How can organizations effectively engage customers in an increasingly digital landscape? This question remains a top priority for businesses in the business-to-consumer (B2C) sector. As traditional business models erode due to the rise of digital platforms, organizations are searching for innovative strategies to keep customers engaged and loyal. Engaged customers not only deliver greater value over their lifetime but also have more touchpoints with their chosen brands.
In this pursuit, financial institutions have encountered challenges in achieving deep consumer engagement, particularly in their mobile app-intermediated services. Compared to online shopping or gaming apps, the average visit to a bank app is significantly shorter. To transform financial-service interactions into lasting engagements, businesses are increasingly turning to AI-enabled customer service.
AI to the Rescue
It’s no secret that customer expectations have evolved. Today, two-thirds of millennials expect real-time customer service, while three-quarters of all customers expect a consistent cross-channel service experience. However, simply hiring more well-trained employees to meet these demands is not a viable option due to rising cost pressures. Consequently, companies are leveraging AI to provide proactive and personalized customer service that meets these evolving expectations—even anticipating customer needs before they arise.
According to research from McKinsey, AI technologies have the potential to deliver up to $1 trillion of additional value each year in global banking alone. A significant portion of this value comes from revamped customer service. However, while some leading institutions have successfully embarked on AI-driven transformations of their customer service through apps and new interfaces, many others are still playing catch-up. The challenges range from selecting the most valuable use cases for AI to integrating technology with legacy systems and finding the right talent and organizational governance structures.
Perils and Promise of AI Customer Engagement
Several factors have made the case for AI-based customer service transformation stronger than ever. Customers are increasingly accepting and even preferring machine-led conversational AI interactions. Messaging platforms are becoming more accessible, and businesses have access to vast amounts of customer data for analysis. However, challenges remain. The COVID-19 pandemic has accelerated the migration to self-service digital channels, creating complexity for businesses. Customers now turn to contact centers and assisted-chat functions for more complex needs, raising expectations for seamless service across all channels. Lastly, businesses face labor market constraints, making it difficult to find the skills required to support AI-driven customer service.
Fulfilling AI’s Customer Engagement Promise
Leaders in AI-enabled customer engagement have committed themselves to a journey of investment, learning, and improvement through five levels of maturity. At level one, customer service is predominantly manual and high-touch. At the most advanced level – level five – companies handle more than 95 percent of their service interactions through AI and digital channels. Companies operating at level five tend to be in digital-native sectors such as ecommerce, taxi aggregation, and over-the-top (OTT) media services. Traditional B2C sectors, like banking, telecommunications, and insurance, have reached levels three and four, while some are pushing towards level five. These businesses leverage AI and technology to support proactive and personalized customer engagement through self-serve tools, revamped apps, new interfaces, dynamic interactive voice response (IVR), and chat.
AI-Powered Customer Service
To achieve the promise of AI-enabled customer service, businesses must align their reimagined vision for engagement with AI-powered tools, core technology, and data. This entails communicating with customers even before they reach out, providing AI-supported solutions, and evaluating performance. It’s essential to strike a balance between automation and human interaction. While chatbots and similar technologies can handle certain tasks, an estimated 75 percent of customers use multiple channels in their experience. Thus, businesses must ensure that AI-supported customer service encompasses all touchpoints, both digital and agent-supported. By anticipating customer needs and providing prompts to agents, businesses can deepen customer relationships and avoid unnecessary follow-up calls.
Real-Life Success Story: An Asian Bank’s Experience
A fast-growing bank in Asia faced challenges such as increasing complaints, slow resolution times, rising cost-to-serve, and low uptake of self-service channels. Over a 12-month period, the bank implemented a transformation that included revamping existing channels, launching new video and social-media channels, and utilizing AI-powered decision making. These changes improved straight-through processing in self-service options and reduced service interactions. Enhanced measurement practices allowed for real-time tracking of performance, and new governance models addressed service request backlogs. The transformation resulted in a doubling to tripling of self-service channel use, a 40 to 50 percent reduction in service interactions, and a more than 20 percent reduction in cost-to-serve.
Seizing the Opportunity
To leverage customer service for engagement and gain a competitive edge, financial institutions should focus on a few key imperatives:
- Envision the future of service with a strategic focus on customer engagement.
- Rethink and enhance every customer touchpoint, digital or assisted, for improved experience and efficiency.
- Maximize every customer service interaction to build loyalty and drive value.
- Leverage AI and technology to provide proactive and personalized customer service.
- Adopt agile and collaborative approaches for a successful transformation.
By holistically transforming customer service into engagement through AI-led capabilities, businesses can enhance the customer experience, reduce costs, and increase sales. Now is the time for financial institutions to take action and embrace AI-enabled customer service.
FAQs
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What is AI-enabled customer service?
AI-enabled customer service refers to the use of artificial intelligence to provide proactive and personalized customer support. It leverages technologies like chatbots, predictive engines, and messaging platforms to anticipate and meet customer needs. -
How does AI-powered customer service benefit businesses?
AI-powered customer service can increase customer engagement, leading to increased cross-sell and upsell opportunities while reducing cost-to-serve. It improves the customer experience, reduces costs, and drives greater value over the customer’s lifetime.
Conclusion
AI-enabled customer service represents the next frontier in customer engagement. As customer expectations continue to evolve, businesses must leverage AI to provide proactive and personalized service. By reimagining customer service and aligning it with AI-powered tools, technology, and data, businesses can deepen customer relationships, drive value, and stay ahead of the competition. The time to embrace AI-enabled customer service is now.
