The digital transformation of retail banking and financial services has changed the customer experience from one that was relatively personal and contextual through branch interactions, to one that prioritizes remote connectivity, customer convenience, scalability, speed of process and an ever-reducing ‘cost to serve’. 

In Thailand, Malaysia and Singapore, around 8 in 10 bank customers now access banking services using mobile apps, while a similar proportion of respondents in Capco’s latest Singapore wealth management survey say they have increased their use of digital channels over the last two years.¹ 

However, while self-service through the internet and mobiles has brought customers and banks many benefits, in some ways it has made it harder for banks to understand individual customers, address their emotional needs, and build a one-to-one relationship. As digital platforms and AI continue to streamline financial services, the absence of a personal connection in retail banking is becoming increasingly noticeable. 

This matters because people appreciate the ability to explain their unique situation to another person who can think critically and adapt the solution based on context – something automated systems, even with AI, sometimes struggle to do effectively. Humans can offer truly personalized guidance, acknowledge concerns with the right mix of empathy and sympathy, and provide context that a machine might miss – vital in troubleshooting situations that require clarification and reassurance.  

In this article, we argue that we are entering another age of banking, where the personal connection, diminished in some ways by automation, is re-introduced using two key mechanisms: 

• Through harnessing mobile technology, social networks, cloud computing, data analytics, and the latest AI technologies, retail banks can now begin to offer truly personalized data-driven solutions tailored to each customer and their context in ways that more closely simulate a one-to-one connection.
• Meanwhile, a new vision for deploying the authentic ‘human touch’ – with the same new technologies helping to refocus and leverage the expertise of staff – will allow banks to not only better understand customers’ financial goals but also to anticipate and answer their emotional needs. 

However, integrating data-driven technologies and human empathy to transform banking into a deeply personal experience will take a significant degree of strategic thinking and planning. 

The challenge of providing personalized services with a ‘human touch’

Improving customer service in the retail banking segment poses several challenges: 

• Balancing high tech and high touch. As automation streamlines processes such as account openings and loan approvals, it reduces direct interactions between customers and bank staff, including relationship managers (RMs). This lack of personal engagement can hinder the bank’s ability to raise financial awareness and provide tailored advice – on complex banking issues and about ways the bank can help the customer beyond the immediate task in hand. The right approach is to implement hybrid models, where automation handles routine tasks and frees RMs to focus on complex, higher-value customer needs and longer-term financial goals. For example, automated tools can pre-screen applications and involve dedicated RMs when necessary to follow up with deeper insights and more personalized services.
• Leveraging data. Many banks fail to fully leverage data analytics to understand customer behavior and preferences. Without insights from data, personalization efforts can be hit-or-miss, leading to generic services that are mistimed, do not resonate with customers, or even expose the bank’s lack of real insight into the customer’s desires. Investing in advanced analytics tools can help banks gather and analyze customer data to tailor services more effectively, for example, through personalized marketing campaigns or recommendations based on the customer’s activities. Banks should aim to be one step ahead of the customer, using their data together with AI-based analytics to understand each customer’s financial goals and pre-empt their financial needs.
• Staff training and support. Employees may lack the necessary support infrastructure, training and product knowledge to focus their time on the right interactions and to consistently deliver personalized recommendations. GenAI-based tools can now be used to triage simpler enquiries while supporting employees or agents in real-time as they answer customers’ more complex and contextual queries. For example, GenAI-based tools can offer intelligent transcription services for customer calls with summaries, sentiment analysis and real-time action points – allowing the agent to focus on the conversation and resolve issues faster. Similar tools can offer easy access to knowledge bases such as contracts and policies, pointing to relevant documents or generating tips and recommendations to help guide agents as they interact with customers in real time. This allows the agent to focus on the areas where they can offer most value in terms of empathy and professional expertise. 

Taking advantage of these opportunities means crafting the right balance of integrated high tech and high touch. It also means improving technology, process and data architectures and offering staff comprehensive training programs that upgrade their product knowledge, customer service skills, and emotional intelligence. 

Key issue 1: Finding the right balance 

A critical first task when optimizing customer service in retail banking is to try to define the right balance between digitization and personal interaction for each step in the customer journey (Figure 1).

Figure 1: Customer journey in retail banking

Customer journeys vary in character across each bank’s business lines and offerings. However, there are usually some steps where human intervention is of limited value to the customer or the bank, even if the process itself seems complex. In retail banking, applying for an account/product/service is one example of this, with customers increasingly leveraging new digital identities, or able to self-serve by submitting the required documentation/details to facilitate the process.

On the flip side, closing an account seems procedurally very simple, however it is also potentially a moment of emotional stress for the customer and a chance for the bank to gain valuable information. In some business lines, it can be beneficial for an RM to continue to intervene in this process so that the bank gains a deeper understanding of the reasons that a customer is considering closing the account – including the emotions surrounding the decision. 

Customers often do not bother filling in feedback forms. An exit interview by the RM can dig a little deeper to uncover the real motivations, with the feedback analyzed and used to improve the bank’s customer journeys and service. The frequency of this kind of RM intervention needs to be driven by the value of the customer, the nature of the service, how long the account has been open, and the likelihood that the customer’s decision will have an emotional component that is difficult to gauge in other ways.

Figure 2 sets out a simple guiding framework to help banks to assess customer journeys based on their routine nature versus their potential to induce stress in customers, helping the bank to decide whether to digitize or add a human touch accordingly. Working out the right balance for each step in the journey requires not only a deep understanding of the bank and its processes, but also of the fast-evolving technologies that can be used to support self-service and leverage human talent.

Figure 2: Assessing customer journeys 
 

Key issue 2: Leveraging human talent

The relationship between technology and the human element in banking services is changing, with big implications for staff deployment and skills. 

As AI-based technologies take over simpler and routine enquiries, the need for remaining staff to possess a depth of product knowledge and exquisite customer service skills is likely to grow rather than recede, at least in the near term. Comprehensive training should be conducted for RMs and other customer-facing employees such as call center agents. 

Employees should have in-depth knowledge of the bank’s products and services including features, benefits and the specific customer needs they address so they can provide informed recommendations. Moreover, training on how to use the latest banking technologies and platforms – such as AI-based support tools, mobile banking apps, CRM systems and other digital tools – will be crucial if human expertise is to be leveraged and customers assisted effectively.

AI and GenAI models can analyze vast amounts of customer data, including transaction history, browsing behavior, and demographic information to generate highly personalized marketing campaigns and product recommendations tailored to individual customers. Leaders should therefore ensure that operational staff have the skills and infrastructure needed to support personalization-at-scale such as advanced analytics, product management, and digital acumen. 

Staff will need to work within robust governance frameworks that support the embedding of GenAI-based tooling. 

As a first step, banks can assess their current talent base and its capabilities. The current capability can then be used as a baseline to devise the target capability, in line with the bank’s agenda and goals. This in turn can inform hiring, training and upskilling, e.g. by using ‘promptathons’ to disseminate knowledge about using GenAI tools within a banking services context. 

The aim should be to anticipate the expertise, capabilities and tooling the bank will need as its personalization program advances.

Conclusion 

While digital systems are great for handling routine inquiries and streamlining tasks, more complex, nuanced issues can require human intervention. The human touch is not a luxury – in some banking activities, it’s essential for building long-term trust, understanding, and connection. 

Even so, the transformative potential of technology is boundless, both for improving the data-driven personalization of automated self-service offerings and for supporting human advisors. The emerging trend to empower financial advisors using AI-tooling and predictive analytics is reshaping the financial services industry.

Negotiating the balance between automation and human interaction will therefore prove critical as banks compete to build stickier, one-to-one relationships with customers through a deeper and more strategic integration of technology and talent. 

References

¹ Capco, Bank of the Future Asia-Pacific Retail Banking Survey 2022: https://www.capco.com/intelligence/capco-intelligence/bank-of-the-future; Capco, Singapore Wealth Survey 2024: https://www.capco.com/intelligence/capco-intelligence/singapore-wealth-survey