How can financial services keep a human touch in digital customer communications? Blending innovation with personalisation, using AI thoughtfully, and working within regulatory requirements will all play a part.
As the financial sector evolves, balancing advanced digital solutions with genuine human interaction remains a significant concern.
We spoke with Ben Hammond, Managing Director of Consulting and Insight at The Lang Cat, about how firms can humanise digital communications while meeting regulatory expectations.
Over the past two decades, customer communications in financial services have transformed dramatically.
Yet, despite significant advancements, the industry often trails behind others in adopting truly customer-centric digital solutions.
From Paper Trails to Digital Platforms
The transition from paper-based to digital communications is a significant milestone.
Financial firms have accelerated their digital initiatives since the COVID-19 pandemic.
However, regulatory and compliance hurdles frequently can slow down or hinder this progress.
"We've moved away from paper in a big way, but there's still much more to do. Regulatory concerns sometimes cause firms to step back from full digital adoption."
Ben Hammond, Managing Director of Consulting and Insight, The Lang Cat
Customer experience is also a key consideration.
While a significant portion of consumers prefer digital channels for routine transactions, reported research on channel preferences suggests many still prefer the option to speak with a human for more complex issues.
What The Lang Cat Research Shows
The Advice Gap 2024 found that 70% of consumers who seek financial advice would prefer it face-to-face, highlighting ongoing demand for personal interaction alongside digital services.
Digitising processes at scale that also require human intervention is a tricky endeavour, compounded by legacy technology.
Navigating the Regulatory Landscape
Regulations aim to safeguard consumers, but if not managed carefully, they can unintentionally stifle innovation.
The Ripple Effect of Consumer Duty
Initiatives like the Consumer Duty have prompted firms to rethink their communication strategies.
"Consumer Duty has made firms change how they communicate with clients. It's not just about compliance but enhancing client experiences and outcomes."
Ben Hammond, Managing Director of Consulting and Insight, The Lang Cat
However, regulations can inadvertently widen the advice gap. Over 55% of advisers report they no longer serve clients with lower asset levels due to Consumer Duty complexities, impacting accessibility to advice for many consumers.
Consumer Duty And The Advice Gap
More than half of advisers in The Lang Cat's Advice Gap research say they no longer serve clients with lower asset levels because of Consumer Duty complexity.
That pressure makes the balance between compliance and innovation harder to sustain at scale.
Striking a Balance Between Compliance and Innovation
Finding harmony between adhering to regulations and fostering innovation is challenging but essential.
As part of ongoing efforts, firms are exploring ways to integrate technology that can help scale services efficiently, within regulatory constraints.
"We need forward thinkers who can work within the rules but still drive innovation to meet customer needs."
Ben Hammond, Managing Director of Consulting and Insight, The Lang Cat
Technology works best when it supports the human elements of customer service and helps firms increase client service capacity without diluting quality.
Bridging the Advice Gap with Technology
The advice gap remains a significant concern, but technology offers promising solutions.
The Emergence of Hybrid Advice Models
Hybrid models that blend digital tools with human expertise are gaining traction.
"We're seeing a move towards hybrid advice. Technology can help bridge the gap, but it's about finding the right balance."
Ben Hammond, Managing Director of Consulting and Insight, The Lang Cat
The World Retail Banking Report by Capgemini notes that financial firms are increasingly utilising AI to improve customer experience.
Yet, questions remain about whether customers would trust AI-generated advice, and regulation highlights the need for human oversight.
Harnessing AI and Emerging Technologies
Artificial Intelligence (AI) and automation can enhance customer communications when used responsibly.
"AI has the potential to enhance customer interactions, but we need to ensure data is handled appropriately."
Ben Hammond, Managing Director of Consulting and Insight, The Lang Cat
Careful management of data privacy and compliance is, of course, paramount to maintaining customer trust.
Upcoming FCA proposals on simplified advice may offer new pathways for firms to guide clients responsibly with reduced complexity, potentially reducing barriers to digital innovation.
Humanising Digital Interactions
Despite technological advancements, the human touch remains irreplaceable in financial services.
Aligning with Customer Expectations
Today's customers expect the convenience of digital services without sacrificing personal interaction.
"Customers want things to be intuitive and just work. Financial services need to match the experiences provided by other industries."
Ben Hammond, Managing Director of Consulting and Insight, The Lang Cat
According to research by Salesforce, 66% of customers expect companies to understand their unique needs and expectations.
"When firms digitise client communications, the goal is to keep the adviser in the relationship. Clients still need a clear, trusted route for the messages that matter."
Carole Howard, Head of Networks, Beyond Encryption (Mailock)
Personalisation is where those expectations often become visible in day-to-day service.
The Power of Personalisation
Tailoring communications can enhance engagement and foster loyalty.
"Segmenting your customer base and adjusting your approach for different demographics is vital. Testing and feedback can help ensure relevance."
Ben Hammond, Managing Director of Consulting and Insight, The Lang Cat
Boston Consulting Group research indicates that personalisation can boost revenue by 6% to 10%.
What The Research Shows On Personalisation
Boston Consulting Group found that personalisation can boost revenue by 6% to 10% in retail and marketing contexts.
Those gains depend on the data foundations firms put in place first.
The Crucial Role of Data and Analytics
Data is the cornerstone of effective personalisation and innovation.
Transforming Data into Insights
Efficient data management enables firms to leverage new technologies fully.
"If your data isn't structured well, you can't take full advantage of new technologies."
Ben Hammond, Managing Director of Consulting and Insight, The Lang Cat
According to the 2019 Global CEO Outlook, 67% of CEOs believe that acting with agility is the new currency of business.
Preparing for the Future
Staying ahead requires continuous innovation and a keen eye on emerging trends.
Embracing Continuous Feedback
Regular customer feedback ensures services remain relevant and effective.
"It's worth continuously gaining qualitative feedback from your customer base to refine services as you go."
Ben Hammond, Managing Director of Consulting and Insight, The Lang Cat
Adapting to Demographic Shifts
Understanding the preferences of different generations is essential.
"Younger generations want on-demand access, while older clients may prefer simplicity. User testing is key."
Ben Hammond, Managing Director of Consulting and Insight, The Lang Cat
According to the latest research, millennials will comprise 40-43% of the global workforce by 2025.
Improving Customer Experience in Financial Services
Humanising digital customer communications means fostering meaningful connections as well as deploying technology.
By blending innovation with personalisation and navigating regulatory requirements thoughtfully, financial services can enhance customer experiences and bridge the advice gap effectively.
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Sam Kendall works on digital marketing at Beyond Encryption, helping build B2B marketing activity around research, first principles, and sustainable growth. He writes about marketing effectiveness, positioning, customer communications, and digital culture, with longer-form work published at ATNL.
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Sam Kendall
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