Since the launch of ChatGPT in late 2022, generative AI has been a popular topic of conversation. Microsoft’s Copilot, Google’s Gemini, and Claude followed, as ChatGPT ignited an AI race. What was once science fiction is now a reality, with AI assistants that can respond to almost any question. Since their introduction over a year ago, more companies have adopted similar programs to replace various forms of automated work, such as website chatbots for customer service.
Sales-based companies have been quick to adopt, but banks, in general, are slower to integrate AI-powered programs into their business workflow and customer journey. While many have started implementing AI-powered chatbots, are banks missing a larger opportunity to improve customer experience with AI-driven advice? Should they integrate AI into their business?
This blog will explore the potential pros and cons of banks integrating AI-driven advice into their business and what it could mean for the future.
Are Banks Ready for AI-Driven Advice?
In short, not yet. Although generative AI is a powerful tool that can provide quick services and answer customers’ questions, it has significant shortcomings, especially for the financial industry. Financial advice is a powerful and influential service that cannot rely solely on AI. Here are some of the reasons why:
Lack of Trust
Banking as a service is built on the foundation of trust. Customers aren’t just investing their money with banks. They’re trusting banks with their livelihoods and expect them to provide holistic advice that will benefit them financially. Banks can even be designed with trust in mind to help customers feel comfortable within the retail setting, such as large open windows or private seating areas for more confidential matters. These thoughtful design elements can help enhance the sense of approachability and transparency.
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One of the biggest limitations of generative AI is the simple fact of trust. Customers don’t trust AI in general, and this is evident in consumer research, with 61% of people saying they are either ambivalent or don’t trust AI. This is a high number and one that will only increase as AI becomes more advanced and widespread. Integrating a technology that customers don’t trust to provide advice is clearly problematic.
Our study “How Branch-focused Customer Experiences Can Increase Advice-driven Services” confirms this theory. 64% of Americans and 75% of Canadians indicated they feel that AI fails to provide unbiased financial advice. Only 6% of respondents said they would turn to AI platforms for trusted financial advice. With 52% of Canadian respondents saying that the most important aspect of advice is credibility, AI’s underperformance in this area could create a PR scandal for banks that try to rely too heavily on AI for quality advice.
Customer Defection
With the world moving its focus toward digital banking, especially mobile banking, a weird phenomenon has taken place. While customers report feeling satisfied with their primary bank, their rate of defection has increased significantly.
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Our study “The State Of Banking: Achieving The Ideal Customer Experience” confirms this phenomenon, with the driving factor for customer defection being a lack of quality advice. Pushing customers toward digital platforms for advice risks accelerating customer defection, especially since it gives them less of a reason to visit a branch. In our latest banking study, we determined that a key retainer for customer loyalty is quality advice from within the branch. Redesigning the branch by incorporating elements that facilitate quality advice can drive positive returns. 20% of customers indicated a significant increase in both visitations to the branch and purchases of new financial products, implying that advice can increase both sales and loyalty.
Human Touch
Human touch is often an aspect banks overlook in favor of technological advancements. In the most recent decade, banks have been investing heavily in digital transformation. However, customers are much more in favor of face-to-face banking rather than online banking only. Its importance is even shown in the political sphere, with some parties making it a part of their platform to guarantee access to face-to-face banking in their communities.
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Today’s banks should take a more holistic approach to advice-driven banking by connecting digital experiences with human interaction for the ultimate customer experience. Although generative AI should not replace advice, it could be integrated into the customer journey to assist staff in providing advice. To prioritize customer privacy during the branch transformation journey, it is recommended that banks use generative AI as a staff assistance tool instead of having customers interact with it directly. This can help overcome issues with customers feeling unsafe and insecure when sharing sensitive information with AI.
For instance, Chongquing Rural Commercial Bank implemented a thoughtful human touch into every aspect of the branch design. Tiered privacy areas are curated throughout the branch for meetings of various purposes, while an approachable open space is still maintained to communicate transparency and trust. Striking a balance between privacy and openness is crucial in making customers feel both welcome and secure in the branch. This helps increase customer satisfaction, retention, and loyalty in the long run.
Conclusion
When examining the changing role of branches and recent branch redesign projects worldwide, it is evident that customers still prefer human financial advisors. However, this does not mean that generative AI does not have a place in the future. Although it cannot be used exclusively in its current state, there could be an opportunity for banks to start working on their own generative, advice-focused AI model rather than using current models like ChatGPT. Incorporating AI to assist staff in helping customers could enhance productivity and the seamlessness of the experience while maintaining trust and human connection.
Amplifying advice-driven services within the branch is crucial to creating a seamless experience that customers can trust and rely on. Redesigning the branch to meet these needs today is the best way to create customer loyalty.
