Empathy in Banking: The New Gold Standard

Prasad Kulkarni
7 min readJul 2, 2021

Marshall Rosenberg had once defined Empathy as “A respectful understanding of what others are experiencing”. And he was right. Our ability as a community to imagine & understand the feelings of the other person is critical in making morally appropriate judgments, which is the core of our existence and functioning.

If we refer to Daniele Trevisani’s Four Levels of Empathy Model, it states that there are in all 4 different paradigms where empathy can be visible. Financial Institutions need to understand that every person interprets and feels all these aspects of empathy involved in relationship with their organizations. On a strategic side, higher the level of understanding between the customers and the banks, the possibility of generating the desired response (behavioral or psychological) from customers will be even higher.

Quantifying Empathy in Banking:

To provide strategic feedback to Banks on the possible set of action items, first we need to understand the different states which the customer goes through. To represent this in a defined & systematic model, Banks can leverage the first aspect of Design Thinking process: Empathy Mapping. Since understanding user needs is the fundamental aspect of User Experience design, they can leverage Empathy Map to develop a deeper understanding of the customers we are designing for. They can act as a backbone of personas building process, carried out in future.

Empathy Maps have numerous advantages and can give better insights into the User Research outcomes:

· Empathy Mapping understands what motivates users’ mindset & behavior

· Recognizes weakness of the user research

· Elaborates user personas and removes bias, if any, from designs and align team towards a single definition of the user

· Identifies user’s real needs & impact areas

Empathy Map is hence a representation of the outcome of user research studies and the observations carried out in the Research Phase to identify critical insights on customer needs. It predominantly has 4 major areas which refer to what the user: Said, Did, Thought, and Felt.

Now for simplicity purposes, consider an Example of Empathy Map of a Bank’s Millennial Customer. Based on the interaction and user research studies, Empathy Map can be drawn as below. As clearly visible, it is easier to understand & fill what the user said or did. However, filling of critical areas like what they thought or felt is difficult. Those areas can only be filled based on observations and analysis; like determining what was the users’ thought process or feelings and how they behaved and responded to certain discussions, recommendations, activities, etc.

Empathy Mapping of Bank’s Standard Millennial Customer

Recording these critical pointers is even more critically important in today’s times when the customers are looking for empathy — for help & support from their banks and financial institutions. Add to this, businesses are also struggling for finding foot in these unprecedented times.

Customer Is the King and the King Was in Trouble

The chance for FIs to prove them on empathy parameter is right here. We all can agree that there has been a paradigm shift in consumer behavior ever since Covid-19 pandemic hit the unexpecting world in 2020. Financial Institutions were tied up in resolving their own problems and reframing their strategies when another priority expectation was to understand and correlate to the issues of the consumers. Customers for over a year had struggled to keep their businesses afloat and desperately needed support in running their BAU work.

Add to this, FIs weren’t ready in many ways to support even if they wanted to. Their infrastructure was dated and non-scalable, processes were manual in nature and had extensive paperwork everywhere. Their various digital channels were fragmented which just couldn’t match to the “new normal”.

Empathy Leading to Enhanced Customer Engagement

Channels of communication has always been a critical factor in communication emotions. Baby Boomers and HNIs still rely heavily on Branch banking. However, majority of innovations in the banking in modern times have been focused towards reducing dependency on the largest operational cost factor for the banks i.e., offline branches. From ATMs to Omni-Channel presence to Chatbots, the intention of “Anytime Banking” was wrapped around reduction of offline branch related resources and infrastructure costs.

And many FIs understood this. In such distress times of financial strain, when it comes to Credit or Loans, having a F2F communication with the customer for understanding their needs and providing much needed helping hands & guidance.

However, unlike the scalable digital channels which Banks provide for customers, branch banking is not scalable and has specific resource related issues which many-a-times cannot be resolved at runtime. Hence Smarter Solutions to understand banking footprints, interaction history & data insights of the customer via various channels & touchpoints are the need of the hour.

Flipping the game 180 degrees and rather than enforcing the customer to leverage a particular medium of communication, FIs should enable appropriate touchpoints at the right places to match the emotional needs of the customer.

Banks should constantly collect data to understand the behavior of the customer, anticipate the assistance which the customer might require and provide the required messaging and assistance tailored to the customer’s emotional needs and overall profile.

Strategy for Empathy Banking

With the user’s research & digital footprint data in hand, Banks & FIs can now create a customized strategy and provide better understanding of user’s needs and be more empathetic. Based on various reports, there are fundamental factors which differentiate Empathetic Banks with respect to traditional ones:

As seen above, Empathetic banking leverages digital technology to identify critical events in customers’ lives and trigger actions to support them. With adaptable workflows and cross-cutting services across multiple channels and business lines, Banks can provide the much-needed customized responses to the customers in these unprecedented times. For example, sending an email to the customer on their birthday every year based on the registered birthdate will trigger no response from the customers. But when the customer receives a personal email on support from their Banks when they have swiped their cards in a hospital provides a different level of empathy & care.

Another example can be when customers get over draft messages. Again, the expected engagement level towards that message is none. But if banks are able to provide better insights into customer spending & recurring expenses with recommendations, customers can feel a level of empathy towards their banks.

Banks can follow some basic rules for defining their strategies. They can define workflows, processes and sequence of these business events, triggers and interactions with customers. These can be driven with intelligence and patterns can be identified. They can then be integrated with core businesses systems like the CRM systems to ensure adoption across workflows and finally, leveraging data analytics to identify and trigger appropriate actions.

How can Banks utilize digital technology to identify critical life events and stages of the customers and trigger actions to support them? Instead of following the dated steps like reusing non-personalized modes of communication — which do extract an action from the customers, empathetic banking trigger personalized and event-based communication to the customers by leveraging technologies like AI/ML. These communication points are also life-goals driven, wrapped around via Gamification approach to increase customer engagement. By using Business Analytics, Banks can get better insights into the customer actions and interests. Customized communication methods, offers and rewards can be targeted. Timing of communication is also of a critical factor here. Placing the right contextual notification at the appropriate time of the day will ensure better response rates. Machine Learning can help in identifying patterns of the user’s behavior and appropriate triggers can be initiated.

However, all these strategies have to be wrapped via appropriate metrics driven Customer Experience, with intuitive UI and seamless omni-channel presence.


Survival of many customers’ business and personal lives was at stake due to lockdowns across the globe and their needs had to be resolved on immediate front. And many Financial Institutions took the ‘bull by its horns’ and rose to the challenge. Some could manage to streamline their business processes to understand their customers better while those who couldn’t, were perceived as part of the problem rather than the solution. Customer-focused Banks with their empathy-directed processes, which are understanding & responsive to the emotional state of the customer, have gained critical market share in these trying times and have gained dedicated customers for life.