Chatbots for Banking: All you need to know
Nirmala
Aug 29, 2023
We often perceive the financial sector as slow to change, yet banking today is changing this perception by adopting new technologies and adapting to new-age demands.
Concepts like Conversational Banking and Digital Banking are changing the status quo for the better — helping banks to focus on customer experience. They are meeting customer expectations for faster response times, 24 x 7 availability, asynchronous messaging, and omnichannel communications.
More and more financial service providers are beginning to see the value of investing in technologies they can deploy instantly without waiting for the typical grinding pace of this heavily regulated field.
A 2018 study by *Humley pointed toward the growing popularity of chatbots in everyday banking tasks. It stated that more than four out of 10 consumers prefer to use chatbots to solve banking-related issues rather than going to their branch.
Here is why banks and other financial companies that want to expand their tech portfolios should invest in an AI-based, omnichannel chatbot technology to transform the banking experience.
In this article, we will explore:
- 1. Why Chatbots are Essential to the Banking Sector
- 2. The Key Challenges Chatbots Need to Address for Successful Banking Deployments
- 3. Entering the Era of the Banking Chatbot: Why Now?
- 4. Common Chatbot Use Cases in the Banking Industry
- 5. How Chatbots are Enabling Self-service and Improved Engagement
- 6. How Banking Chatbots Drive Customer Engagement
- 7. WhatsApp Chatbots for Banking
Why Chatbots are Essential to the Banking Sector
Why are chatbots making waves in the banking sector?
These programs complete numerous, often repetive tasks that earlier fell to human agents. For instance, helping customers check their account balances, transfer money, report upcoming travel, or making payments.
As people increasingly embrace a digital way of life and require instant reponses, these technologies become more critical.
Convenience
Chatbots offer a convenient way for customers to interact with their banks forgoing the need to visit a branch or call customer service.
Saves Costs
Chatbots can help banks save money on customer service costs. By using a chatbot instead of a human agent, banks can reduce the number of agents they need to hire and train.
Round-the-clock Service
Chatbots can operate 24/7. Customers do not need to call during business hours to get assistance. Fewer agents need to work the graveyard shift to be available for emergencies.
Builds Customer Trust
By providing helpful and timely assistance, Chatbots give banks unprecedented opportunities to improve customer engagement and loyalty.
Collects Relevant Data
Chatbots can securely collect data about customer interactions to improve the overall customer experience.
The Key Challenges Chatbots Need to Address for Successful Banking Deployments
Despite the many benefits that chatbots offer, there are still some hurdles to overcome – which is why many financial institutions often outsource their bot tech. Here are a few chatbot challenges in the banking sector that developers need to overcome:
Create a Smooth Conversation Flow
Banks must ensure their chatbots can understand and use plain language. Customers shouldn’t have to use their best grammar to ask questions or master weird, robotic phrasing to decipher the answers. Communication should be as fluid as talking to another person – so it pays to invest in an AI-based, natural-sounding bot.
Handle Complex Tasks
Before deploying the chatbot, banks need to ensure their chatbots can handle complex requests correctly. Even though the bot won’t get overwhelmed or frustrated by complicated inquiries, you can’t say the same for a customer, especially if the system makes mistakes. Remember: If you havent perfected your chatbot flows, it is beter not to implement them.
Enable Self-learning
Finally, banks need to design their chatbots to allow them to evolve continually. Set a clear expectation that your AI-based chatbot can learn from previous mistakes and interactions. This is the only way to keep up with changing customer needs and expectations, which is a crucial aspect of any good customer experience strategy.
Choose a Partner with a Strong AI Portfolio
You won’t be surprised to learn that your choice of technology provider is everything. While these challenges may seem insurmountable, picking a partner with a strong AI portfolio dramatically increases your odds of pushing through.
Entering the Era of the Banking Chatbot: Why Now?
Chatbots have been around since the 1960s. The first chatbot, ELIZA*, was a sort of digital therapist designed by an MIT professor.
This raises the question: Why haven’t we already had banking chatbots for decades?
Turns out, there is no single reason – even if chatbots had potential, banking innovators had to deal with stringent regulations, public perception, and technological support, to name a few challenges.
In the modern era, however, the playing field is a bit more level: No longer are the odds stacked against this winning technology.
One of the biggest reasons why chatbots for banking becominng popular is the maturation of Software as a Service (SaaS platforms).
Today’s banks don’t have to hire artificial intelligence experts or MIT professors to get effective bots up and running or make them work with existing digital platforms.
With the right chatbot provider, integration, management, and analysis become effortless, lowering one of the biggest barriers to entry.
Of course, having the right circumstances within the industry is just one part of the equation. The broader picture is equally important:
- Consumers are now living in a digital world where they want access to their accounts 24/7 – no matter where they happen to be
- Chatbots don’t require breaks, lunches, vacations, or sick leave. They can provide quick responses without any errors at any time of day
- Chatbots scale amazingly well. If you have 1 million customers, you might only need a few dozen bot programs to serve them all, and you could duplicate those bots instead of hiring thousands of human agents. This helps reduce costs while providing excellent customer service
- Chatbots never forget anything you don’t want them to. Their perfect memory recall and connection to your data backends make it way easier to solve complex issues or reference prior conversations
Common Chatbot Use Cases in the Banking Industry
How are banks currently using chatbots?
While there’s no shortage of innovation currently happening, there are a few noteworthy standouts:
Streamline Customer Onboarding
*Financiers say that modern chatbots can make onboarding far less harrowing. For instance, they can answer common questions, suggest areas where forms might be auto-filled, and connect to back-end systems to extract data from other documents and save new customers time.
Check Account Balance
Customers can use a chatbot to check their account balance via SMS or a messaging app such as WhatsApp, without logging into their online banking portal or mobile app. This facility is especially convenient for those who don’t want to remember multiple login credentials.
Build Brand Presence
Chatbots are increasingly becoming the first point of contact for banking consumers, but it goes way beyond the robotic, impersonal experiences you might expect from older bot technology. *Virtual banking assistants like HSBC’s multilingual Amy and other human-named programs changed the way people bank by merging typical customer service paths with a less formal model reminiscent of the way people send text messages and chat. In other words, bots are a natural fit for keeping busy account holders informed and engaged on the go.
Transfer Money
Customers can use a chatbot to transfer money between accounts or make payments on loans and credit cards without having to visit a branch or call customer service. This saves time and makes doing business simpler for those who may not live near a bank branch or who have difficulty using traditional banking channels – not a bad way to grow your customer base!
Open New Accounts
Customers can use a chatbot to open new accounts without filling out paperwork or meeting with a banker in person. This soothes a major pain point for those who want to open an account but may not have the time or opportunity to visit a branch.
How Chatbots are Enabling Self-service and Improved Engagement
Chatbots are transforming the banking industry by enabling self-service capabilities. Customers dont need to speak with an agent for your account information or other banking needs.
Empower with Self-service
Self-service isn’t just convenient for those who prefer to avoid human interaction. It also appeals to those who simply don’t have time to wait on hold. Additionally, self-service can significantly lower costs for banks – Bots won’t replace customer service agents any time soon, but they reduce the amount of time these representatives waste on unnecessary labor.
Improve Engagement with Conversational Banking Chatbots
Banking chatbots improve engagement by offering timely and helpful assistance. This can take the form of providing account balances and transaction histories, answering questions about products and services, or even making personalized savings recommendations.
Such features are integral to building trust with customers and enticing them to come back for more. Additionally, banking chatbots can collect data about customer interactions to improve the overall customer experience.
How Chatbots Help Banks Meet Their Customers’ Evolving Needs
Banks are under intense pressure: Not only do they need to provide excellent customer service, but also they have to reduce costs.
Chatbots can help. Their ability to provide 24/7 support, automate essential contact center tasks, and free up customer service representatives makes it possible to get the most out of your irreplaceable human capital.
Chatbots also let banks keep up with the latest trends and technologies with minimal acclimation time. It’s way easier to train a bot to master conversational banking or provide accurate information about a new mobile payments service than it is to teach tellers the same tricks overnight. In other words, financial service providers can pivot rapidly, responding to market shifts far more effectively.
How Banking Chatbots Drive Customer Engagement
Chatbots empower bankers to take a multifaceted approach toward driving customer engagement. They make it more straightforward to explore alternate business strategies, improving the odds that banks and other financial institutions can identify the “magic formulas” that keep their clientele happy.
One obvious advantage is that chatbots offer timely and helpful assistance. By supplying the right answers at the right times, chatbots make it a pleasure to interact with brands. Because personal finance is already a touchy subject for many, it pays to invest in tools that minimize friction.
It is important to remember that chatbots merely mimic human conversation – Even though they can work from prompts or follow scripts like an agent, the customer generally remains in control of where the discourse is going. This can help evoke positive customer sentiment and encourage patrons to continue doing business with a bank since every interaction effectively becomes a bespoke, white-glove experience (if done right).
Finally, don’t overlook the benefits of automating the collection of customer data and feedback. By ensuring that people’s opinions get heard – and translated into action – chatbots arm banks with crucial insights into how to improve.
WhatsApp Chatbots for Banking
Banking has witnessed accelerated digital transformation in recent years. This growth has coincided with the emergence of WhatsApp as the most popular messaging channel in the world especially in growing economies like India and Brazil.
With over 2 billion monthly users, the growing adoption of WhatsApp has led to the rise of conversational banking on this platfrom.
This opens a new window for the chatbot experience. Instead of being restricted to a website or an in-house app, bots can be used to cater to customers on different channels. An intelligent chatbot added over and above the WhatsApp automation layer can help banks improve experiences and attract new customers. And if we factor in the value of proactive routing to live agents with the right context and information, it could be a pathway for an exceptional customer experience.
Lightening the Load for Agents: Virtual Banking Assistants Don’t Just Help Customers
We’ve mentioned this briefly, but the idea bears reinforcing: Chatbots are there to answer inquiries when your agents can’t be. Banking agents can get overwhelmed due to several reasons. It could be a high call volume or a holiday or even when the company is scaling, all these factors can lead to agent burnout.
According to Gallup, employees that feel burned out are 2.6 times as likely to actively look for another job. Chatbots can take off this burden by providing round-the-clock customer support & allowing agents to work on complex, interesting projects.
As more consumers get used to the idea of truly-anytime banking, chatbots are taking on the majority of customer experience interactions. Your human agents not only get a welcome break but also more time for the important stuff – like training, troubleshooting tough problems, and learning how they can improve the way they further customer satisfaction.
The Importance of Human Fallbacks
While on the one hand automation is reducing hte load on human agents, it cannot be solely relied upon to provide a wholesome customer experience.
A chatbot may not be able to assist users in every case.
It can fail for a multiple reasons: inability to understand a language or the subtlety of a language; inability to understand the context or tone of a conversation; inability to process a complex query; inability to work out a high-value conversation, and more.
While chatbots can mimic human-to-human interaction to a certain degree, they cannot replace them completely. A chatbot with human-level cognizance is still a long haul.
So, creating smart human handoffs at key conversational points is crucial. Your chatbot should be designed to proactively shift to human support before it has a chance to fail.
The Future of Chatbots in the Banking Industry
It’s tough to say what amazing things banks might do with chatbots next – but if the banking sector at large is any clue, the possibilities are endless.
A 2019 study conducted by Allied Market Research projected that the global chatbot market in the BFSI space, then valued at USD 494.68 million, will reach USD 3,392.96 million at a CAGR of 27.3%.
In the coming years, we may see more AI-powered chatbots that can provide hyper-personalized recommendations and financial coaching – like the bots day traders have long used to predict stock prices and recommend financial moves.
Tomorrow’s banking bots could help customers manage their money more effectively or even proactively detect and prevent fraud. It’s almost certain that chatbots will become more widely used in customer service, as they can handle an increasing number of tasks and requests that would overwhelm the best agents and tellers.
Chatbots have the potential to make many aspects of banking simpler, easier, and more convenient for customers. Of course, there’s a big difference between a good bot and one that holds your enterprise back, so it’s vital to take a nuanced approach to acquiring this kind of exciting new technology.
Opt for Ozonetel’s AI-based Omnichannel Banking Solutions
Today, customers expect banks to deliver an omnichannel experience that is fast, interactive, relationship-focused, and personal. Ozonetel provides a complete contact center solution replete with AI-based chatbots and human fallbacks to manage customer conversations across channels while providing the high availability, secure infrastructure that banks require.
Our solution helps your bank’s contact center respond faster and achieve more while staying deeply empathetic and human. Talk to our experts for a demo
Citations:
https://www.insiderintelligence.com/content/chatbots-in-u-s-banking
https://www.alliedmarketresearch.com/chatbot-market
