Smart money and financial services

COVID-19 has catalysed financial service organisations to harness artificial intelligence (AI) to improve customer experience (CX); however, challenges in integration and customer perceptions are undermining its potential.

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Financial services’ implementation of AI at scale is one of the lowest across all industries and, where AI has been deployed, there are still some customer expectations not being met: half of all customers say the value they received from AI-based interactions was non-existent or less than expected.

"COVID-19-driven changes in customer behaviours offer a unique opportunity for banks and insurers to accelerate AI deployment.”

Although many financial services firms say improving CX is the key objective behind launching new AI-enabled initiatives, a clear disconnect is emerging given these findings. Customers are increasingly looking for a more human experience when interacting with AI-powered chatbots but 35 per cent say their current interactions lack the human touch according to a recent Capgemini Research Institute report, Smart Money: How to drive AI at scale to transform the financial services customer experience.

The deployment of AI to improve the overall CX has grown significantly in the financial services industry in the past three years. Nine in 10 (94 per cent) organisations say improving customer experience is the key objective behind launching new AI-enabled initiatives and customers are becoming comfortable in interacting with AI on a regular basis.

Yet in Australia just 45 per cent of customers have daily AI-enabled interactions (like talking to a chatbot) with banking and insurance firms; this becomes even more important as most customers (75 per cent) expect to increase touchless interactions as the COVID-19 crisis prolongs.

COVID-19 provides acceleration opportunity

COVID-19-driven changes in customer behaviours offer a unique opportunity for banks and insurers to accelerate AI deployment. Customer interactions with AI are directly or indirectly spread over multiple channels throughout the financial services value chain.

  • A majority (75 per cent) of Australian consumers expect to use touchless interactions more, through voice assistants, facial recognition or apps – compared to just 61 per cent pre COVID-19.
  • Close to half (45 per cent) of customers will increase their use of contactless payments during the pandemic.
  • COVID-19 is also prompting a major behaviour shift by older consumers as contactless payments adoption has grown by 37 per cent in the 61–65-year age group, and a 33 per cent increase with those over 66 globally.

Scalability challenges

While the organisational benefits banks and insurers can realise by using AI in better engaging with their customers are the highest across industry sectors, financial services firms have the lowest scaled implementation across all industries. Only 5 per cent of banks and 6 per cent of insurers have been able to deploy AI at scale across several touchpoint functions globally and in Australia, this level of overall AI implementation is nil.

One of the biggest challenges is leadership and organisational resistance driven by anxieties about the need for new skills and job loss fears (reported by 52 per cent of banking and 53 per cent of insurance). Difficulty in identifying the right use cases to scale, long gestation periods for implementation and lack of trust for high-priced interactions also are barriers for adoption.

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While traditional players are struggling with AI implementation at scale, it is a different scenario for new-age players like fintechs. Not bound by the same challenges as traditional legacy financial services firms, fintechs are succeeding in delivering superior value to customers by using AI-driven solutions to make financial services tasks more efficient and customers interactions friendlier.

Benefits of deployment

Even with the lower rate of AI implementation compared with other industries, financial services firms have already realised significant benefits. In Australia, they have reduced their cost of operations by 8 per cent and have increased revenue per customer by 9 per cent after deploying AI in customer-facing functions.

AI has also helped deliver improvements in customer satisfaction. Banks and insurers have witnessed greater customer engagement with brands from deploying customer AI. Around one-in-five industry firms (25 per cent for banks and 19 per cent for insurers) have seen a 20–40 per cent increase in customer engagement.

Multiple critical factors

Based on Capgemini research, there are six recommendations for achieving scale with AI:

  • Invest in value-driven AI to transform the customer experience;
  • create trust-based and ethical AI governance approaches to drive broad-based customer adoption;
  • deliver an AI experience that considers “signature moments” that require empathy and emotion;
  • set up the technology foundation required for an AI-enabled customer engagement;
  • add senior leadership roles for AI to accelerate adoption; and
  • educate customers on what AI can do for them and make AI systems explainable and transparent.

Financial services have seen widespread adoption of customer facing AI and today’s pandemic environment will only accelerate this trend. But while organisations have benefited from AI, customers expect and want more.

At the same time, the industry is behind the curve when it comes to achieving scale with AI-driven CX. There are several challenges the financial services firms need to tackle, from organisational resistance to lack of customer trust.

The industry currently lags in the field in terms of how customers view its customer-facing AI and it needs to accelerate progress if it does not want to be left even further behind.

Stanislas de Roys is Managing Director Financial Services & Marie-Caroline Baerd is Executive VP AI at Capgemini Invent

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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