and helpful.
CX technology also allows financial institutions to take CX beyond simply responding to customer inquiries. Data, predictive analytics and automation support proactive outreach by identifying potential problems, recognizing relevant offerings and sending personalized communications. These actions turn dormant accounts into active ones and build positive customer relationships. Happy customers are more likely to stay with a bank, recommend it to others and engage with additional products or services. By creating positive customer experiences, banks can increase wallet share and drive organic growth, turning CX into a revenue generator.
How to build more positive customer experiences
Financial institutions that want to raise the quality of their CX need to start by giving customers multiple ways to connect, including websites, apps, social media and email. Offering omnichannel options allows customers to choose the channel that fits their needs and preferences, which may differ from day to day or situation to situation.
But having multiple channels is not enough. These channels must all be connected, consistent and coherent to deliver a seamless experience. Customers should receive the same quality of service regardless of which way they choose to reach out, and — crucially — they should not have to repeat themselves when they switch from one channel to another. Context preservation is critical to many consumers, and it’s a particular challenge for many financial institutions. More than three-quarters of Zingly survey respondents value companies remembering their history.
Personalization in CX touchpoints helps build customer relationships. McKinsey research found that about 75% of consumers feel frustrated when their go-to brand websites are not personalized. Financial institutions can do better here, too, by using customer data to shape interactions that reflect each customer’s unique preferences and behaviors.
Financial institutions can provide this unified, customized experience by combining technology’s efficiency with humans’ empathy.
Challenges facing banks and credit unions
All of this won’t be easy. Financial institutions face several challenges that other sectors don’t, including stringent regulations and legacy systems. Banks and credit unions must conscientiously vet technology solutions to ensure they adhere to all regulatory requirements and maintain data security and privacy. Incremental innovation allows institutions to leverage existing infrastructure and slowly integrate new platforms, reducing risks and operational disruption.
Despite the challenges, it’s worth making the investments — and the hard decisions — that will prioritize better CX.
Artificial Intelligence (AI) offers many exciting CX improvement opportunities, but financial institutions must be wary of leaning too far into the technology. AI itself won’t generate additional revenue — the human touch will be the difference between dormant accounts and engaged, satisfied customers.
Gaurav Passi is the CEO and co-founder of Zingly.
