Human Element Key In Customer Service, AI Can Assist But Not Replace: RBI Governor

In the March 2025 bulletin of the Reserve Bank of India (RBI), governor Sanjay Malhotra emphasised on human aspect of customer service and grievance redressal in his report. In the paper titled ‘Transforming Grievance Redress: The AI Advantage’, he highlighted the significance of human touch in grievance redressal and the utility of artificial intelligence (AI) in faster redressal.

The report talks about improving customer service. RBI-regulated entities have been taking measures in this regard by implementing mobile banking, internet banking, UPI, and digitising services like KYC verification, etc., to improve customer experience. However, there is still a huge number of customer complaints against banking services.

In 2023-24, more than 10 million complaints were recorded in 95 scheduled commercial banks as per the report. If other REs are included, the total number of complaints would be much higher.  

Customer Satisfaction Is A Cornerstone Of Banking Services:

The report underscores the significance of good customer service. According to it, “Every complaint is a test of trust. When a consumer files a grievance – whether for a disputed transaction, a lapse in service, inappropriate pricing or charges, or an unfair practice – it is a signal that our system has fallen short. Left unresolved, such issues can erode consumer confidence and tarnish the entire ecosystem”.

Customer service is what helps in developing trust among customers in the banking and financial system. The report highlights that rising complaints are one part but if these are not redressed, these are escalated to RBI Ombudsman, burdening them. 

For the last two years, every year customer complaints have increased on an average of 50 per cent leading to 9.34 lakh in 2023-24. The complaints at the RBI Ombudsman office have also increased by 25 per cent from 2,35,000 to 2,94,000 in 2022-23 and 2023-24, respectively. Overall, 57 per cent of the maintainable complaints need RBI Ombudsman intervention for redressal.

Customer Service Is The Key:

Through this report, the governor urged CEOs of banks and other REs to pay attention to improving customer service and grievance redressal. “Customer complaints aren’t a nuisance – they are in fact opportunities to improve, innovate, and build trust. Handling them well can define your success. Each unresolved grievance is a missed opportunity for regulated entities to reaffirm customer trust and loyalty”.

In the digital world, complaints reach social media faster than to the official channel. Therefore it becomes important for REs to proactively resolve complaints and ensure that the same complaint does not happen twice.

Improving Grievance Redressal System:

The report suggests that there should be at least two levels of grievance redressal in the REs for a better customer experience.

It also suggests that there should be multiple officers at all levels for grievance redressal, including the internal Ombudsman office. Further, the complaints should be categorised properly between requests, queries, disputes, etc.

Where Can The Services Be Improved?

The KYC documents that are already obtained should not be asked again from the customer by the REs. Once the details are updated with one financial RE, other REs can access the details from the CKYCR details. 

So, REs can avoid their customers’ inconvenience if they access the KYC details of customers from the CKYCR data. Besides this, REs also need to put measures in place to build robust internal controls in the system to prevent digital fraud. They can work to enhance digital financial literacy. 

AI Use In Improving Customer Service:

AI can help in faster resolution of grievances with accuracy and fairness in resolution. With AI, delays in redressal can be improved leading to reduced processing time. It can also aid in finding out the systemic gaps by analysing data, chat logs, emails, etc., and working toward solutions pre-emptively. 

Technology can also help in mitigating language barriers by using chatbots in local languages and answering customer queries, concerns, and grievances. The report suggests that ‘integrating AI at every stage – from complaint lodging to closure – can result in a seamless, efficient, and data-driven grievance redressal system’.

Integration Of Human Aspect:

The report highlights the strength of the human aspect in customer service, saying that technology ‘is no substitute for integrity, empathy, and human judgment’. Amid the enormous data availability and automation, it is easy to forget about the human element. Every transaction looks like a number but it is more than this. It is the hard-earned money of a person, of a small businessman, or the lifelong savings of a senior citizen.

Thus, REs should not ignore the behavioural aspect in providing customer service, and decision-making should be decentralised to some extent to enhance customer satisfaction.