Why the Great Wealth Transfer calls for a digital rethink across financial institutions

The greatest transfer of wealth in human history has just started, and already it is sending shockwaves through the financial world. Between now and 2048, $106 trillion of wealth will be handed down from primarily baby boomers to younger generations.

Financial institutions that fail to appeal to these younger recipients, who are primarily made up of Generation X, millennials, and Gen Z, seriously risk their future success and viability. With the latter two being significantly more digitally savvy than their predecessors, it is no surprise that financial institutions across the globe have heavily invested in their digital transformation strategies. 

Yet what most organizations fail to realize is that digital doesn’t mean less human. Attitudes towards financial management are evolving, where speed and personalization are winning attributes among these younger generations who make up a big chunk of inheritors. 

However, these are not the only ingredients to a formula of success. Financial institutions that want to succeed over the next two decades and beyond have also got to tap into the humane side of technology. How? By prioritizing empathy, not just efficiency, and empowering their customers with choice. 

The customer care points to keep in mind

A lot of organizations will go with one of two extremes: they will either go digital-only in their service operations or woefully lag behind and stick to outdated, brick-and-morter-based models. What they so often fail to do is strike a happy medium, particularly as 83% of Gen Z actively seek human interaction for major decisions. 

People ultimately want choice. For low-stakes transactions, like submitting a document, they will want to take the digital route. For instance, credit unions that require grieving inheritors to make countless office trips at awkward times for simple processes are sure to lose these accounts. Baby boomers may make up the majority of their member base for now, but credit unions that insist on sticking to outdated service models will never appeal to the younger inheritors. Credit unions, in particular, are falling behind in modernizing their digital infrastructures compared to other financial services. 

However, for more complex, distressing scenarios, like having their account hacked, most individuals will want to escalate the issue to a human representative who fully grasps the gravity of the situation. 

When financial institutions recognize the importance of choice, they are also inherently pursuing a digital strategy rooted in empathy. They understand and see their customers or members’ needs that extend beyond what a chatbot can fulfil. These younger generations, especially Gen Z, approach their finances with a totally different mindset, treating it like self-care. Financial organizations that blindly follow speed and efficiency without considering the empathy dimension will, therefore, fall flat in nurturing long-standing relationships built on trust. 

Another area to improve on is designing a streamlined user experience, both online and offline. Customers expect the same quality of service whether they’re interacting with an organization through their phone or in person. In fact, a PwC survey from a few years ago found that 51% of customers would be less loyal if their online experience was not as enjoyable as in-person. Financial institutions can’t pursue an ‘either/or’ path with their approaches to customer relationship management—they need to invest in the online and offline experience. 

Carefully designed AI deployment 

Striking a balance between empathy and efficiency in future-ready digital strategies requires careful fine-tuning around AI. In the rush to automate and speed up processes, an all-or-nothing approach to AI will lead to customer management mishaps, potential reputation damage, and operational headaches. 

For example, credit unions are renowned for their community-driven approach to interacting with members. There are opportunities to augment the quality of customer care they deliver, but if credit unions choose to pursue a rapid switch to AI, they risk undermining that foundation that makes them stand out. 

Carefully design AI blueprints to address specific bottlenecks. Identify areas of improvement, whether that is taking the administrative weight off teams by automating repetitive tasks like document uploads. The idea here is not to use AI to replace the human touch but to augment it. Staff whose time is no longer eaten up by filing simple documents can spend more time focused on higher-stakes scenarios, like putting a distressed customer at ease. 

Optimize where existing operations are outdated, adding strains on already stretched staff. Instead of throwing more people at the problem, explore how AI solutions can streamline service delivery for more enjoyable user experiences. Outdated digital systems continue to plague the financial industry, driving almost half of banking staff to consider leaving their jobs. Fragmented systems and dated processes are a serious issue for customer and staff retention alike. 

AI is not a silver bullet, but when integrated correctly it can help resolve these issues. Keep in mind that the scene needs to be set for an AI-ready ecosystem. Tackle fragmented systems head-on through succinct data management. Silos, bias, hallucinations, and other risks can be mitigated with the right guardrails that ensure security, transparency, and interoperability in the very foundation of data handling. 

When organizations pursue a workflow-specific approach to AI deployment, these measures can also be ensured. That not only promotes better efficiency, but helps teams ensure and consistently deliver empathy. For instance, a workflow can be automated to trigger a sympathy card delivery when an inheritor uploads a death certificate of the deceased account holder. It is these seemingly small yet massively significant gestures that can make or break a member or customer’s decision to stay with an institution. 

Keeping the humans empowered, not just in the loop

Do not forget the people in the bigger picture. There is no given situation where AI will operate completely autonomously, and financial institutions must equip their teams to oversee these tools. People understand people, and digital transformations rooted in empathy as well as efficiency start with the humans behind the scenes. 

Beyond the relevant technical skills like AI and data literacy, staff really need to bolster customer care handling. Soft skills are just as important in any client-facing role, and now is the time to foster a workforce that champions empathy and connection in customer interactions. This way, the empathetic side of the digital experience becomes a living, breathing action that people remember and respond to. 

So, with AI handling more basic, repetitive tasks on the administrative and data-processing side, staff must be well-versed in handling the more complex, sometimes more emotionally-charged cases. It is entirely worthwhile to train staff in communication skills and emotional intelligence so they’re better prepared for having the baton passed on to them from an AI chatbot. Frustrated, grieving, or upset customers won’t want to switch from a robot to a robotic-sounding person. 

The best AI deployment strategies are not based on what everyone else is doing, but an organization’s distinct needs and pain points. They empower teams to deliver a connected, humane experience that keeps pace with the evolving expectations of younger, digitally-savvy account holders.

Article authored by Saeid Kian, CEO and Co-Founder of Ribbon