Top 5 tips for cost reduction in banking customer service

While a strong customer service is a necessity for banks, it can represent a substantial ongoing expense. Not only are there fixed costs such as salaries, equipment, training, etc., but poor customer service can have ongoing negative financial repercussions.

If the quality of service isn’t up to scratch, there is an increased likelihood of customer churn, lower levels of cross or upsells, and general dissatisfaction. 

This begs the question, what can banks do to deliver a customer service experience that reduces costs – while ensuring ongoing excellence?

Here are our top five choices. 

1. Offer sufficient channel options

One of the most important ways to reduce costs in banking is to ensure that there are enough channel options available for customers. This is because not all customers have the same needs when they contact their bank. While some may need more involved support, others could find a self-service solution using a chatbot or using other low-touch channels. 

The issue is if only high-touch channels are available, agents are forced to deal with all customer inquiries, which puts increased pressure on the staff. This is what Unblu customer, Swiss Post, was faced with, having to manage incoming inquiries from their customer base of 2.5 million people.

The results were remarkable as 76% of the requests were handled by the chatbot, leading to a 3X increase in agent efficiency across digital channels.

2. Optimize behind-the-scenes processes

Continuing with the concept of efficiency, the behind-the-scenes processes in customer service scenarios must be sufficiently streamlined to promote cost efficiency. Bank employees have to deal with incoming requests from multiple channels, potentially sent over various days, and with different levels of urgency. 

Without a robust workbench to manage these interactions, the experience on the customer side will quickly become disjointed.

3. Leverage the power of Artificial Intelligence

By harnessing artificial intelligence technologies, banks can streamline processes, optimize operational costs, and foster cost efficiency within their business units.

But how does it do this exactly? Here are the top three use cases.

1. Enhanced customer chatbot for service and support 

AI is now able to use advanced algorithms to accurately understand detailed customer inquiries and provide tailored responses derived from the organization’s knowledge base. Customers can independently resolve complex issues without the need for human intervention.

2. Streamlined data collection for service, support, and advisory

For years now, AI has had the potential to automate manual and repetitive tasks, reducing processing costs and freeing up resources for more strategic initiatives. Now, this has reached the next level, with specialized chatbots designed to gather specific information, such as initial details required for a loan application, before direct consultations with an advisor. 

3. AI Co-Pilot for service, support, and advisory tasks

Finally, the Generative AI capabilities can be used to offer suggested responses to agents or advisors, facilitating smoother communication between agents, advisors, and clients. Gen AI technology offers suggested responses, taken from the organization’s LLM, to enhance the productivity of interactions.

4. Don’t forget the bank branch

While there has been a consistent downward trend in the number of bank branches around the world, the role of bank branches shouldn’t be dismissed entirely. According to EY, 82% of customers claim that having a local branch is “extremely or very important.” 

The reason for this comes down to the human factor associated with branch banking. Customers like having the option to talk to a real person whenever they have a larger issue or want to take out a substantial product, like a loan or mortgage. 

That being said, in terms of costs, maintaining a traditional branch network can be prohibitive. The only way to embrace new options is to develop a new type of branch network. Valiant Bank, based in Switzerland, was able to prove that this model can be successful. 

This success story shows that bank branches still have a role to play in our modern world – provided they are adapted to be cost-effective.

5. Empower your employees

Employee morale is a significant factor in a bank’s customer service success initiatives. Bank employees that feel they are under-supported or overburdened are going to find it more difficult to maintain high levels of efficiency. 

For team leaders, there are two aspects that need to be addressed to effectively empower agents and improve performance levels. One of the aspects is ensuring that they have access to the correct tools and technology platforms, some of which we have discussed above.

But offering new tools and channels is one side of the coin. To truly, they also need to have the authority to solve customer problems and not be forced to escalate when presented with even minor decisions. 

By giving employees the ability to actually help customers – and the discretion to make decisions – they can focus on providing the best service possible. This can directly lead to increased customer and agent satisfaction, faster resolution times, and more opportunities for upsells.

Building on your cost-reduction strategies

Reducing costs is just the beginning when it comes to succeeding in today’s banking industry. Not only can a strong customer experience reduce operating expenses, but it can also help drive revenue growth. 

Take the bank Raiffeisenbank as an example, which is one of the largest financial organizations in  Central and Eastern Europe. Raiffeisenbank takes pride in the quality of its customer experiences, catering to 1.4 million customers. 

To reduce costs, Raiffeisenbank implemented new channels, beginning with Live Chat and later adding an AI chatbot and Co-Browsing. This helped streamline conversations and reduce costs. 

But with a stronger channel offering and well-trained staff, Raiffeisenbank was able to increase upsell conversations, showing the power of strong service experiences. In fact, after nine months, the bank was able to achieve a 4X increase in digital conversions, while doubling agent productivity and achieving a 4.1/5 client satisfaction score.

Cost management (and beyond) with Unblu

In financial services, healthy profit margins are built on a mixture of low operating costs, strong customer relationships, and strong product offerings. And yet customer service is often considered by financial institutions to be an irritating cost pressure. 

Instead, it should be looked at as a competitive advantage. By properly leveraging human resources and digital technology, financial institutions can go beyond implementing cost reduction measures to embrace a transformational approach that serves as a viable business strategy. 

It is time for the banking industry to look for new technology partnerships that cut down on redundant processes and expensive channels. Not only will this lead to practical cost saving measures, but it can lead to greater customer relationship management capabilities – and greater profits.