Unveiling the AI in banking gap: 60% of banks and credit unions say their use of AI is behind the competition

Banks and credit unions are not leveraging AI to its full potential. This is one of the key findings of the Talkdesk 2024 CX in Banking Survey: An Industry Benchmark, which asked 200 customer experience (CX) professionals from banks and credit unions about how AI is reshaping the customer experience landscape. In fact, a majority of respondents (59.5%) believe their organization falls behind the competition in leveraging AI capabilities and 58.5% of those increasing investment in digital service with AI prioritize CX technology.

So how are those who do leverage AI in banking reap the benefits? These respondents state that:

• Delivering superior CX is a key differentiating factor in their organization.
• They can now deliver consistent CX across channels.
• Their contact center is an empowering contributor to their CX strategy.
• They successfully link CX metrics to ROI.
• They believe CX is a leading driver of customer loyalty and deposit retention. 

Additionally, respondents anticipate that eight out of ten (81%) support interactions will be resolved on first contact, and more than half will be resolved through self-service. If successful,  these metrics could have a profound impact on overall customer satisfaction and loyalty.

Such improvements in efficiency and effectiveness could lead to higher retention rates and a stronger reputation in the market. Moreover, operational costs are likely to decrease as AI-driven solutions streamline processes and reduce the need for extensive manual intervention.

In the long run, these advancements may not only elevate the customer experience but also position the bank as a forward-thinking leader in the adoption of innovative technology.

Large banks are leading with AI.

Compared to small banks and credit unions, large banks are twice as likely to focus on deepening existing customer relationships. Smaller institutions are more focused on acquiring new customers and building a relationship with them in a race to make up for lost revenue due to low interest rates.

Another key metric highlights the role of large banks in this technological shift. Respondents from banks with over $10B in assets under management (AUM) indicate a significant investment trend: they are more than twice as likely to increase their investment in AI-driven digital self-service (85.1% vs. 35.2%). You’ll find other surprising facts in the report that set larger institutions apart.

According to our survey, larger banks are demonstrating a distinct preference in their investment strategies, favouring AI functionality for CX over AI tools aimed at enhancing employee efficiency. By prioritizing AI in customer experience, these banks are not only aiming to provide a more personalized and efficient service to their clients, but are also looking to gain a competitive edge in a market that increasingly values customer-centric approaches.

Furthermore, this suggests a broader understanding within these organizations that improving customer experience can indirectly boost employee efficiency as well. As AI takes on more of the routine, time-consuming tasks in customer service, employees can focus on more complex and value-added activities. This approach is expected to not only enhance customer engagement, but also improve employee morale and productivity, creating a synergistic effect that benefits the entire organization.

Similarly to these developments in larger banks, our survey reveals a more cautious stance among smaller institutions. Only about one in five respondents (21%) from organizations with less than $10B in AUM express belief in their bank or credit union’s commitment to deepen investment in AI for enhancing employee experience (EX).

The conviction in these smaller institutions to follow suit in AI investment for customer experience is even less pronounced—merely 7% strongly agree that their company will intensify their investment in AI for CX, and a scant 2% show strong agreement for deepening investment in AI for EX. This cautious approach among smaller banks and credit unions reflects a significant divergence in strategic focus and resource allocation when compared to their larger counterparts, underscoring a divide in the banking sector’s adaptation to technological advancements.

The difference in overcoming the barriers to adopting AI in banking: Small versus larger banks.

One in three respondents report that their organizations are still struggling to adopt transformation initiatives like migrating their CX technology to the cloud. Although barriers to adopting AI seem fairly consistent across large and small organizations, there are a few notable exceptions. Larger organizations are more focused on data. These respondents have concerns about consolidating and using customer data as part of their initiatives. In contrast, smaller organizations often cite budget constraints and a lack of skilled personnel as their primary challenges. This difference in focus reflects the varying capacities and resources available to these institutions.

For larger banks, the challenge lies in effectively harnessing and integrating vast amounts of customer data to enhance the AI-driven customer experience. They face the complex task of not only collecting and storing this data, but also ensuring its quality, security, and compliance with regulatory standards. Meanwhile, smaller banks and credit unions, with more limited resources, struggle primarily with the initial stages of technological adoption. Their focus is often on finding cost-effective solutions and training or hiring staff capable of implementing and managing these advanced technologies.

This divergence in challenges highlights the distinct paths that financial institutions are taking in their digital transformation journeys. While larger banks are delving deeper into sophisticated data analytics to refine their CX, smaller institutions are still navigating the foundational aspects of adopting AI and cloud technologies. These differences underscore the need for tailored strategies that address the unique needs and capabilities of each institution.

The insights mentioned in this blog are just the tip of the iceberg. The Talkdesk 2024 CX in banking survey: An industry benchmark survey provides a compelling picture of the diverging paths being taken by large and small financial institutions in the journey towards AI integration in CX. While larger banks are forging ahead, using AI to deepen customer relationships and enhance the customer experience, smaller banks appear more hesitant, grappling with constraints. These findings in the survey not only point out the transformative impact of AI in banking but also highlight the challenges and opportunities that banks of different sizes face in this digital era.

For a deeper dive into these trends and to understand how your organization can navigate this changing landscape, access the full survey here. Discover the strategies, challenges, and expectations shaping the future of banking in an AI-driven world.