The age of the customer has come to financial services – with a vengeance.

“Our industry is facing a massive loyalty crisis,” Salesforce’s senior vice president for Financial Services, Rohit Mahna, told a packed audience at Salesforce World Tour 2017 in London. “All financial services customers are cheating. They may buy one product from you, but they go elsewhere for something else.”

The problem, according to Mahna, is that financial services customers are no longer loyal to brands, but to experiences. They’ll go with whichever provider gives them the best, the most personalised and the most convenient experience for whatever they want to buy. 

Surprising new entrants are disrupting the industry

Increasingly, that provider may not be from the traditional banking industry – or even from the world’s traditional financial centres. 

Two years ago, fintech investors were eyeing up companies in London and San Francisco. Today, the smart money is looking eastwards: at companies like Ant Financial, the payments provider set up by the Chinese e-commerce giant Alibaba, which now has 450 million users and a market valuation of $60bn. As well as at WeChat, the 800 million-users-strong instant messaging service that lets users check their bank balance, make payments, and talk to their bank--all without leaving the chat app. 

These companies are blazing new trails in financial services, inventing entire new distribution models and leaving traditional banks in the dust.

Don’t be scared of disruptors. Think like they think.

How should UK financial services companies respond? “We can get scared by this, or we can internalise it and build it into our business models,” said Mahna. 

The key to success, he says, is to look for friction points in the current customer experience, and innovate to remove the friction. 

“It’s about putting the customer at the centre,” he said. “It’s about knowing who they are, what they need, and building the right service for them.” 

Artificial intelligence will transform the industry

That takes a shift in culture, and it takes new technologies. One critical technology in financial services in the next few years will be artificial intelligence. The ability to predict what customers will need or value, and provide it to them at exactly the right time, and in exactly the right way, will drive differentiation and success.

In the opening keynote at Salesforce World Tour London, Salesforce CMO Simon Mulcahy presented one such AI-driven experience. A vehicle insurer could take weather report data from IBM’s Watson cognitive computing platform, and overlay it on a map of addresses of policyholders, using data held in the Salesforce platform. A match could trigger a personalised warning to affected policyholders: “It’s about to start hailing in your area; get your vehicle inside.” 

Using Salesforce Einstein AI software to learn from previous customer behaviour, the app could even determine which channel the policyholder generally checks first for messages, and deliver the warning by SMS, instant message or app notification accordingly. And it could personalise it, too: not just “get your vehicle inside” but “get your Vespa inside”. 

Back in the financial services session, Darrell Sansom, chief marketing officer of insurance giant AXA, agreed that AI will drive a transformational shift in the insurance industry. “Today, insurance is a payments business,” he said. “We wait for stuff to go wrong, and then we try to make it right.” But AI will flip that model on its head. “We can use connected devices and AI to become a prevention business,” he said. “People with wearable devices, for example, we’ll be able to prevent them from becoming ill.”

AI will augment – not replace – the human touch

Even today, a focus on the customer experience is helping AXA differentiate itself from other insurers. “It’s often hard in insurance to see the policyholder as a person, rather than a number,” Darrell said. “IT systems can work against us in that sense. Salesforce helped us flip that on its head - to put the customer at the centre and let us understand each one as a person. Our CSAT (customer satisfaction) and NPS (Net Promoter Score) have increased exponentially.” 

AXA’s investment in Salesforce has been complemented by a cultural shift towards empowering contact centre agents. During the severe winter flooding in Cumbria in 2015, an AXA agent took the initiative to offer affected families a gift of £100 to spend a few hours away from their flooded home while AXA sorted their insurance claim. The company quickly decided to empower all agents to offer the same thing. “The feedback was tremendous,” said Sansom.

And that was one of the key messages of the session: AI won’t replace humans in financial services, but it will help the industry to give customers the best possible experience. In a demo to round off the session, Rohit Mahna used an example of a bank customer keen to buy a new house. She takes a photo of a house for sale, and sends it to the bank’s chatbot, which uses AI to identify the house and provide details about the local area. But when the customer wants to move fast, the bot passes the customer to a human being to process the finer details of her mortgage application. 

Regulation as a driver of innovation

The last speaker in the financial services session was Conrad Ford, founder and CEO of Funding Options, a company disrupting the UK business lending sector

Funding Options has been successful because it identified an “area of friction” for customers; in this case, small businesses who couldn’t get a bank loan due to lending clampdowns following the 2008 financial crisis. It applied innovation to the problem, creating an online marketplace that matches businesses to lending providers--often sourcing funds in as little as 1.5 hours. 

Perhaps surprisingly in an industry where regulation is often cited as a barrier to innovation, Funding Options says it’s due to smash those timescales thanks to the UK’s planned early introduction in January 2018 of the new European Payments Service Directive (PSD2). 

That regulation will force banks to open up their customer data, enabling disruptors like Funding Options to crunch loan applicants’ financial histories and get lending decisions within seconds. “We want to be able to get cash into people’s accounts in 1.5 minutes,” says Ford. “With PSD2 there’s no reason it can’t be done. It’s a hugely forward-thinking decision by the UK government.” 

Financial services is undergoing a massive shift right now. And the players who traditionally won in this space need to recognize the value of the customer-centric approach companies like Funding Options have adopted. The good news is that, as AXA learned, that change in mindset can be accomplished – you just have to want to make it. 

Take your first step towards customer-centricity by understanding what customers want from a modern bank in the 2017 Connected Retail Banking Report.