Financial services firms’ implementation of AI at scale is the lowest across all industries, and where AI has been deployed, customer expectations are not being met – with half of customers saying they receive no value from AI-enabled interactions.
This is according to a report published today by the Capgemini Research Institute entitled, “Smart Money: How to drive AI at scale to transform the financial services customer experience”.
Key findings from the report include:
• The use of AI is widespread: Nearly 40% of customer services are now AI-enabled for most banks (53%) and insurers (62%) surveyed
• Expectations are changing: 78% of customers expect to increase their use of touchless interactions, and firms must prioritize investment in solutions that will benefit customers
• Consumers aren’t afraid to try something new: Organizations recognize that modern consumers will not hesitate to find an alternate service or provider that offers better experiences, with 36% of consumers having found a new provider during the COVID-19 crisis
• The benefits of AI depend on scale: Only 5% of banks and 6% of insurers have deployed AI at scale across all areas, while companies which have achieved scale reap the benefits of AI
• Leadership and internal resistance are preventing scaled AI roll-out: Barriers such as internal resistance, driven by anxieties about re-skilling and job losses are barriers to deploying AI at scale by 52% of banking and 53% of insurance executives, as well as leadership awareness and buy-in from an executive standpoint (53%)
The deployment of AI to improve the overall CX has grown significantly in the financial services industry in the past three years. Just over half of customers (51%) have daily AI-enabled interactions (like talking to a chatbot) with banking and insurance firms; this becomes even more important as most customers (78%) expect to increase touchless interactions as the COVID-19 crisis prolongs. Financial services firms have already perceived the positive impact on their bottom-line of implementing AI in customer-facing functions, including reduced cost of operations (13%) and increased revenue per customer (10%).
Financial services firms are looking to AI to improve customer experience, but customers are not seeing the benefits
For financial services firms, meeting customer expectations is business critical, with 94% of organizations saying that improving CX is the key objective behind launching new AI-enabled initiatives. However, a clear disconnect is emerging as customer expectations are not being met. Almost half (49%) of consumers rate the value they derive from AI-enabled digital touchpoints as non-existent or less than expected. Customers are increasingly looking for a more human experience when interacting with AI-powered chatbots, and 35% say that their current interactions lack the human touch.
COVID-19-driven changes in customer behaviors offer a unique opportunity for banks and insurers to accelerate AI deployment. Customer interactions with AI are directly or indirectly spread over multiple channels throughout the financial services value chain.
• A majority (78%) of consumers expect to use touchless interactions more, through voice assistants, facial recognition or apps – compared to just 61% pre COVID-19.
• Close to half (45%) of customers will increase their use of contactless payments during the pandemic.
• COVID-19 is also prompting a major behavior shift by older consumers as contactless payments adoption has grown by 37% in the 61–65-year age group, and a 33% increase with those over 66.
Ability to scale AI is a significant challenge
While the organizational benefits that banks and insurers can realize by using AI in better engaging with their customers are the highest across industry sectors, financial services firms have the lowest scaled implementation across all industries. Only 5% of banks and 6% of insurers have been able to deploy AI at scale across several touchpoint functions. The biggest challenge is leadership and organizational resistance driven by anxieties about the need for new skills and job loss fears (reported by 52% of banking and 53% of insurance). Difficulty in identifying the right use cases to scale, long gestation periods for implementation and lack of trust for high-priced interactions also are barriers for adoption.
While traditional players are struggling with AI implementation at scale, it is a different scenario for new-age players like FinTechs. Not bound by the same challenges as traditional legacy financial services firms, FinTechs are succeeding in delivering superior value to customers by using AI-driven solutions to make financial services tasks more efficient and customers interactions friendlier.
Financial benefits to organizations are clear
Even with the lower rate of AI implementation compared to other industries, financial services firms have realized significant benefits. They have reduced their cost of operations by 13% and have increased revenue per customer by 10% after deploying AI in customer-facing functions. AI has also helped deliver improvements in customer satisfaction. Banks and insurers have witnessed greater customer engagement with brands from deploying customer AI. Around one in five industry firms (25% for banks and 19% for insurers) have seen a 20–40% increase in customer engagement.
“Financial services firms have much to gain from implementing AI in their customer interactions, but there are steps to be taken before the benefits are fully realized for businesses and consumers alike,” said Anirban Bose, CEO of Capgemini’s Financial Services and Group Executive Board member. “Organizations need to focus on educating their customers and staff on what AI can do for them. It will take both investment and consumer trust to make the most of this powerful technology. To deliver the right AI-powered experience centred around the consumer, banking and insurance firms must ensure they have senior leadership roles in charge of internal and external AI adoption and acceleration.”
The AI in Customer Experience for Financial Services report has been created from customer and executive surveys. In April and May 2020, Capgemini surveyed 5,300 customers across 12 countries and 318 business leaders from large financial services organizations with at least $1 billion in 2019 annual revenue across a range of sectors and countries. In addition, interviews with industry executives, were conducted, to examine how the customer experiences with AI in CX have evolved, what organizations are doing to get more benefits, where they are implementing AI in CX, what the challenges are and how they are ensuring trust among consumers with respect to their AI systems. Quantitative research was complemented with two virtual focus group discussions, with 8 to ten consumers per focus group, for Germany, and the US. The survey, as well as the focus group discussions, had a healthy mix of demographics and AI user and non-user respondents.