How Artificial Intelligence Helps Reduce Customer and Employee Churn in Banking

Churn. It’s long been a dirty word in the banking industry—and for good reason. According to Accenture data, customer churn rates have traditionally hovered around 11 percent, with nearly half of bank customers not remaining past the first 90 days after opening an account. Although banks invest heavily to lure people in, net growth still hinges on making sure customers stick around.

Of course, churn applies to more than just customers. Employees also come and go. The Crowe Bank Compensation and Benefits Survey reports that the average turnover rate for nonofficer banking positions is 16.2 percent—one of the highest among all industries. In this era of employees reassessing their careers and work-life balance, resignations are on the rise—and so are costly turnover costs.

The good news: using advanced capabilities like artificial intelligence (AI) banks can deliver experiences that help them retain both customers and employees.

The AI Directive

While many banks began leveraging AI prior to the start of COVID-19, it’s become a “must have” to provide the experiences that motivate customers and employees to remain engaged. This includes delivering around-the-clock, frictionless customer service, as well as seamless back-office operations.

It’s clear that digital banking utilizing AI is the future, or rather the present. In fact, 77 percent of bankers surveyed by Temenos believe that the differentiated use of AI will separate winners from losers. Yet, many banks have yet to harness the potential of AI to transform the experiences they deliver. With its expanding possibilities, the opportunity is how to make AI an effective bridge between banks, their customers, and their employees. 

Pressure from Big Tech

Banks face increasing pressure from tech giants, as well as a growing number of fintech startups, that have entered the financial services space. This has upped the stakes for challenging traditional banks, further propelling them to eliminate obsolete practices and embrace more digital capabilities.  Beyond technology, these competitive companies are changing consumers’ expectations of experience and the banks are lagging behind. According to EMI Boston, “New entrants to banking are identifying an attractive and/or underserved segment and building a tailored digital banking experience, new entrants can establish a market presence, while differentiating themselves from both incumbent banks and other new entrants.”

A cloud migration opens the world of possibilities. Banks can increase their ability to keep up with technology companies who today are building agile banking and investment systems themselves.           AI can help today’s banks complement existing premises-based deployments with a hybrid approach that connects capabilities and brings greater value. With capabilities in the cloud, a bank can quickly leverage AI technology to attract and retain customers with superior customer service, simplify workflows, and contextualize customer and employee experiences. Customers are proactively informed about fraud situations requiring attention with personalized options to address them quickly. Products can be offered to improve financial health by monitoring it and making intelligent recommendations. Intelligent routing can be deployed to ensure customers are consistently matched with the right resource, using business rules, internal and external context, and desired business outcomes. 

Keeping Employees Engaged

Many analysts predict that AI will continue to replace simple tasks in banking to enable staff to care for higher-level or more strategic needs. With banks now using conversational AI, chatbots and virtual assistants solve many customer inquiries without agent assistance.

Your employees serve as a vital link between customers and the capabilities that AI technologies offer. Because banks are vulnerable to high levels of turnover, employees must be engaged and motivated to stay on the job with the right support, tools, and coaching from day one. Cloud and AI capabilities can help retain employees by providing actionable insights across processes, interaction analytics, call and screen recordings, and more.

Maintaining a Human-Centered Strategy

The potential of AI within banking can undeniably improve customer and employee experiences. But it could also become harmful if there’s a lack of human centricity. With data breaches and ransomware attacks regularly making headline news, consumers are concerned about the lack of control and transparency surrounding their data. AI technologies can add to this level of distrust. Connecting biometric and mobile authentication with other conversational AI solutions can dramatically improve customer confidence and loyalty.

Solutions that leverage AI to make automated decisions can also potentially place groups of individuals at a systemic disadvantage. For example, a risk assessment system for credit scores may not account for socio-cultural complexities, nor distinguish between bias and discrimination. In a heavily regulated industry such as banking, this can be particularly problematic. In such cases, debiasing algorithms’ outputs may be necessary to prevent the reinforcement of existing social inequalities and to maintain compliance with existing laws. 

Successfully Integrating AI

So, what steps can be taken to ensure the integration of AI is successful for banks, their customers, and their employees?

• Focus on the Everything Customer – Today’s customer has increasingly demanding expectations and step one is adopting an experience mindset that is focused on the customer, not technology alone.
• Stay Agile & Monitor Trends – As customer and employee needs change, so do their habits. Banks must stay alert to customer and employee engagement trends and be able to adapt to them quickly and efficiently when needed. This requires an agile way of thinking and the flexibility to deploy new technologies. With a cloud-based platform, banks can leverage the power of composability to rapidly create new interactions that drive customer and employee satisfaction. This simple building block approach to adding new or out-of-the-box capabilities eliminates the need to start from scratch while extending capabilities to create personalized outcomes.
• Create Effortless Journeys - Many of the benefits of AI go to waste if customer experiences are not connected.  Banks need to create efficient and effortless journeys across touchpoints and provide connected, intelligent workflows that ensure customers and employees have what they want, without obstacles.

Both customers and employees thrive when they have personalized, frictionless experiences. Your AI strategy can help make this happen—serving as a catalyst to strengthen engagement and build better relationships. With the willingness to adopt the right technologies and the know-how to adapt them, banks are well-positioned to uncover these new possibilities.