Banking and FinanceCover StoryIssue 03 - 2023MAGAZINE
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Human touch in banking wanes

The digital revolution in banking has been a game-changer as routine transactions are now seamless, which also provides 24/7 access to account information

The banking landscape has undergone a fundamental transformation towards digitalization and automation in a time of fast technological innovation. As digital platforms and artificial intelligence continue to streamline financial services, a perceived absence of human connection in banking has been seen. The traditional face-to-face contacts that historically characterised banking experiences are now yearned for by close to half of all banking consumers worldwide. Online banking, mobile apps, and chatbots have unquestionably made life more convenient, but they have also made us saddened by the loss of the human touch, empathy, and certainty that come only from interpersonal engagement.

The digital revolution in banking has been a game-changer as routine transactions are now seamless, which also provides 24/7 access to account information. Some clients, however, feel cut off from their banks as a result of the automation. Remote help and virtual assistance has replaced traditional in-person encounters, creating the impression of diminished accountability and confidence. Customers frequently find themselves negotiating knotty issues, without the confidence of a human counsel who comprehends their particular circumstances. As a result, there is a desire for a deeper level of human connection than a simple business transaction, leading some to wonder if banking has forgotten its fundamental ideals of trust and empathy.

Additionally, the human connection in banking is essential, especially during major life events or financial crises. Customers frequently ask their dependable advisors for emotional support and direction during uncertain times. Technology can analyse data and offer advice, but it finds it difficult to grasp the subtleties of human emotions and unique situations. Customers yearn for the empathy that can only be offered by a human, someone who can relate to their challenges, fears, and aspirations. Therefore, even while technology has brought incredible convenience, it has unintentionally increased the need for human connection in deeper and more vulnerable situations.

A few demographics’ financial knowledge and inclusion have been influenced by the decline of human connection. People who are less tech-savvy or don’t have access to technology run the risk of falling behind as digital banking becomes the standard. It can be difficult and unpleasant for older generations used to traditional banking procedures to adjust to digital platforms. Similar to how vulnerable groups may be shut out of the banking system, compounding already existing disparities, are individuals with poor access to technology or financial literacy. The absence of human assistance can act as a barrier, making financial decisions difficult and perhaps putting one in danger of financial traps.

Some banks have made an effort to close the gap by incorporating personalised customer service through numerous channels after realising the importance of the human element. They use human-like chatbots, deliver video consultations, and offer interactive tools to improve the client experience. These initiatives seek to utilise the effectiveness of technology while emulating the warmth and connection of human engagement. However, challenges persist in finding the ideal balance between automation and human interaction. Straying too far in either direction can lead to dissatisfaction among different segments of customers.

Furthermore, the loss of the human element in banking may have long-term effects on client loyalty and bank brand loyalty. Fostering a true relationship with customers is essential for increasing their loyalty, and this frequently calls for a personal touch. Customers will be more likely to trust and remain loyal to banks that prioritise client interaction, personalised service, and empathy, becoming brand evangelists who recommend their institution to friends and family. On the other side, banks that just rely on automated services might find it difficult to build long-lasting emotional relationships with their clients, which would result in higher client churn.

Banks must adopt a hybrid strategy that combines technology with emotional intelligence to address the desire for human engagement. Banks can offer individualised services that connect with clients on a personal level by utilising data analytics to gather insightful knowledge about their preferences. Furthermore, providing frontline staff with thorough training and guidance can improve their capacity to offer sympathetic, individualised assistance to clients in need. Banks can walk the narrow line between innovation and empathy by fusing the effectiveness of technology with the human touch, ensuring that customer experiences remain the core of their success.

However, the difficulties in maintaining a human connection in banking go beyond the intrusion of technology. Changes in cultural norms and shifting consumer expectations are both very important. Modern consumers may bring these expectations into their relationships with banks since they are used to instant satisfaction and on-demand services in other areas of their lives. As banks work to implement automated solutions to satisfy customer needs for speedy resolutions and prompt replies, they inadvertently undermine the value of the human touch. Finding the correct balance in this situation is even more difficult since banks must simultaneously meet consumers’ changing expectations and maintain the personalised touch that appeals to them on a deeper level.

Moreover, the COVID-19 pandemic hastened the transition to online banking and remote communication. Lockdowns and other social isolation tactics led to a reduction in foot traffic at conventional brick-and-mortar branches, driving both clients and banks to adopt digital substitutes. Although digital solutions were essential for maintaining continuity throughout the pandemic, they also highlighted the risks associated with relying primarily on technology. Customers encountered issues with remote support, prolonged response times, and a lack of individualised help. This further strengthened the perception that something vital was missing in the customer experience – the human connection.

The importance of the personal touch in banking was badly missed during the pandemic-induced change. In times of adversity, many consumers sought comfort in interpersonal interactions, and their loss was acutely felt. A yearning for in-person contacts and the confidence of a caring financial advisor became clear as the world struggled with uncertainty. The pandemic served as a sobering reminder that despite the quick development of technology, the human touch continues to be an essential component of the banking experience.

One crucial aspect that distinguishes humans from machines is empathy – the ability to understand and share the feelings of others. Genuine connections are based on empathy, which also fosters a relationship of trust between clients and their banks. While technology is capable of gathering enormous quantities of data and providing individualised recommendations, it struggles to convey true empathy. Some forward-thinking banks have been investing in creating compassionate cultures inside their organisations as a result of realising this restriction. They teach their staff how to listen intently, comprehend consumer needs, and act compassionately. By doing this, these banks hope to create long-lasting relationships that go beyond simple business dealings and promote a sense of loyalty and fulfilment.

The idea of financial advice and counselling is closely related to the human connection in banking. Traditional banking connections frequently entailed long-term alliances with dependable consultants who comprehended the complexity of their client’s financial problems. These advisors provided individualised guidance in light of a thorough comprehension of the objectives, risk tolerance, and financial aspirations of their customers. However, several institutions have moved away from conventional financial counselling models as a result of the development of automated financial advisory platforms, sometimes known as robo-advisors.

Robo-advisors cater to clients looking for affordable and effective investing options by providing algorithm-driven investment advice. These platforms have benefits in terms of accessibility and convenience, but they might not have a human touch or the capacity to take complex emotional elements into account, which can affect financial decision-making. As a result, some users can feel alienated and uneasy about entrusting an automated system with their financial destiny.

Meanwhile, research conducted by Foolproof, a Zensar company has also revealed that customers are frustrated with their banking experience and are craving a more human connection. The research showed that nearly 46% of the surveyed customers want human interaction, and 29% stated that they want more high street branches. Around 47% say chatbots are not answering their questions, and 23% believe their banking experience has gotten worse in the last 12 months. Only 19% of people over the age of 55 think their banking experience has improved, and 74% of people don’t think banking is personal enough.

To know more about banking and its need for human connection, Global Business Outlook caught up with Mr. MVS Murthy, CMO of Federal Bank, who shared his views about the importance of human connection in banking, the era of digital banking, and much more.

Q) How would you define the ‘human connection’ in banking and why is it important for customers?

A) Money needs assurance, and it comes from explaining how earnings can be deposited, used to pay for products and services, invested for goals, invested to create long-term wealth etc. Be it investing or buying an asset, it can not happen without a human touch. What if something goes wrong? Or what if I need to go to the branch urgently tomorrow morning?

Human connections will always be important to manage these what-ifs. Of course, customers will evolve and will use technology efficiently, but they definitely want to know that there is a human at the core. We know of instances like tolls/parking/amusement parks which all have efficient tech powering them and have encountered frustrations when it’s not working. The number of humans or the number of interactions may be less but it’s the pivot of any efficient experience.

Every time a situation where a customer’s faith is reinforced in the bank, the customer becomes an evangelist and reassures others to give it a try. Customers’ trust value for the brand can be gauged by organisations through the Net Promoter Score (NPS) method, a metric that can be an eye-opener for brands/banks/organisations to improve their connection with customers and turn them into loyal ambassadors.

Q) Could you please enlighten us about the reasons making customers feel that their banking experiences are lacking human connection?

A) Formerly for everything, we come to the bank. Technology has come into the banking industry, and it is imperative in the modern banking landscape to keep up with digital advancements and changing customer preferences. For the sake of the human touch, we can’t expect only manual withdrawal of funds without ATMs or mobile banking, such banks would only cause customer inconvenience and become extinct.

Rather, banks can choose to classify segments as high touch or low touch basis in the long run. A new banking customer may require a high touch on basics, but an existing customer may require a high touch on a new product. So, banks will need to actively look at the maturity cohorts of customers and markets and decide which customers need how much support.

The banking sector is not losing the human touch, but it is losing the consistency of humans due to attrition. And this is an area any company in the service space needs to work harder. Inconsistency of service delivery or culture of service is the primary reason that customers complain of a ‘lack of human connection.’ Dexterity and efficiency are both needed for a superior experience.

Q) If there are downsides to focusing on the ‘human connection’ in the digital age, how can the banking sector overcome them?

A) The banking sector can take several measures to overcome these challenges and foster a strong ‘human connection’ despite the digital landscape. First and foremost, banks should invest in customer-centric technologies that enhance personalization, such as artificial intelligence-driven chatbots capable of empathetic responses. These technologies can mimic human interactions and create a more positive customer experience.

Additionally, banks should strive to strike a balance between digital and human touchpoints. Offering multiple communication channels, like video calls or virtual meetings, can provide customers with the option to engage directly with bank representatives when needed, further strengthening the human connection.

Furthermore, training bank employees to be proficient in digital tools and empathetic communication is crucial. This ensures that when a customer chooses to interact with a real person, they receive personalized and attentive service that fosters trust and loyalty.

Q) What should be the key strategies for banks to maintain the 50:50 balance between technology and the ‘human touch’ in their services?

A) There is no right proportion. There is the right sentiment – both about people and technology. If people lack empathy and the technology is subpar, the customer experience suffers a double whammy of dissonance. Both people and technology get better and more intuitive over time.

Technology gets obsolete with time. Humans become wise with experience. So, you need the combination of the latest technology and talented people over time. There is no perfect mix, any note can have a soliloquy or be in chorus with the larger mix in a performance. It is still the age of humanity served by technology.

Q) What changes could customers see in the banking sector in the future?

A) Customer relations in the banking industry will probably undergo considerable change as a result of ongoing technological improvements. Artificial intelligence, chatbots, and virtual assistants, among other innovations, will continue to improve the effectiveness and accessibility of customer assistance. These technologies can execute transactions, handle routine queries, and provide individualised advice, freeing up human personnel to work on more challenging and valuable jobs.

Q) Can you provide examples of successful initiatives by banks or financial institutions that have effectively addressed the issue of missing human connection in banking?

A) Missing human connection is not about the absence of humans alone. It is about unskilled personnel, or it is about dead-end technology without human support. To the credit of the banks and the financial institutions, especially in India, they have juxtaposed the best of both.

Across the world, there are banks of multiple sizes, there are ecosystems within and around banking powered by technology, and there are commerce ecosystems functioning famously by leveraging tech with sharing and cross-pollination of data from digital economies. Farmers, manufacturers, pharma companies, banks and consumers are getting integrated into human intelligence-created and artificial intelligence-powered economies that are vying for scale.

Examples of very effective and innovative use of technology in banking include robotic wealth advisories in banking apps, the use of AR filters in social media for effective engagement, use of chatbots to respond to queries that provide seamless customer experience across platforms.

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