Next-Gen Contact Center – Strategic Asset for Banks
Sutherland Banking Insights
September 2013
Adopting alternative channels fuelled by newer technologies is a win-win situation for both banks and customers, and there has been secular movement towards electronic transactions in the last decade.
Call Centers: A Strategic Asset Banks, by and large, are in the customer service business, servicing through branches, contact centers, ATMs, online channel and mobile. Over a period of time, the way of serving customers has changed. Today, few people visit bank branches as they are increasingly becoming time conscious and prefer other quicker and convenient modes of banking. Even banks around the world are discouraging their customers from visiting branches by levying charges for transactions such as cash deposits. Thus, branches, being inconvenient for customers and costlier for banks, are becoming the least-preferred channel. Preferred Channel for Banking in the US, 20091 Internet Banking 25%
Unknown 23%
Mail 9% Branches 21% ATM 17%
Preferred Channel for Banking in the US, 2012 MobileUnknown 8% 6%
Internet Banking 39%
Mail 8%
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In such scenario, the role of contact centers has become extremely crucial as these centers also witness high human interaction. Contact centers or call centers provide real-time information using voice and text-based media like email, chat, and social media. Contact centers are taking the lead role in redefining the overall banking experience. Banking contact centers are shifting from informational and troubleshooting hubs to sales centers. They are considered as a strategic asset, which can create revenue opportunities and deliver high-quality customer service. Thus, call centers are also becoming a major painpoint for many banks. Security threats and deteriorating customer service loom large today
Telephone 9%
ATM 12%
Since 2009, internet banking is the most preferred channel, whose preference has increased drastically over a period of time. According to the American Bankers Association, in 2009 mobile banking was preferred by only 1% customers, which increased to 6% in 2012 and is expected to grow further in future due to increase in penetration of smartphones. Phone channel, including Mobile and Telephone, accounted for 15% of the total channel preference in 2012 and is expected to grow further due to optimization of the Interactive Voice Response (IVR) technology. Internet banking is also widely used for services to research loans, mortgages, and credit cards; but for mortgage applications and product sales, where face-to-face interaction is important, branches remain the most popular channel.
Mobile 1%
Telephone 4%
Customers’ preference for speed and convenience has increased the demand for internet, phone and mobile as a preferred channel for banking.
Branches 18%
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American Bankers Association (ABA) 2
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than ever. If these issues are not addressed on time, they may lead to loss of business as well as brand equity.
Banks’ Top Priority: Customer Retention Currently, banks are facing a daunting array of economical, regulatory, cost and operational challenges. In this dynamic environment, retaining a customer is of utmost importance, as bank fees are increasing and the customer can easily switch to credit unions and alternative financial service providers. To retain customers, banks must provide an excellent customer experience and secured transactional environment. However, many call centers struggle on these fronts.
Banks ignore security enhancements in call centers Banks and credit unions have invested in technology to impede phishing attacks and online fraud, but some of them have ignored call centers. Compared to online banking security, very little attention has been given to the user authentication and verification at a call center. Call centers usually validate customers by asking basic information such as account number, phone number, address, DOB (date of birth) and the last four digits of their Social Security number or tax ID, which can be easily stolen. If such kind of critical data is compromised, a fraudster can call the contact center to change the password, transfer the money or perform any kind of banking transaction easily. While many banks have antifraud measures like knowledge-based authentication (KBA) to detect the fraudster, these tools are not so effective in case of some crooks that can at times answer some personal challenging questions. In 2011, M&T, a leading bank in the US, witnessed an increase in call center frauds when it acquired Wilmington Trust Corp. During 3
its transition period, the company started receiving fraudulent calls. Typically, fraudsters would call to open a new account or change some credential data as they were aware that the call-center service agents would not be able to fully verify all the details until a few days after the conversion is complete; and employees trying to be helpful sometimes would end up giving out information. However, there was no significant loss as the company identified and dealt with the problem in time.
There is a need for personalized customer experience Customers are increasingly becoming knowledgeable about financial products. These days, they demand value-added, personalized service in real time; they are quick to voice their disappointment about poor customer experiences; and social media can amplify these negative views, which can lead to complete brand erosion. Most of the banks still have siloed IT infrastructures and poor integration of frontline and back office systems, which hinder banks from delivering smooth customer experience across all lines of businesses. As a result, customers receive contradictory advice, products and services not suiting their situation, and apparently no care. Customer service representatives (CSRs) are usually the first point of contact for unhappy customers; it is essential that banks have effective tools in place to attain each customer interaction with access to suitable information, products and services to resolve the issue at the earliest. Lack of consistent services, including complaint handling policies and mechanisms, is resulting in continuing poor customer service practices such as directing customers from one CSR to another, asking them to call a different department or branch, slow resolution of complaints or even failing to hear the voice of
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the customers. As a result, banks are losing customers and facing loss of reputation.
The Next-Generation Call Center Issues surrounding call centers are highlighting an urgent need for an intelligent customer service system, which can integrate with the existing myriad systems and applications of the bank and streamline the customer handling process. As such, evolution of the nextgeneration call center has already begun. The next-generation contact centers will use Net Promoter Score (NPS) to monitor customer experience; they will have a state-of-the-art speech technology (voice authentication, call steering system (e.g. Nuance), Predictive Analytics tools, customized IVRs, automated cross-sell / up-sell engines, and enhanced mobile platforms in addition to their existing technological platforms.
Voice Biometrics adoption will reach $750 million by 2015 background statistical analysis of the live call on various Voice
biometrics
performs
characteristics drawn from a person’s voice such as inflection, pitch, dialect among others, and matches that with the voice already stored in the system. It helps customers verify their identity simply by speaking, making it easier and faster to gain access to secure banking by way of mobile apps, telephone and Web channels. It is one of the fastest growing technology modalities in the banking sector. In 2012, Barclay’s wealth investment management deployed Nuance FreeSpeech, a voice biometric solution to authenticate customers in its call centers. Since implementing the voice biometrics system, 93% of Barclays’ clients scored at least nine out of 10 for the speed, ease of use and security of voice authentication.
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Predictive Analytics and Big Data Banks have a huge pile of raw data such as customer transaction history, recordings from call centers, emails, letters, and social media, commonly referred to as big data. Analytics harnesses this big data to give banks a clear picture of individual customer attributes such as demographics, sentiment, transaction history, life cycle needs, risk tolerance, channel preference, utilization, and more. Analysts expect that the top challenge facing the banking community in 2013 is leveraging big data in a way that benefits their bottom lines; and it is also the year where many bankers will turn to big data analytics to move their organization forward. Predictive Analytics performs statistical analysis of big data to predict future trends and behavior patterns of consumers. It analyzes the transaction history and suggests "next best product" for a cross-sell; and may also recommend the "next best action" if customer sentiment does not require a cross-sell at that moment. It can help the service agent to know his/her customers better and convert the call into sales. Predictive analytics can also identify unhappy customers and the nature of their grievances. When these customers call again, service agents have a conversation path prepared to address and resolve their issues. The successful harnessing of this big data can help banks create a customer-centric enterprise, streamline business operations, derive more insights about their business, and build competitive advantage.
Rise of Mobile Banking Mobile will be the most important channel for customer relationship within five years. According to a Federal Reserve study published in March 2013, there is a high probability that non-mobile bankers will eventually adopt the technology.
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Average Transaction Cost in the US Branch
Mobile
Online
$4.00
$0.08
$0.17
Cost of transaction through branch is approximately 50 times higher than cost of mobile transaction. This gap is undermining the current branch model. Given declining profits and high-cost of infrastructure of physical banking locations, banks are reassessing the branch economics and moving to low-cost channels such as mobile and internet. Factors like rising consumer adoption of digital technologies and increase in Generation Y consumers have altered the branch-based distribution model. Currently, most leading banks offer basic mobile banking services such as check balances, make transfers between accounts, view account history, pay household bills, locate ATMs and branches. They are gradually moving to nextgeneration transactional mobile banking services such as person-to-person (P2P) payments, remote deposit capture (RDC) of checks, contactless payments at the point of sale.
Optimized IVR through natural language and call steering Banks were early adopters of the IVR technology, however many banks have avoided upgrading or replacing their IVR systems. IVR is a first point of contact for callers; it either facilitates a positive self-service experience, or drives consumers to opt for a more costly live agent. Most of today's IVR and transactionprocessing applications employ a touch-tone or dual-tone multi-frequency (DTMF) user 5
interface. However, applications that allow callers to use their own voice rather than DTMF inputs to complete transactions are rapidly emerging. Natural language interactive voice response teaches the speech system to understand the caller and filter out phrases such as “Um, I guess’ or ‘Yeah, I’d like” and provides callers more flexibility in responding to a question and improved interactions with reduced retryattempts and excessive confirmations. IVR has complex menus that baffle customers and the call gets mis-routed to other department. Here, call steering system comes to the aid of callers. It asks callers to describe their needs in their own words, and then routes callers to the right self-service application or contact center agent in one go. Cost of transaction through IVR is quiet lower than cost of transaction through call center. Investment in an optimized IVR program will help banks save money over the long term as customers will start developing a preference for self-service over live agents. USAA Federal Savings Bank has installed Nuance Communications natural language interactive voice response and intelligent routing system to better understand customers, and then in a more precise way route the call to the most appropriate service agent. In partnership with a leading technology provider, Sutherland offers consulting services and language call steering solutions. In typical banking scenarios, IVR optimization by redesigning the tree structure provides around 60%-65% call containment. By implementing a call steering solution (speech recognition with 95% accuracy), a significant improvement of around 75% call containment can be achieved.
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Development of right-skilled talent pool To keep up with the growing demand of consumers, changing landscape in the customer service and the rising security thefts, there is a need of trained and skilled employees. Banks need to educate their customer service representatives regularly and provide product training to handle customer queries. As mobile banking is the latest trend, banks will be entailed to teach employees how to enroll new customers or members into mobile banking as part of the account opening procedure as well as to encourage enrollment for existing customers. There are reports claiming that financial institutions, which have a program in place for branch and call center staff to educate and engage customers, are achieving higher mobile banking adoption rates. As banks are turning to Big Data and Analytics to analyze customers’ preferences and needs, there is a surge in demand for analytic talent.
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Conclusion There are growing numbers of opportunities, which can be grabbed by using next-gen call centers. Now, it is up to banks whether they want to make their call centers a strategic asset or a cost center. There are various ways to upgrade banking call centers to make them world-class. One way is to explore the services of third-party outsourcing companies such as Sutherland. They can help banks in two ways – first, they can provide plug-and-play contact centers with a state-of-the-art technology and second, they can provide a bank all the requisite technology, knowledge and training to make its own call centers world-class. Sutherland has strategic partnership with the world’s leading technology providers for providing speech solutions. Sutherland also provides plug-andplay call centers as well as consulting service to improve outdated call centers. For banks, time is ticking; they have to take decisions quickly before they lose business to competitors who have already upgraded their operations.
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