Cost of Living Crisis: How Can Banks Show Customers They Are Trusted Partners?

From the current geopolitical landscape, it is clear we are in a period of instability and unpredictability, and one which we won’t likely see the back of any time soon. From war in Europe, to continued supply chain disruptions in China as a result of COVID lockdowns, there are a variety of factors contributing to rising inflation and the cost of living crisis.

Consumers are being harder hit by rising prices for items like food, fuel and energy than many can remember in their lifetimes. It’s not just fuel and energy, but basic food items like bread, milk and butter all raising prices faster than in the last 40 years. As the typical consumer experiences these rises, many will be looking to their financial institutions for support in this difficult time. The question is, how can banks show they are trusted partners to their consumers?

1)      Communicating with relevant information

For a bank to receive the best net promoter scores and keep customers, it must be able to answer customer queries to the highest standards – showing speed, supportiveness and usefulness in their responses. Getting it right first time, and efficiently is key. Lack of unity in backend customer relationship management systems and the ongoing hybrid nature of work, combined with an ever-growing list of issues consumers are facing, can lead to employees feeling in the dark. Lack of access to relevant customer data, training, and channels is a killer for productive consumer experiences – this is where communication comes into it.

Banks must be willing to invest in technology that allows them to easily adapt to changing consumer needs. A decision hub that deploys contextual strategies instantly will enable employees to communicate the issues at hand while making it easy to explain the next steps to solve the problem across all channels. Artificial intelligence applied to next best actions can really help augment and support an employee when dealing with a customer. And, communication can also be proactive during this cost of living crisis. Banks can monitor a customer’s expenditure and average balance amount, making compelling, personalised interventions to offer support and drive loyalty long term. For example, offering a mortgage redraw where a customer is ahead on their repayments but has short term cashflow needs.

2)      Timing is key

Not only should banks provide relevant information, but also ensure it is timely, so customers are not waiting around for support. For example, the cost of living crisis has led to huge growth in the volume of customer enquiries in order to deal with mortgage payments with many seeking to lock in low rates before anticipated rises. The share of mortgaged property transactions taking more than six months to complete has nearly tripled since 2019 to hit a record high of 13.9% so far this year – meaning one in seven buyers is now unable to complete before their mortgage offers’ six month expiry dates. While timelines aren’t always within banks’ control, it highlights the importance of not delaying the homebuying process further for prospective buyers. Banks acting with empathy in what is an undoubtedly stressful time in customers’ lives is vital, or they could face backlash. Indeed, recent research from Butterfield Mortgages found, 48% of mortgage customers said lenders do not provide adequate support to borrowers once the loan has been approved.

Whilst lending operations often have an element of flexibility in staffing, by running overtime and cross-skilling some staff, that only goes so far in supporting service levels. Fortunately, companies can turn to technology to enable a far greater response to customers. For example, automation can improve the ability to deal with credit assessment, fulfilment backlogs and servicing requests of customers looking to defer payments. Workflow automation and AI-powered decisioning can really make a difference in flexibility to change automation / STP levels, and dynamically route work and improve service levels. They are invaluable tools to ensure banks aren’t losing customers to the many competitors in the space.

3)      Be human through AI

Real empathy comes through interactions with people who are there to provide the right level of assistance. However, technology has a role to play in augmenting and helping interactions to be empathic. This can be applied to both refinancing as well as pre-delinquency and collections activities. Banks can use AI to power real-time decisioning to deliver personalised services across all digital channels. These intelligent tools can interact with consumers in an almost ‘intuitive’ way, while minimising the cost-to-serve with case management and intelligent automation. AI can be applied to a process, such as a loan referred out for manual credit assessment, or customers who are pre-delinquent but looking for help. Equally it can be relevant to an interaction through voice AI where actions are automatically captured and completed in the background whilst the staff member is talking to the customer. This combination of the human touch, with the genius of robotics, can improve service levels and interactions, cutting levels of angst for the consumer and cutting costs for banks through greater efficiency.

This is a trying time and banks can be the hero or the villain depending on how they operate.  Financial institutions need to focus on relationship building with consumers. Ensuring relevant communication, timely messages and intelligent tools for personalised engagements are in place will be the key driver for customer longevity and trust.