AI-powered avatars: Next stage in banking CX?

Warm, personal, one-on-one service often eludes enterprises like banks that serve global customers — which ultimately impacts their bottom line. Research shows 79% of customers would switch to a competitor if they provided a better customer experience, and 51% believe the importance of customer service outweighs the price tag. Companies in the U.S. alone already suffer $75 billion in annual losses due to poor customer service.

Despite decades-worth of improvements in call centers, email correspondence, and various automated response systems, customers are still not totally satisfied. Indeed, these innovations have streamlined basic customer interactions, yet they've failed to reproduce the natural attention and empathy provided by a caring human assistant.

But this challenge isn't insurmountable, given the rising availability of today's most headline-grabbing technology: Generative AI.

An inexperienced industry takes notice

In a recent survey, 89% of executives named AI and Generative AI in particular as their top priority. Some online retailers are already infusing their own tailored LLMs into their digital storefronts, allowing shoppers to search for items with direct prompts rather than tedious drop-down menus — e.g., "do you carry x brand of shoes" or "do you carry these in X-large?"

It's a nice start but doesn't nearly come close to bridging the gap between a lifeless (albeit intelligent) chatbot and a friendly branch employee. While customized LLMs can capture human-like conversation through generative conversational text, text boxes alone aren't proving to be the salve many expected. In fact, a recent Gartner survey showed only 8% of customers used a chatbot during their most recent customer service experience.

Perhaps text-based chatbots were never intended to be the end-all product of GenAI, but merely the "under-the-hood" technology to power far more dynamic applications.

Digital avatars – a science-backed CX solution

One of these applications, digital avatars, could hold the key to unleashing a new era of AI-powered excellence in customer service, especially at the digital banking level. These digital avatars (or digital humans, or AI-avatars or AI agents — the industry is so young that the terminology is still fluid) combine GenAI tools like voice cloning, LLMs, and facial recognition and reenactment technologies to produce photo realistic digital humans capable of holding real-time, face-to-face conversations with online end-users in multiple languages. These AI-powered Avatars can be trained on company data and embedded onto company websites and mobile apps, effectively scaling personalized, one-on-one customer service — a groundbreaking leap in global CX.

The transition from text-based to front-facing personalized interactions is grounded in science. Fundamental to a human's psychological makeup is their innate connection to faces. Studies reveal that our brains respond to Digital Human replicas in ways strikingly similar to our reactions to real human interactions.

Thanks to neuroimaging advancements, scientists from the Netherlands have concluded that emotive expressions conveyed by human-like Avatars evoke comparable levels of empathy in humans as when they interact with real individuals. Researchers from Australia even discovered that artificially generated faces stimulate the production of N170 ERP in the brain, the same neural processing waveform that manifests after seeing an actual face.

In other words, these facial constructs are naturally inclined to resonate with humans, despite their artificial nature. The more lifelike they are, the more credibility they exude, and the more accepting customers will be to the idea of digital avatar retail assistants.

Equipped with avatars capable of nurturing human-like relationships with shoppers, businesses can deliver a personalized shopping experience that mirrors the warmth and familiarity of in-store interactions. For example, instead of trying to manage a return or track the delivery status of ordered items manually or through a chatbot — or worse, through an automated call center — shoppers can open a face-to-face dialogue with a digital representation of a store representative to instantly guide them through their query with care and expertise.

AI-powered avatars should be seamlessly integrated into the line of business systems of retailers and e-tailers, enabling them to access real-time data, manage inventory, and process orders efficiently. This integration ensures digital agents can perform complex tasks such as tracking deliveries and managing returns directly through the business' back end system, enhancing operational efficiencies and customer satisfaction.

It might sound like something out of a sci-fi movie, but across industries, AI avatars have already begun attracting big-name early adopters like Chevron, Qatar Airlines, and Deutch Telekom. In fact, the digital human avatar sector is projected to expand into a $500 billion market over the next ten years. While a decade may seem distant, the time for businesses to start preparing for future customer expectations is now.

Seize the opportunity

Though it successfully made vendors and brands more accessible, the advent of the globalized marketplace has continually chipped away at customer service standards.

Fortunately, melding generative AI with digital avatar technologies stands to infuse global e-commerce with the face-to-face interactions shoppers are missing. Together, these two innovative technologies unleash massive potential for elevating user engagement, fostering emotional connections, and enhancing overall satisfaction.

The technology is here, and the science is sound. You just have to seize the opportunity.