What is Customer Service in Banking | it’s Importance

Banking and financial services are essential to the daily lives of customers. From digital banking to savings accounts to financial planning, customer service is a fundamental component of all interactions between businesses and consumers in the banking sector.




In recent years, the financial industry has undergone significant transformation due to the emergence of technology. This has increased the focus on digital channels and online banking. Therefore, customer service executives have had to evolve, discovering methods to remain connected with their customers by means of remote communication.

Despite advances in technology, in-person banking customer service is still essential. Bank branches remain in operation, and bank tellers are available to assist customers with tasks such as money transactions and account inquiries.

When selecting a financial institution, customers are seeking more than just a place to deposit checks or transfer funds. They seek an establishment that can provide various degrees of service for their banking needs. Investing in customer service is essential for banks to create a competitive advantage, increase customer loyalty, and attract new customers.




What is Good Customer Service in Banking?

Providing exemplary customer service is paramount to the success of banking operations. Prompt and efficient service is essential for developing positive public relations, minimizing customer complaints, and increasing customer loyalty. The banking industry places heavy importance on delivering quality customer service, as this helps to create a sense of valued customers, better accommodate their needs, and ultimately increase customer retention.

Key Importance of Customer Service in Banking

The acquisition of new customers for financial institutions typically carries a high cost, which can be up to five times higher than that of retaining existing customers. Therefore, it is imperative for banks to implement effective strategies to enhance their customer service. Customer service has evolved over time, and the fundamental element remains the same:

Providing exceptional levels of service to customers. As customer expectations have shifted, they have become more demanding and knowledgeable than ever before.

As customer expectations evolve, businesses are recognizing the significance of superior customer service as a method of distinguishing their products and services from their competitors.

Developing a customer relationship strategy is essential to create a value proposition for customers. This strategy should be given priority and incorporated into the marketing mix. Once formulated, implementation and control measures must be taken.




Here are some pillars of excellent banking customer experience (CX) strategies to take into consideration:

1. Make a positive first impression

Establishing a positive first impression is a key element of customer onboarding. When customers open a checking account or sign up for investment products, this is usually a formal process. Unfortunately, banks often struggle with inefficiencies in customer onboarding. Given the extensive amount of personal and legal information required, completing processes can take several weeks, particularly when they are paper-based and manual.

It is essential for businesses to identify and implement approaches for enhancing onboarding processes. However, very few are taking the necessary steps to do so. The Digital Banking Report reveals that an alarming 47% of organizations do not have a structured onboarding process (The Financial Brand). Utilizing an effective onboarding process to create a positive initial impression can be highly beneficial for banks. Enhancing processes and service standards during this crucial stage of the customer journey can help to differentiate them from their competitors.



2. Select positive language

When dealing with financial matters, it is important to use positive and respectful language. Customer service agents should strive to provide banking solutions in a straightforward manner, ensuring customers have access to the necessary resources.

The language used in communications powered by artificial intelligence is of great importance. If a bank employs chatbots to answer certain customer inquiries, they should be able to emulate the tone and mannerisms of a human customer service representative.


Agents should strive to focus on what is achievable and emphasize the positive aspects of their role. If a request cannot be resolved instantly, agents should assure customers that a resolution is being actively pursued.

3. Empower the staff

In today’s banking sector, trust is of utmost importance. Establishing trust is achieved by demonstrating to customers that their feedback is valued, which in turn necessitates equipping advisors and agents with the necessary tools to provide an unparalleled customer experience.

Customers may experience difficulties related to credit and debit card protocols, and similarly, customer service representatives may experience challenges in resolving customer requests when faced with company policies and regulations.

4. Choose your expertise

Technology advancements have increased customer demands for personalized advice that is readily available. In today’s market, businesses must strive to meet these expectations. It is evident that attempting to provide swift and personalized advice on all banking products is not a viable approach. Without an effective strategy, this will result in higher overhead costs and advisors who are overburdened in trying to meet individual customer requirements.



To improve customer service, banks should focus on developing specialized competencies for their advisors (such as mortgage applications or estate planning) and utilize technologies like algorithmic banking. This will enable them to provide more efficient and effective services.

Investing in technology can provide financial advisors with a more efficient way to engage customers. Video conferencing and live chat offer swift communication, as well as a convenient solution for clients. To further encourage digital adoption, banks should take measures to educate customers on the use of new technologies. However, it is also essential to leave the possibility of in-person interaction open.

5. Customize the customer journey

Banking organizations have seen great benefits in leveraging the capabilities of technology to create a personalized customer experience. A recent Forbes report found that 75% of financial institutions have made digital banking transformation a priority in the past year.

It is essential that online banking is both user-friendly and intuitive, and also provides customers with a number of channels to interact with their bank. These should include a mix of options that can be accessed through mobile devices, as well as telephone services and video meetings for more personalized interaction. It is essential to give customers the flexibility to adjust to their changing needs throughout the customer lifecycle as every banking experience will be unique.

6. Fuse technology with a personal touch

In order to meet the expectations of younger customers, it is essential to combine technology with a personal touch. As this age group is used to the highly personalized and streamlined services provided by tech giants such as Apple, Google, and Amazon, they expect the same level of service from financial service providers. A survey conducted by EY revealed that 81% of Generation Z customers expressed a preference for personalized features that would enhance their connection with their banking institution. Additionally, 47% of customers aged 65 and above expressed a similar sentiment.




As customer expectations continue to evolve, there is an increasing demand for a personalized experience, particularly when it comes to banking services. Banks can use technology to supplement human expertise and create comprehensive customer profiles to meet this demand. Digital banking should strive to meet the everyday needs of customers while maintaining connections for higher-touch engagements and providing personalized offers.

7. Build trust

Building trust is essential for effective financial management. In today’s world, where victims of fraud often seek assistance from their banks, customers are increasingly expecting banks to ensure the security of their data. According to research, between 14-18% of all demographics have identified this as the most crucial factor in determining trust.


Banks need to develop reliable internal infrastructures for efficiently handling and safeguarding large quantities of customer data and remain open about how they are managing and utilizing personal information. Considering that numerous financial organizations are utilizing third-party platforms to communicate with customers. In order to ensure the safety of customer information, it is important to outline the measures that customers can take to protect themselves. For example, when sharing sensitive data such as account numbers, social security numbers, or PINs, customers should be made aware of the channels in which these exchanges are not secure.

8. Gather feedback

Gathering feedback is essential for customer service teams in the banking industry. Ratings provide invaluable information regarding customers’ experiences with financial services, making it possible to make improvements.



It is often difficult to obtain customer feedback due to the reluctance of customers to spend time providing it. Repeated requests for customers to log in to an online portal and fill out a lengthy form are unlikely to encourage positive customer engagement.

For improved customer feedback, integrating links to surveys in emails is suggested. Keeping surveys short and relevant is recommended while offering incentives or rewards for participating further increases the response rate. Establishing a mutually beneficial feedback process is thus achievable.

9. Resolve your customers concerns

It is unfortunately true that one dissatisfied customer can cancel out countless satisfied customers. It is therefore essential to gain an understanding of where our services are falling short.

Many banks have identified digital service offerings as a weak point in their customer experience, as these services are relatively new. According to one survey, 64% of respondents felt that their mobile banking was inadequate for quickly resolving customer queries, and sometimes failed to resolve them entirely.

Banks can often address customer pain points by providing quality services. Investing in biometric technologies can help to prevent the frustration of forgotten passwords, significantly enhancing the customer experience.

Moreover, providing customers with an easy-to-use platform can further contribute to a positive customer experience. Utilizing collaboration tools, such as live and asynchronous messengers, calls, and video meetings, banks can provide a variety of methods to resolve issues. Allowing customers to have the option to engage in conversations with human agents encourages the development of meaningful connections and improves the customer experience.

10. Focus on retention

Customer loyalty is just as important as client acquisition. By ensuring customers are satisfied with their experience, momentum will be built throughout the customer lifecycle, leading to improved acquisition without the need for additional sales effort. Forrester research shows that 92% of customers who feel valued by their financial service provider remain loyal, 87% plan to purchase more, and 87% will advocate for the brand.



The question is: What banks can do to improve customer retention rate? Research indicates that optimizing communication is a key factor, which entails broadening access points. Online banking portals should not be the sole means of a customer’s engagement with their preferred financial institution. An omnichannel approach can assist banks in fostering high-touch customer experiences that are likely to improve customer retention.

11. Take the customer-centric approach

In order to provide exemplary customer service in banking, it is essential to take a customer-centric approach. All strategies should be formulated from the customer’s point of view and should be evaluated based on their impact from this perspective. When the primary measure of success is Average Handle Time (AHT) rather than customer satisfaction scores, the emphasis shifts from providing an overall positive customer experience to productivity and cost efficiency.

In order to prioritize customer-centricity, organizations must ensure they have the necessary resources and workforce. It is essential that customer interests are reflected from the highest level of the organization and that a Chief Customer Officer is appointed with direct access to the CEO. Customer service agents and advisors on the front lines must be properly trained and equipped with the necessary technology to provide high-quality, relevant advice. The fundamental principle of service should always be to prioritize the needs of the customer over the financial interests of the bank.



Wrapping Up:

As the financial services sector continues to evolve with new trends and regulations evolving almost every day, it is essential to prioritize customer service within the banking industry. To ensure that your financial institution is offering the highest quality customer experience, it is essential to stay up-to-date with industry trends and explore strategies to enhance customer service in banking.

Banks should remain open to change and remain committed to seeking out opportunities to improve and incorporate new technology. By actively listening to customer feedback and making wise investments in digital customer engagement tools, banks and financial institutions can ensure that they are providing exceptional customer service.

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