The new frontier in finserv: immersive CX with conversational AI

Article originally published in the Altfi report, jointly sponsored by Zendesk.

The landscape of customer service has never looked more different, shaped by shifting consumer behaviour and expectations that have rapidly changed over the past two years, driven in turn by the shocks and aftershocks of the pandemic, economic uncertainties, and ever evolving technology trends. Consumers’ voices are growing louder, and bolder, and what customers want is clear: immersive customer experiences. And they are eager and willing to change course and drop brand loyalty, and give businesses, who promise to offer it, a shot.

According to Zendesk CX Trends 2023 report, forty three per cent of customers are willing to switch to a company’s competitor after just one bad experience, and sixty two per cent of consumers are likely to purchase from businesses that care about their emotional well being. Businesses who have recognised and acted on this exciting new shift are seeing tangible results. Our report shows, seventy seven per cent of business leaders have seen those investments pay off.

Getting customer service right is vital for customer retention across all sectors, but the stakes are especially high for financial service providers, given the high lifetime value of customers, and the increasing shift from brick-and-mortar to online banking. Artificial Intelligence (AI) is playing a critical role in customer journeys, giving customers new ways to bank.

AI can enable financial organisations to anticipate customer needs before they arise and respond quickly when required. And, AI-driven conversational experiences can get companies closer to delivering faster responses, happier customers, and an immersive customer experience (CX).

What exactly is Immersive CX?

Immersive CX is all about natural, fluid interactions with companies. From chatbots that closely mimic real human beings to conversational experiences where customers can start an interaction on one channel and then seamlessly switch to another, immersive CX boils down to one simple idea: people want to be seen and heard, to be treated not as a transaction or a ticket but as the highly valued customers they are. By doing so, businesses stand to greatly strengthen customer relationships, a benefit whose value cannot be overstated.

Why Conversational AI is key to a smart CX strategy

Chatbots and conversational AI are key components of a smart CX strategy, but it’s important to note the difference between the two. Essentially, the term chatbot describes just one tool in the box, whereas conversational AI describes the whole toolbox.

Chatbots can interact with users to provide information and solve simple problems without the need for human supervision. And if an agent is required, chatbots can direct the customer to the most appropriate person. Conversational AI has much wider capabilities. Using data insights, machine learning (ML), and language algorithms, conversational AI has the capability to automate a variety of tasks and enable customer self-service.

Our research shows that 69 per cent of UK business leaders and managers say they have not implemented conversational customer service but want or are planning to. A further seventy one per cent of UK businesses believe AI/bots will drive large cost savings over the next few years and a third of UK businesses (thirty four per cent) find AI improves agent productivity, while more than half (fifty four per cent) expect chatbots to drive large savings.

Many of today’s consumers feel positive about the use of AI in customer service. Our research finds that thirty nine per cent of UK consumers expected AI to improve the customer experience they receive from companies. The fact that customers are embracing chatbot usage is also reflected in the data; our research shows that chatbot ticket volumes rose by seventeen per cent between 2020 and 2021. However, they expect their interaction to feel more human.

In fact, seventy one per cent of consumers surveyed in our research said that it is important for them that interactions feel more natural and conversational when they get in touch with a company, and sixty nine per cent said they spend more with businesses that provide a seamless customer experience across multiple touch points. Clearly, an evolved, conversational, and seamless customer experience powered by AI is the need of the hour.

AI adoption in financial services is on the rise

AI deployment within the financial service sector is also gathering pace and across all sectors companies are increasing their investment. As per our CX Trends 2023 report, eighty two per cent of leaders say expanding the use of AI across customer experience is an important priority over the next twelve months, and seventy six per cent of leaders believe AI/bots will drive larger cost savings over the next few years.

Things are moving so fast that regulators are struggling to keep up. For example, there is no harmonised legal framework in the European Union (EU) yet; all member states’ own local laws apply. This means banks and financial institutions acting across borders must consider local regulations.

Conversational experiences make a difference

Our customer stories are great case studies to see conversational experience in action. Starling Bank uses Zendesk to provide 24/7 support 365 days a year for customers, assisting them across multiple channels, including live chat on desktop or in-app. And customers are clearly happy; according to research by Which, Starling received one of the highest customer scores for current bank accounts, gaining five-star ratings across every part of its service.

Financial services provider Homebridge is another great example. Homebridge collaborates more effectively across 10 departments and provides smoother customer experiences using Zendesk Support, Guide and Chat. Homebridge uses Zendesk to deliver customer self-service and handle customer enquiries across multiple touchpoints, including phone, email, and chat.

Greater resilience and empathy in turbulent times

Consumers are feeling the cost of living squeeze in the UK with inflation rate at 10.1 per cent in March 2023, and the economic climate continues to remain uncertain throughout Europe. The impact of the escalating cost of living has meant how consumers are prioritising their finances has changed significantly.

This market turbulence coupled with increased competition and changing consumer expectations is creating a perfect storm that can disrupt brand loyalty even for the most long-standing financial services institution. In fact, according to our CXT ’23 report, seventy eight per cent of leaders say there would be increased pressure from customers to deliver a great customer experience during an economic downturn and eighty three per cent of leaders agree that providing excellent customer service during economic uncertainty becomes even more important.

Thus, it is now more crucial than ever for financial institutions to invest in their customer service and experience. But, a strategic approach is vital. Zendesk’s research finds that more than half (fifty seven per cent) of businesses say their approach is reactive, not strategic.

Conversational experiences and AI are the powerful tools that can help businesses achieve greater agility and resilience during these turbulent times, and help deliver a truly empathetic CX. According to our research, seventy one per cent of customers already believe that AI will help to make customer experiences more empathetic.

But, your AI is only as good as the data it learns from. At Zendesk, we train our AI using a robust library of sentiments based on billions of real-life customer service data points. With our recently announced intelligence layer, Zendesk AI, personalised, efficient, immersive, and more empathetic customer experience is now within reach for companies.