Compassion is central to empathetic banking.

Empathetic Banking: Why It’s Important in a Post-COVID World

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Historians may point to the COVID-19 pandemic as a turning point for digital adoption in the banking sector. Technology has always been central to consumer banking, but those financial institutions that had more advanced systems in place prior to the pandemic fared far better than those who did not. At the end of the day, tech made a challenging period much more manageable.

But moving forward, in order to maintain new customers and retain existing ones, high tech agility and capability must be paired with not only artificial intelligence, but emotional intelligence as well.

Ironically enough, the best way for banks to become more empathetic to their customers' inner-most needs and sensitivities may be by further leveraging technological innovations.

What is empathetic banking?
As defined by Accenture, empathetic banking refers to financial institutions' ability to address and respond to their customers' emotional state, in terms of adaptation, tone of voice, disposition and overall financial situation.

"Empathetic banking refers to FIs' ability to address and respond to their customers' emotional state."

As any human knows, people are very complex creatures; their demeanor and how they appear on the outside isn't necessarily reflective of what they're feeling on the inside. Subsequently, what they ask for in terms of financial services may not always be what they truly want or need. That's a problem, because as a recent survey found, non-verbal communication doesn't come especially easily to most banking professionals. Conducted by Accenture, the poll showed that just 30% of banking executive respondents were "very confident" in their ability to sense their customers' emotional state using only non-verbal cues.

Empathy not a strength for many banks
While empathy and sensitivity may not seem like something customers crave from their banks, it happens to be important to them. In April 2020, Ipsos conducted a survey that asked banking customers how effectively they felt their bank was responding to their needs during the pandemic. Only 14% of the poll's participants said their bank was performing exceptionally well and 30% classified their bank as doing "good."

Given the unprecedented nature of the coronavirus — in addition to the economic turmoil that it caused for millions of Americans — many people were understandably stressed during the height of the crisis, particularly as it pertained to their financial situation. Worried that something similar might happen again, nearly 60% of respondents said they plan on spending less of their discretionary income, according to the Ipsos poll.

To help reduce their customers' anxieties, many  financial institutions and community banks decided to waive fees and defer payments for several months in 2020. This was greatly appreciated among banking customers who were afforded these options. Over 85% in the Ipsos survey said such conveniences were important to them, be it "very" or "somewhat."

"How can banks become more receptive to their account holders' needs?"

Clearly, today's banking customers highly value empathetic banking. But with professionals acknowledging that they struggle in this area, how can they become more sensitive and receptive to their account holders' needs?  One way is by taking advantage of chat technology. As noted by Alan McIntyre, senior industry director for banking at Accenture, AI-supported chat technology is gaining traction in banking. In addition to freeing up staffing, chat technology helps banks to better understand and respond to their customers moment-to-moment needs. AI and machine learning give chatbots the intelligence to respond to customers' questions, which reduces the anxiety and frustration they may experience from wait times.

"AI software will help customer service agents handle chats better by surfacing relevant information about the customer, their situation, and potential solutions the bank can provide – all faster than a service agent could do on their own," McIntyre wrote for Forbes. "As banks make better use of their customers' data, they'll be able to better anticipate how they can be of assistance before an issue becomes too big."

So what?
While everyone enjoys being the recipient of empathy, some may wonder whether investing in such technology is worthwhile. In addition to improving retention, the Accenture study found that empathetic banking leaders grew their revenues during the study period by 1.3%. Meanwhile, so-called "empathetic banking laggards" saw their revenues fall (-0.6%).

For banks to become more empathetic, Accenture suggests the following:

  • Once customer data is obtained from different sources, integrate it so it's on just one central platform.
  • Provide call centers with more digital capabilities, such as chat technology.
  • Leverage voice recognition and speech analytics to better assess customers' emotional state.
  • Make improving the customer experience central to branch transformation.

It may seem counterintuitive, but further relying on technology can actually improve your bank's ability to be more attuned to your customers' sensibilities in a post-COVID world. BranchServ Convergint has the tech solutions and branch transformation recommendations that work. Contact us today to learn more.