Banking on future success

The global banking and financial services sector has been through one of its most volatile and unpredictable years in recent history. And as we move further into 2024 that uncertainty is set to continue. How well organizations can cope with this prolonged turmoil will come down to how they use data to engage with customers and guide technology implementations.

Person holding a credit card and looking at their smartphone

Published ·March 4, 2024

Reading time·5 min

When Charles Dickens wrote “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair,” he was describing the absolute fluidity of experiencing life during the French Revolution.   

Those opening lines belong to the classic novel “A Tale of Two Cities,” but they’re an equally accurate summation of the current state of the global banking and financial services industry.  

A year of highs and lows  

Since the beginning of 2023, one major European and five American banks have failed. Interest rates on both sides of the Atlantic have risen by 500 basis points. Inflation has negatively impacted both corporate and consumer finance to the point where credit delinquency rates are worryingly high, and profit warnings — even from established firms — are a regular occurrence.  

Even fintechs are feeling the pinch, as VC investment dries up and the wider tech sector conducts round after round of layoffs. There’s a tangible fear of recession or stagnation in many countries and indications that, just as in 2008, consumer trust in the financial services industry is eroding.  

And yet, during the same period, the Dow Jones hit a new high, a host of financial institutions reported record profits and there’s a sense of excited optimism being created by the potential of generative AI.  

So, it really has been a season of light and dark, of the best and the worst,t and of belief and incredulity. And more importantly, this time of extremes isn’t over yet.  

A tale of two revolutions  

When Dickens wrote “A Tale of Two Cities,” he did so not simply to capture the essence of the French Revolution but also to draw direct parallels with it and the societal change he was witnessing within contemporary England.  

Whereas politics had been the driving force in 18th-century France, the catalyst for seismic change in 19th-century Britain was technology. And proving that history does repeat itself, 24 years into the 21st century, we’re witnessing another industrial revolution where jobs are disappearing due to automation while new roles and new commercial possibilities are simultaneously appearing.  

And this is the moment in the story where business leaders need to choose if the future continues to reflect Dickensian prose because when change is happening so quickly, it’s too easy to make decisions that lead to foolishness and despair, rather than wisdom and hope.  

This is especially true when it comes to something as powerful as generative AI. Unlike other recent technological leaps forward, it has arrived almost fully formed. Even in its most basic, off-the-shelf format, it has clear use cases. As such, there’s a genuine concern among businesses, not just within the banking and financial services industry, that unless they embrace it now, they’re going to be left behind.  

If we reduce the focus on the technology so that its benefits can be considered simply within the realm of customer experience, GenAI can perform basic sentiment analysis and deliver an immersive self-service experience that will deflect live contacts and reduce operating costs. With basic calibration, it can provide financial advice and guidance for both customers and customer-facing employees or be used in the background to automate processes and generate effective marketing and product messaging.  

However, GenAI is capable of delivering business transformation and elevating or improving all aspects of an organization. Therefore, just like Dickens, business leaders need to view the technology in context and look for parallels with other breakthroughs in recent history. This will help identify potential pitfalls and understand the potential risks as well as the potential benefits. The shelves are already full of business books telling the story of transformations that went out of control, failed to deliver or never recouped the initial financial outlay.  

Likewise, alongside AI there’s a quieter but equally disruptive customer revolution currently unfolding and it’s already having an impact on many legacy financial brands.  

A customer revolt  

The Industrial Revolution gave people greater agency and financial autonomy and changed society’s view of what’s possible with the application of technology. The French Revolution rebuilt society so that it better reflected its population’s wants, needs, hopes and future expectations.  

The current customer revolution, which has been gathering momentum year-over-year since the turn of the century, has echoes of both revolutions that have come before. More and more established banks and financial institutions are either experiencing greater levels of customer attrition or lower levels of customer lifetime value. Beyond basic transactional services, empowered, expectant consumers are looking elsewhere for financial products that reflect their needs.  

Before financial services organizations can make the most of generative AI or any other transformative technology, they need to make the most of their customer relationships. This means developing a greater understanding of who their customers are and delivering a level of customer experience that reflects this understanding.  

A date with data  

Learning the back story of your customers and discovering what’s driving them is only possible through data analysis. Whether in systems and databases or within the contact center, the banking and financial services industry holds tremendous volumes of customer data that could provide genuine insights.  

The problem many organizations face is that as well as being siloed, the data is in disparate formats and therefore difficult to combine into a unified source of truth and write a coherent story. This means the biggest priority is developing the technical expertise to corral all that data and use it to shape a better customer experience strategy for today and to train and develop generative AI solutions for tomorrow.  

The sector has never been more competitive or more challenging. But if your organization can operationalize and share its data across its business, it can always find a way to unlock efficiencies, increase productivity, enhance customer value, or leverage new technologies, whether it’s the best of times or the worst of times.  

To learn more about how banking, financial services and fintech brands can use their data to overcome key challenges facing their CX, read “A date with data: The best practice guide to customer experience in banking and financial services.”