Over the past few years, the uses of artificial intelligence in the financial services industry has been a much debated topic. However, the practical applications of how and when it should be used are becoming much clearer.
With more and more native Al solutions becoming available, product and service providers are finding they can deliver better and faster services to their customers.
Delivering benefits through Al means finding tools and solutions that perform tasks better than humans could, whether that’s completing tasks more quickly or analysing large data sets.
One clear area where AI can make a huge difference is in harnessing technology to support complaints processes.
Alongside CourtCorrect, which provides AI complaints solutions across regulated industries, we explored how AI can be a game-changer in how firms understand complaints to improve the customer experience.
Tackling the issue
Investment and pensions firms have seen complaints increase by more than 20 per cent in the past 10 years. Data from the Financial Ombudsman Service in H1 2024 revealed a 40 per cent increase in complaints on 2023’s H1 data.
Now, just over 18 months into the Financial Conduct Authority’s consumer duty rules, it seems the industry is still to move the dial significantly on complaints. All this in an era of increased digitisation and automation.
If this trend is to change and firms are to deliver good outcomes for customers, it is vital that they uncover and analyse the root cause for complaints. Root cause analysis (RCA) is a key component to understanding the customer experience and how to influence it in the future.
The key to complaints handling is in understanding why they occur, and crucially how they can be prevented in the future.
AI-ming higher
AI can help firms deliver on their RCA requirements by providing a deeper understanding of the complaints they receive over a much broader set of information than would be possible by humans.
Gathering the right intelligence around their products, services and how they communicate with customers better is fundamental. Crucially, when looking at AI, only once the inputs and data are sufficient will the right analysis and outputs be delivered back into the business.
It is still vital that firms have the correct controls and guardrails in place when adopting AI into their business, and we firmly believe that AI should support, rather than replace, human-led activity. But if done right, firms can place AI within their complaints function and process to maximise the benefits, for themselves and their customers.
Completing RCA to the same level of detail, consistently against the model, is one of the largest challenges that firms face. Utilising AI to do this not only saves a considerable amount of time, but it can also be completed uniformly across all complaints received.
AI can be utilised within a broader complaints management tool that facilitates the easy capture of case details, investigation, outcome and resolution, and customer response. Additionally, they can also identify vulnerable customers.
Capturing data
When using AI to complete the root cause identification of complaints, users are presented with suggested potential root causes based on similar complaints historically and keywords in the complaint itself. Multiple points of failure and issues can be flagged, highlighting which of these is the most likely root cause.
As this is completed on every case, to the same standard and level of detail, firms have a higher level of confidence in the root cause defined. This avoids cases simply being logged against the most common root cause due to insufficient time spent by the user.
The benefits of using AI to complete RCA
AI-driven RCA tools offer transformative benefits to complaints teams by streamlining operations and enabling deeper insights in several ways:
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Enhanced data accuracy: AI reduces human error in categorising and analysing complaints.
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Efficiency gains: AI reduces human error in categorising and analysing complaints.
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Novel insights: Beyond confirming known issues, AI reveals emerging trends and outliers. Visualisations of these patterns through clustering algorithms help firms proactively address systemic challenges.
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Customer-centric solutions: The ability to analyse RCA data in the context of complainants’ specific pain points ensures solutions are tailored to diverse customer needs, including vulnerable groups.
It is vital that root causes are presented in a way that allows a wide section of stakeholders within a firm to understand why complaints are occurring. These stakeholders may be coming from different perspectives, some from operational areas, others from product, compliance, and executives. There is no one-size-fits-all approach that will deliver for all.
However, creating different viewpoints for different audiences may be the answer, as well as creating multiple layers of views so that an understanding can be gained across the full picture before delving further into specific areas.
Providing comparisons of complaints between different time periods, for example year-on-year, as well as heatmaps to highlight key areas of focus, can also be useful.
AI is yet to be the panacea to all known ills in financial firms, but it’s already capable of helping firms identify and resolve the root cause of customer complaints and could help firms retain and attract more customers in the future.
Nina Cherry is wealth consultant at Simplify Consulting
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