In a business environment of constant competition and digital disruption, advisor/customer retention is becoming increasingly important for financial services companies. Although, there is a gap in addressing the retention challenge, as 85 percent of customers report that companies could do more to retain them. Research from the PWC stated that financial institutions will lose 24 percent of revenue in the next three to five years due to customer churn to new fintech companies. In order to prevent this from happening, the financial services industry has entered the artificial intelligence (AI) phase of the digital marathon.
Many companies have already started implementing intelligent solutions such as advanced analytics, process automation, and self-learning programs to reduce customer churn, allowing AI to become a key business strategy moving forward. To effectively capitalize on all of the advantages offered by AI, companies need to consider how humans and machines interact within their organizations as well as externally with their value chain partners and customers. Especially the relationship managers within the organization, after all, they are the “relationship” face for the advisor/customer relationship driving loyalty and wallet share. Read on to learn why deploying AI tools systematically across the financial services industry will help improve customer retention.
What Does Customer Churn Mean for Financial Service Companies?
Customer churn is best described as when an existing customer stops using a company’s services and/or stops buying their products. In other words, the customer chooses to cut his or her ties with the company. In financial services, however, “churn” is not always a clear line. Often times it manifests as AUM, or account diminishment, or even account orphaning. These patterns are more common than a customer completely leaving a bank or other financial institution in one single action. This diminishment or orphaning is a significant problem as it is not typically surfaced to the banker, advisor or wholesaler – that relationship manager. This lack of insight represents lost wallet share with a direct impact on revenue growth potential. Therefore, many institutions focus their priorities to attract new advisors and customers for growth opportunities, but as we all know, acquiring customers can be difficult and expensive. According to research conducted by Bain & Company, increasing customer retention rates by a mere five percent could increase profits by 25 to 95 percent. If reducing customer AUM dimishment is not a company’s strategic objective, it should be in their best interest to retain and grow any and every advisor and customer possible.
AI Transformation in Financial Services
For financial institutions who have just begun their AI journey, embedding both analytics and AI in strategic initiatives is an important first step. But many struggle with where and how to start. Aligning predictive use cases to key business objectives is a must – whether that be wholesaler productivity, growing a line of business within your firm’s existing book, or driving stronger customer relationships and higher AUM. Elevating the critical importance assigned to these initiatives, along with building a long-term AI vision and strategy, lays out the foundation. This is not a one and done project, it is a journey of learning, prescribing, and relearning as the business changes. Starting with simple use cases to prioritize your book of business and quickly understand your advisors/customer segmentation is key. Most financial institutions are just starting to plan their efforts when it comes to incorporating AI into their everyday business processes of their relationship managers. As financial institutions look to find their purpose for AI, frontrunners provide a clear view on how to effectively integrate the technology with an organization’s customer acquisition, growth, and retention strategies.
What to Expect in the Future from AI
Predictions for the soon-to-come AI applications in financial services is a popular topic. AI is reshaping the business landscape of the financial industry by providing predictive capabilities and recommended actions for your relationship managers to engage in more meaningful interactions with customers. Acting on the recommendations and incorporating this additional data back into the machine learning, will only continue to produce better, faster, and more accurate predictions and recommendations. With AI, machine learning and natural language processing, it will become increasingly clear that the financial industry will witness a dramatic change as a result of this technology. This new technology comes right at a time when individuals are demanding access to cheaper, more transparent and more efficient financial services – all while having the assurances that their investments are truly being cared for and proactively managed.
The bottom line is that customer attrition cannot be solved retroactively, and there rarely is a true attrition moment. Financial services companies need to take a more proactive approach to identify diminishment, orphaning or degradation in the relationship and proactively, insightfully manage the relationship if they want to accurately reduce attrition. By leveraging AI to generate a data-driven, predictive strategy for managing existing books of business, companies can focus their efforts on more meaningful interactions, growing the business, and even gain a competitive advantage.
About Laura Koch:
As the VP of Customer Engagement at Atrium, Laura works to define and manage the customer intelligent experience journey incorporating analytic, predictive, and perspective capabilities to drive the next level of value from CRM systems Laura has been leading customers in systems implementation for over 25+ years and is a leader in the salesforce.com ecosystem. Laura is a Salesforce Certified Administrator and a Salesforce Certified Sales Cloud Consultant.
About Atrium:
Atrium is a next-generation consulting services company that helps advise, implement and optimize artificial intelligence and analytics solutions. Fusing together the leading elements of math, programming, consulting, and industry expertise, Atrium is helping enterprise companies define the customer experience ecosystem by navigating the world of Machine Learning and AI. Founded in 2018, Atrium has become the fastest company to achieve the gold partner status with Salesforce and has customers across the financial services, higher education, healthcare and life science industries.
Laura Koch, VP of engagement, Atrium
Laura is currently the VP of engagement at Atrium. She has more than 2 decades of experience into IT and consulting with prime focus on the Cloud based solutions working with Salesforce.com - Sales, Service, Communities, Marketing Cloud, and Force.com..
