Bank customer service as a competitive advantage
Bank customer service as a competitive advantage
Insight

Bank customer service as a competitive advantage

The customer experience is about to become the new battleground.

In recent years, banks have been under attack by more agile digital upstarts. To combat the new competitors, “improved customer service is and will continue to be a leading value proposition” for the nation’s retail financial institutions, says Terry Walls, Customer Service Transformation Lead at KPMG’s U.S. Customer Advisory Practice.

Big retail banks make money by bundling services. They provide checking and savings accounts, as well as credit cards, college savings accounts, home mortgages, wealth management services and more. The list continues to grow.

As a result, banks have had to merge systems and processes that hadn’t previously been connected, which has improved customer service. “By continuing to fix the customer service experience, banks can expand and offer rebundled services, while improving their bottom line and staying competitive,” says Mitch Siegel, KPMG’s National Financial Services Strategy and Transformation Leader.

There are three major ways the customer service environment in banking is likely to change in the next three to five years, the consultants say. Bloomberg Intelligence data and insights about banking customer service—prepared independently of KPMG—support their contentions. Here’s what’s about to change, and the practical steps banks can take today to prepare for that future.

Data will inform customer service

Banking customer service today tends to be transactional, built around what the customer wants to accomplish at the time they contact the bank. But that will change.

“If you think of the way you use Uber or Airbnb or Amazon, it’s based off the fact that they understand the way that you transact. They’re able to make offers and customize treatment and contact strategy based off of the historical data that they have about you. That’s going to happen in financial services,” says Siegel.

Spain’s BBVA—Banco Bilbao Vizcaya Argentaria— is one bank already headed in that direction, says Siegel. It’s used its online platform to expand in the U.S. Sunbelt, where it operates as BBVA Compass, he says. The bank has seen its global digital customer base increase 22 percent in the last year, to almost 20 million clients worldwide, investors were told on the bank’s second-quarter earnings call in July. Mobile customers have increased 42 percent in the last year to almost 15 million as the bank uses technology to expand in new markets, with more than half of its customers in Chile, Venezuela and Turkey active on digital platforms.

AI will reinvent customer service, but humans won’t disappear

Artificial intelligence will remake bank customer service over the next five years, according to Walls. An early example is Bank of America’s Erica, a smartphone chat bot that uses artificial intelligence, predictive analytics and cognitive messaging to help customers check balances, make payments and conduct other routine business. Customers can interact with Erica via voice or text messaging.

Banking spending on AI products exceeded all other industries in 2015, and this will continue to be the case through 2020, according to Bloomberg Intelligence.

But the rise of AI certainly doesn’t mean humans are being pushed out of the customer service process, says Walls—it’s that they’ll have to shift from being transactional order-takers to “complex problem solvers,” he says.

The race to rebundle financial services is on

The great unbundling that has washed over financial services over the past five years is likely to reverse itself, at least in part, says Siegel. Today’s customer may send money with her Venmo app, use SoFi to refinance her student debt, use her bank’s app to check balances and use Mint.com to manage the whole of her financial life. KPMG research has found that the typical Millennial goes to 11 online places to deal with their money.

But as these customers age and “their lives become more complex, and as their primary bank becomes more digital-savvy, it will begin to rebundle some of those things into a single relationship,” says Siegel. The big banks “are going to eat up a lot of these disruptors, take them in-house and rebundle a lot of those services and products.”