In the realm of the Banking, Financial Services and Insurance (BFSI) sector, customer experience (CX) trends are rapidly evolving to meet the demands of modern consumers. According to a report by PwC, 73% consumers believe that a good experience is key to their brand loyalty, making CX a top priority for BFSI institutions.However, another report by Kapture CX states that 68% CX leaders believe that customer service interaction remains the top grievance in BFSI sector. As consumers increasingly expect tailored and efficient services, BFSI institutions are turning to advanced technologies such as Artificial Intelligence (AI) to deliver on these expectations. “Artificial Intelligence is revolutionising the customer experience in the BFSI sector by enabling hyper-personalised services at scale. At YES BANK, we are leveraging AI to build predictive models that enable us to service customer needs, and deliver a seamless, intuitive banking experience that drives efficiency and enables enhanced customer trust with us.” Mahesh Ramamoorthy, chief information officer, YES BANK, told BrandWagon Online.
The BFSI sector, CX and AI
The BFSI sector is seemingly considered as the cornerstone of the global economy. It manages critical financial assets, provides essential services, and underpins economic stability and growth. In this context, delivering exceptional customer experiences is not just about enhancing satisfaction but also about driving business performance. High-quality CX fosters customer loyalty, boosts retention rates, and enhances overall competitiveness. Institutions that excel in CX are better equipped to build trust, encourage positive word-of-mouth, and achieve sustained success.
Artificial Intelligence (AI) has emerged as a transformative force in reshaping customer experience within the BFSI sector. AI technologies, including machine learning, natural language processing, and predictive analytics, are enabling institutions to offer more responsive, personalised, and efficient services. For instance, AI-powered chatbots and virtual assistants have revolutionised customer support by providing 24/7 assistance, handling routine queries, and processing transactions with remarkable speed. “AI handles routine interactions such as answering FAQs (Frequently Asked Questions), guiding users through the investment process, and providing real-time updates on portfolio performance. Human agents step in for more complex issues that require nuanced understanding or personalised guidance, ensuring a seamless blend of efficiency and empathy.” Vikas Verma, CTO, hBits, said.
According to a report by Juniper Research, AI chatbots are expected to save the BFSI sector around $7.3 billion annually by 2024 through reduced operational costs and improved efficiency. “AI is deeply integrated into our ecosystem, with 92% of underwriting handled by AI models. Besides, we use AI to gain personalised insights from customer credit scores which helps us understand the customer and the repayment cycles better,” Anil Sinha, chief technology officer, Fibe (formerly EarlySalary), said. Some AI models also enable personalising customer experience with Gen AI model interacting with them on an ongoing basis and providing them with the necessary support for their queries even beyond business hours, he added.
Furthermore, AI tailors financial products and services to individual needs by analysing customer behaviour, transaction history and preferences. With the help of this personalisation, customers can experience a more responsive and efficient service, backed by quicker resolutions and specifically tailored advice for their financial situations. “In the Indian banking sector, HDFC Bank is a prime example of how AI technologies can be leveraged for significant advancements, having made strides in unifying their customer experience across all channels through the adoption of AI technologies to drive greater agent efficiency with the support of chatbots, voice bots, workforce management, and interactive voice recognition (IVR)” Subrato Bandhu, VP- India, Sprinklr, said.
The concept of open finance is also reshaping the consumer experience. By integrating various financial accounts and offering real-time data access, AI enables a more holistic view of a customers’ financial situation. This integration simplifies processes, enhances transparency, and empowers consumers with greater control over their financial lives.
Furthermore, by leveraging a combination of natural language processing (NLP) for chatbots, machine learning (ML) for predictive analytics, and AI- powered recommendation engines. These technologies enhance the offerings by the BFSI sector by providing real-time insights, automating customer interactions, and optimising investment opportunities.
Regulations and implementation
Despite the advantages that AI provides for the BFSI sector in transforming their CX, the integration of AI into CX in the BFSI sector raises several security and regulatory concerns as well. The use of AI involves processing vast amounts of sensitive customer data which necessitates stringent data protection measures to safeguard the data against breaches and misuse. Institutions must navigate this complex road equipped with regulatory frameworks such as GDPR and DPDP, in order to provide efficient solutions.”We never use any PII (Personally Identifiable Information) data for model training. The model is hosted in India only and we use standard models which are well tested on security aspects to ensure customer data is not compromised.” Sinha stated. The European Commission states that the GDPR imposes strict requirements on data handling and user content, not adhering, which can fetch a penalty up to four percent of the global annual turnover of the company.
“AI models can inadvertently perpetuate biases present in their training data. This is particularly concerning in financial services, where biassed algorithms can lead to unfair lending practices or discriminatory insurance pricing.” Rajesh Mirjankar, co-founder, MD and CEO, Kiya.ai, said. The challenge lies in continuously monitoring and refining these models to mitigate biases, which is often not adequately addressed in current applications. Furthermore, Many AI systems operate ‘black boxes’ making it difficult for users and stakeholders to understand how decisions are made. This lack of transparency can lead to scepticism among customers and regulatory scrutiny. For instance, if a loan application is denied by an AI system without a clear rationale, it can foster distrust in financial institutions.
Ensuring the privacy and security of the sensitive customer data requires robust cybersecurity measures as well. “Integrating AI with existing legacy systems is complex and costly, necessitating significant investment in technology and infrastructure. Implementing AI also requires a skilled workforce in data science and AI development, necessitating investment in training and talent acquisition.” Bandhu added.
As more and more institutions enter the market, the players need to offer innovative solutions while addressing these regulatory and ethical considerations. “The maturing Indian market, with its unique demands and diverse user needs, requires a comprehensive strategy. Successfully navigating these challenges can pave the way for significant advancements in the financial sector,” Mirjankar added.
The future
As we look into the future, AI is expected to profoundly evolve across various sectors, shaping the way businesses function and interact with its customers. AI’s fraud detection capabilities will become more advanced, providing better security for digital transactions and building customer trust. “A unified CCaaS vision will connect all communication channels, ensuring consistent and seamless customer experiences,”Bandhu said. AI will enable the development of innovative financial products, such as AI-driven robo-advisors offering personalised investment advice.
Experts opine that generative AI is expected to see a significant growth in the BFSI sector with Indian banks piloting projects for customer service, fraud detection, and personalised advice. This trend will reportedly expand as institutions seek efficiency and competitive advantages. Additionally, with the help of AI, the institutions can automate routine tasks and improve decision making which ultimately leads to cost savings and allows the staff to focus on higher value activities. The most important of them all is the workforce, the rise of AI will require workforce upskilling in data literacy and AI ethics, leading to new roles like AI ethicists and data scientists to manage AI implementations.
As AI continues to reshape the CX in the BFSI sector, its potential to drive innovation, enhance personalization, and improve efficiency is undeniable. From answering simple queries to giving customers financial advice, how much of the workforce can be integrated under AI and what does it leave for the human workforce is something we all can wait and watch…