Imagine a few days in your customers’ lives–or maybe even your own life. You’re going about your busy daily routine: running errands during your lunch hour; helping kids with homework; working late on a presentation.

At some point during the month, you forget to check the balance of the bank account you use to pay bills. Then, because you forget to check, you don’t transfer money from another account at the same bank to that bill paying account. A couple of days later, your automated bill charges hit your account, which now has a negative balance. You get an email alert that your account has insufficient funds and your account starts racking up non-sufficient funds (NSF) fees.

You call the bank immediately, of course, and tell the customer service representative that you have plenty of money in your other accounts with the bank and arrange a funds transfer. The representative confirms the funds in the other account and transfers the funds.

Before you hang up, you ask the representative to cancel the NSF fees, but the representative says he can’t do that. He tells you that the bank charged you for just one bounced payment rather than for all three bounced payments. He tells you that the bank can extend a credit line to you so that you don’t miss a payment again. 

You can tell he’s reading a script because you don’t need a line of credit. Your other accounts with the bank and at other banks have plenty of money in them and you’ve never had an NSF situation before this week. You decline the line of credit and get off the phone so that you can move more funds into your checking account. 

From the bank’s perspective, this NSF situation is the customer’s problem. She didn’t have enough money in her account to pay the bills. The bank charges NSF fees for each payment that bounces–plain and simple. 

From the customer’s perspective, this situation is the bank’s customer service and data problem: why doesn’t the bank know that I’ve never had an NSF situation before, and that I have plenty of money sitting in other accounts with the bank?

As an FI, if the fee side of your business doesn’t know your customers, do you really know your customers at all? This lack of knowledge raises two issues:

1. In 2023, this siloed model of separating “fees” from “customer service” is an approach that financial institutions can’t afford. 

2. In 2023, why don’t banks act on knowledge they already have about their customers, and why don’t they act even before the customer is aware of a problem? 

Customer service trust is the foundation of user engagement.

Banks tend to think about customer service as a one-off situation: a question and answer. 

Banks tend to think of customer engagement as a series of needs that are connected in a “customer journey,” an ongoing series of interactions.

Banks broadly tend to think about security and data privacy separately from either customer service or customer engagement.

Thinking about these concepts in siloes prevents banks from truly leveraging the trust they can build via customer service interactions throughout their relationship with customers. The trust that customers can gain through their experiences with customer service is the real glue that bridges customer service and customer engagement in the customer-FI relationship. Service trust moves customers from transactional services to real engagement with the financial institution.

According to Morning Consult’s 2022 Special Report: Trust in banking, investment and payments, trust is critically important to the FI’s customer relationship. The Morning Consult survey found that 29% of consumers who lost trust in a financial services provider would never use that provider again. And the No. 1 reason customers lost their trust in a financial service provider was a bad customer service experience. 

Consumers constantly seek out financial services organizations that they trust. A recent  Business Intelligence/eMarketer survey found that, increasingly, consumer trust is important not just in a primary bank relationship, but also for fintechs (Venmo, Paypal), traditional credit card providers (Visa, American Express) and big tech (Amazon). 

How are customer service and trust linked?

The challenge for banks is that security and trust are intertwined. Yet banks and digital banking solutions treat these as separate capabilities that don’t mix–or even are opposed. This view has several consequences that impact your customers:

• Channel-to-channel friction. The lack of service and process coordination among and between channels–both digital and human–creates friction that impedes service and lowers customer trust. This friction can take the form of a  particular service being offered via one channel, but not another. For example, a bank that requires a customer to go to a physical branch to reset an ATM card password and does not offer this via phone-based customer service or mobile or other digital device due to insufficient security processes.

• High frustration. The time a customer spends tracking down help, solutions and answers–and sometimes not finding any at all–leads, of course, to high frustration and lack of trust. A frustrated customer increasingly doubts the FI’s ability to do anything in a timely manner that benefits her. She may ignore services designed to help her simply because customer service trust is nonexistent.

• The FI-created customer journey, innovation, products and services become irrelevant as the friction of accomplishing a task grows.

Under the above examples, the customer connection starts to fray with the FI’s inability to create and build customer services trust. Regardless of how many products the customer has with the FI, the customer’s experience of high-friction customer service leads to a looser connection to the FI. The customer’s inability to get helpful service and to move easily between channels to get that service inhibits the relationship to that FI. Ultimately, the friction of customer service creates a negative customer experience that motivates the customer to seek out alternative FIs or fintechs to serve their financial services needs.

How to build customer service trust through digital banking channels.

In the old days, banks built customer service trust through the reliable branch manager who knew your name, the company you worked for and all your neighbors. He or she remembered everything they knew about you. So did the tellers. When it came time for a car loan, you sat down with the branch manager who remembered these details and used them, along with the bank’s processes, to determine your eligibility for a loan. He was able to suggest the appropriate services and you trusted his suggestions because you trusted him. 

Do banks have to push customers back to the branch to build trust? No. This branch experience, however, showcases the power of data to build trust and relationships with customers. To build trust, and thus relationships, today, banks can and must use the technology and data they have on hand. 

How should banks adapt in the age of digital transformation?

Is building trust through digital channels simply a matter of replicating the branch process? Also no. Digitizing processes enables your FI to introduce innovation and use data in new, more personalized ways.

FIs can use digital banking capabilities that focus on the customer to improve service trust in the following ways:  

• Providing personalized advice and guidance. Customers must be able to get this advice and guidance in every channel; whether on a device, or from a human customer service representative in a branch or on a phone call or video chat.

• Use data you already have when your customer or prospective customer interacts with you. Your FI already has a lot of data on customers; you probably already use it to cross sell or upsell products and services. Now is the time to use it to improve customer service and reduce the friction in those interactions. 

• Use data to respond to questions and to formulate advice. Rather than targeting customers based on their balance or how many products they already own, banks must use data to respond to the customer’s questions and, if appropriate, formulate relevant advice specific to that customer’s question, problem or need. 

• Deploy digital assistants that are smart enough to respond to customers. Older chatbots used scripts and algorithms based on the FI’s needs rather than the customer’s. For instance, chatbot responses used the bank’s lingo, which made it even more difficult for customers to get answers to their questions and help with their needs.

How conversational AI is unlocking new banking customer experiences

• Coordinate interactions. Digital personal assistants and human customer service representatives must be able to work together on behalf of the customer. Just as transactions show up in multiple channels, so too customer service requests must follow the customer as she moves to a different channel or a different service representative (digital or human). Doing so not only makes customer service more efficient, but also shows the customer that the bank knows what it is doing. Don’t make your customers repeat their request to each new service representative; be considerate of her intelligence and time. 

The more personalized the interactions, advice and answers, the more personalized the trust the FI builds with each customer. This personalized trust builds the foundation for personalized engagement.

Galileo CPO David Feuer on how data-driven support can give banks an edge 

I recently went to my bank branch to get a certified check that I needed for a court proceeding. It was for less than $50. The teller told me that the fee was $10. When I mentioned that the fee was 25% of the amount of the check, she asked me what the check amount was. I told her. She removed the fee.

This experience required an in-person interaction and made me glad I have accounts with this bank. However, the key for this bank, and others, is to bring this human intelligence and compassion into all channels, devices and interactions. It was painful to have to get a paper certified check, but I am grateful that the teller knew me and could make an on-the-spot decision about a fee based on her knowledge. 

A bank’s ability to apply intelligence to service and build customer service trust should not depend on customers coming to their branches. Indeed, I went to the branch in the first place only because the courts in my city don’t accept debit or credit card payments.  

Relationships require trust. Banks can’t expect to leapfrog the necessary steps that build trust. But they can expect technology to help them develop the capabilities that support long-term, positive–and profitable–relationships with their customers.

Learn more about how to optimize customer engagement to boost lifetime value and ROI