Making Financial Services Customer Communications More Human

How can financial services maintain a human touch in their digital customer communications? Blending innovation with personalisation, along with using the latest in AI technology, will be key—as will working to innovate within and challenge regulatory requirements.

As the financial sector evolves, balancing advanced digital solutions with genuine human interaction is a significant concern.

We caught up with Ben Hammond, Managing Director of Consulting and Insight at The Lang Cat, to discuss how financial services can humanise digital communications amidst regulatory challenges.

Evolution of Digital Communications in Finance

Over the past two decades, customer communications in financial services have transformed dramatically.

Yet, despite significant advancements, the industry often trails behind others in adopting truly customer-centric digital solutions.

From Paper Trails to Digital Platforms

The transition from paper-based to digital communications is a significant milestone.

Financial firms have accelerated their digital initiatives since the COVID-19 pandemic.

However, regulatory and compliance hurdles frequently can slow down or hinder this progress.

"We've moved away from paper in a big way, but there's still much more to do. Regulatory concerns sometimes cause firms to step back from full digital adoption."

— Ben Hammond, The Lang Cat

Customer experience is also a key consideration.

According to Accenture, while a significant portion of consumers prefer digital channels for routine transactions, a majority still prefer the option to speak with a human for more complex issues.

In fact, research from The Lang Cat shows that 70% of consumers who seek financial advice would prefer it face-to-face, highlighting an ongoing need for personal interaction alongside digital services.

Digitising processes at scale that also require human intervention is a tricky endeavour, compounded by legacy technology.

Navigating the Regulatory Landscape

Regulations aim to safeguard consumers, but if not managed carefully, they can unintentionally stifle innovation.

The Ripple Effect of Consumer Duty

Initiatives like the Consumer Duty have prompted firms to rethink their communication strategies.

"Consumer Duty has made firms change how they communicate with clients. It's not just about compliance but enhancing client experiences and outcomes."

— Ben Hammond, The Lang Cat

However, regulations can inadvertently widen the "advice gap"—with over 55% of advisers reporting they no longer serve clients with lower asset levels due to Consumer Duty's complexities, impacting accessibility to advice for many consumers.

Striking a Balance Between Compliance and Innovation

Finding harmony between adhering to regulations and fostering innovation is challenging but essential.

As part of ongoing efforts, firms are exploring ways to integrate technology that can help scale services efficiently, within regulatory constraints.

"We need forward thinkers who can work within the rules but still drive innovation to meet customer needs."

— Ben Hammond, The Lang Cat

It's about leveraging technology to enhance, not replace, the human elements of customer service, with the potential to increase client service capacity if applied efficiently.

Bridging the Advice Gap with Technology

The advice gap remains a significant concern, but technology offers promising solutions.

The Emergence of Hybrid Advice Models

Hybrid models that blend digital tools with human expertise are gaining traction.

"We're seeing a move towards hybrid advice. Technology can help bridge the gap, but it's about finding the right balance."

— Ben Hammond, The Lang Cat

The World Retail Banking Report by Capgemini notes that financial firms are increasingly utilising AI to improve customer experience.

Yet, questions remain about whether customers would trust AI-generated advice, and regulation highlights the need for human oversight.

Harnessing AI and Emerging Technologies

Artificial Intelligence (AI) and automation can enhance customer communications when used responsibly.

"AI has the potential to enhance customer interactions, but we need to ensure data is handled appropriately."

— Ben Hammond, The Lang Cat

Careful management of data privacy and compliance is, of course, paramount to maintaining customer trust.

Upcoming FCA proposals on simplified advice may offer new pathways for firms to guide clients responsibly with reduced complexity, potentially reducing barriers to digital innovation.

Humanising Digital Interactions

Despite technological advancements, the human touch remains irreplaceable in financial services.

Aligning with Customer Expectations

Today's customers expect the convenience of digital services without sacrificing personal interaction.

"Customers want things to be intuitive and just work. Financial services need to match the experiences provided by other industries."

— Ben Hammond, The Lang Cat

According to research by Salesforce, 66% of customers expect companies to understand their unique needs and expectations.

The Power of Personalisation

Tailoring communications can enhance engagement and foster loyalty.

"Segmenting your customer base and adjusting your approach for different demographics is vital. Testing and feedback can help ensure relevance."

— Ben Hammond, The Lang Cat

Boston Consulting Group research indicates that personalisation can boost revenue by 6% to 10%.

The Crucial Role of Data and Analytics

Data is the cornerstone of effective personalisation and innovation.

Transforming Data into Insights

Efficient data management enables firms to leverage new technologies fully.

"If your data isn't structured well, you can't take full advantage of new technologies."

— Ben Hammond, The Lang Cat

According to the 2019 Global CEO Outlook, 67% of CEOs believe that 'acting with agility is the new currency of business.'

Preparing for the Future

Staying ahead requires continuous innovation and a keen eye on emerging trends.

Embracing Continuous Feedback

Regular customer feedback ensures services remain relevant and effective.

"It's worth continuously gaining qualitative feedback from your customer base to refine services as you go."

— Ben Hammond, The Lang Cat

Adapting to Demographic Shifts

Understanding the preferences of different generations is essential.

"Younger generations want on-demand access, while older clients may prefer simplicity. User testing is key."

— Ben Hammond, The Lang Cat

According to a the latest research, millennials will comprise 40-43% of the global workforce by 2025.

In Summary

In summary, humanising digital customer communications is not just about leveraging technology—it's about fostering meaningful connections.

By blending innovation with personalisation and navigating regulatory requirements thoughtfully, financial services can enhance customer experiences and bridge the advice gap effectively.

Embracing technology to support advisers, rather than replace them, could be key to expanding access while preserving the quality of service.

References

AI Stats News: 86% Of Consumers Prefer Humans To Chatbots, Accenture, 2019

World Retail Banking Report, Capgemini, 2020

The Advice Gap 2024, The Lang Cat, 2024

What Are Customer Expectations, and How Have They Changed?, Salesforce, 2023

Profiting from Personalization, Boston Consulting Group, 2017

Redefining Resilience: 2019 Global CEO Outlook, KPMG, 2019

Shaping Millennials to be the leaders of tomorrow, CEO Magazine, 2023

Reviewed By

Sabrina McClune, 31.10.2024

Sam Kendall, 31.10.2024