How Fintech Can Use AI To Improve Customer Service and Increase Retention

Fintech AI

Disruptive fintech companies and digital-only challenger banks have shaken up an industry once plagued with little differentiation amongst products and poor customer experiences. Upstart banks and financial services companies like Brex, Chime, Monzo, and Wealthfront are digital-native and designed to provide an online customer experience on par with the best consumer apps. This is a point not lost even on legacy bank executives: 75% of banking executives believe the most critical impact fintech companies will have is driving an increased focus on the customer1

In fact, only half of the respondents from the banking sector (53%) believe their organizations are consumer-centric, compared with over 80% of fintechs2. Fintechs need to provide superior online and in-app customer support in addition to the smooth user experiences (such as sign-up flows) they provide in their products. This ease of use plus strong support builds long-term loyalty in the face of fierce competition for consumer wallets. Fintech companies are turning to AI to scale customer service, automating resolutions to repeatable tickets. AI also powers in-app and proactive service offerings that anticipate customer needs and resolve problems faster without taking users out of their flow. 

Frictionless CX for fintech companies is driving adoption 

Today’s banking and finance draw parallels to the media industry, where we’ve seen streaming upstarts steal eyeballs and attention from the legacy media behemoths. Consumers are realizing they don’t need all of the bundled extras and hidden fees from cable companies and are cutting the cord at alarming rates in favor of unbundled and streaming services like Netflix and Hulu. 

This same shift is happening in financial services. Consumers are flocking to challenger banks like Chime, simple-to-use retirement apps like Betterment and Wealthfront, and frictionless financial services like Venmo to handle simple banking needs. Their success has come because, according to Deloitte, fintechs “developed a product offering and channel experience that targeted the points of the value chain where incumbents’ weaknesses were most exposed and often not easy to fix. Most commonly, this was low satisfaction with customer service levels, broken digital account opening and servicing journeys, and complex product terms with various layers of hidden add-on fees.3

Today, 1 in 4 people under the age of 37 have an account with a digital-only challenger bank like Revolut, Monzo and NuBankk4. And while the United States has lagged in terms of adoption as compared to Europe, Asia and LATAM, US consumer appetite for alternate providers of financial services is picking up, driven, in part, by the user-friendly experiences designed to save customers time. One example of this is with opening an account with a financial services company. Opening a new account with the UK’s Monzo bank and the US’s N26 is done in less than 5 minutes on a mobile phone5. This compares to opening an account with a traditional bank, which may require in-branch meetings, faxes and paperwork, and multiple days for an approval. 

Poor service drives churn in fintech 

With more competition, churn remains a major issue for fintech companies. One study found that one day after signing up for financial apps, only 34.8% of users remain; a week later, this drops to 14.9%; and three months later to just 3.4%5. Respondents consistently cited “poor service” as their reason for churning off apps6.  

Fintech companies need to meet the demands of the modern consumer who doesn’t like waiting, craves simplicity and ease, and is often completing tasks on their smartphones. By prioritizing existing customer happiness and providing the support that they expect, fintech companies will grow revenue by reducing churn. This is because seven in 10 US consumers say they’ve spent more money to do business with a company that delivers excellent service, and 95% of consumers cite customer service as important in their choice of and loyalty to a brand. 

The four pillars of excellent fintech customer service  

Digital-first millennials who have expectations for truly seamless, immediate and convenient customer support are the primary and earliest adopters of fintechs. To retain these customers, fintech companies need to implement four key customer service strategies. 

  1. Provide meaningful, 1:1 in-app support: While omni-channel support is essential, for fintech companies in particular, most of the interaction with the customer is taking place within apps. Don’t force a person to exit the app, call a support line or send an email to get in touch. Providing support within the apps where services are provided gives customers access to the information they need at their fingertips. Deploy live chat functionality to enable a person to receive support in the exact moment of need. 
  2. Be always-on and always-available: Customers run into issues 24/7/365. And especially when money is involved, customers crave immediate support. Don’t restrict customers to business hours or keep them waiting for a response. Respond immediately, no matter if it’s after-hours, the weekend or a holiday. 
  3. Leverage AI to automate resolutions to basic issues: Self-service is core to all fintech experiences and a key reason people become customers in the first place. AI-powered chatbots can immediately resolve issues, including resetting passwords, checking account balances, transferring funds between accounts or paying monthly bills.  With AI chatbots managing many repeatable tasks, live agents focus on more complex or urgent tasks. AI chatbots differ from first-generation bots as they enable customers to engage in natural, human-like conversation, not tied to rigid decision trees.   
  4. Get out in front of issues with proactive service: Solving issues before customers even know they exist brings the idea of convenience to a new level. By leveraging AI, fintech companies can understand when a problem is likely to arise, when a customer might get frustrated or when specific information would be valuable. Fintechs can then preemptively intervene before a customer has to reach out.  

As soon as an account is set up, for instance, fintech companies can reach out with precise information drips to proactively answer the most common questions after onboarding. After 3-6 months, a person’s questions have likely changed, so targeted education can reduce customer frustration. To implement proactive service, identify friction areas, the top customer service tickets that arise along the customer journey, and differentiation amongst customer segments. You can then identify low-impact, high-value opportunities to offer proactive service. 

Closing: How AI can help fintech companies excel at customer success  

As competition in the financial services industry heats up with new entrants and incumbent banks taking massive steps to reinvent their customer experience, differentiation increasingly comes from customer service. Meeting customer expectations for immediate, convenient and frictionless support is directly correlated with long-term customer happiness and growth. 

To turn customer support into a competitive edge and meet quick-rising demands for quick, convenient and personal resolutions, fintech companies need to bring AI into the workforce to resolve issues immediately, and introduce always-on, proactive and in-app service.

Are you a fintech company looking to create frictionless customer service interactions? Get in touch for a demo today! 

References 

  1. PWC: https://www.pwc.com/gx/en/industries/financial-services/fintech-survey/blurred-lines.html 
  2. PWC 2: https://www.pwc.com/gx/en/industries/financial-services/publications/fintech-is-reshaping-banking.html 
  3. Deloitte: https://www2.deloitte.com/content/dam/Deloitte/us/Documents/financial-services/us-dna-of-digital-challenger-banks.pdf 
  4. SI Digital: https://sidigital.co/blog/customer-retention-financial-services 
  5. Tear Sheet: https://tearsheet.co/marketing/5-techniques-fintech-and-banking-apps-use-to-engage-and-retain-users/ 
  6. Qualtrics: https://www.qualtrics.com/customer-experience/banking-report/#section3 

Emily Cummins

PR and Content Writer

Emily has worked in the AI industry for many years. She loves researching and writing about evolving trends in AI in customer service. She graduated from the College of Charleston.

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