4th July 2019

It’s Time to Have a Chat About Conversational Banking

It used to be like this: people need banking services, bank provides services, people get services. The relationship between brick and mortar banking and their customers has a history of being dry, one-sided and purely monetary. Times are changing though and this paradigm is going through a major transformation.

The digitization of the banking process has lent itself to the creation of a new medium of communication between bank and customer. Customers no longer have to walk into a physical store to manage or get answers regarding their finances. Banks have adapted to the fintech revolution and created apps that allow customers to be in total control of their bank account. 

The advances in artificial intelligence (AI) , machine learning and natural language processing seem to be the solution to the communication conundrum. Conversational User Interfaces (CUI) are voice or text-based messaging platforms that allow the customer to have a real-time, deep-level discussion with a non-human operator. 

Conversational banking is perceived as the evolution of the chatbot idea. Chatbots were a cool and very smart way to provide customers with answers to basic inquiries but they were also limited. Being able to engage with a customer on a more personal level and answer questions that are relevant to their unique financial profile is a completely different game. 

conversational banking

According to IBM, “Good bot services encourage users to engage more deeply with software features that might otherwise go unnoticed, because they provide a richer, more natural experience. Customers can now simply ask a bot to take them where they want to go, or to enable a feature without having to hunt it down.”

The proposition of conversational mobile banking fits the current communications trend environment. Messaging seems to be the preferred medium for most people. According to Accenture, 64% of consumers choose messaging first instead of calls or emails. The reasons behind that are self-explanatory: it’s faster, more convenient and non-intrusive.

You don’t have to look far to see what this little experiment will be like. Just keep an eye on voice assistants such as Siri or Amazon Alexa and you’ll have a pretty good idea of where this is going. This AI-powered tech is en-route to achieving some amazing things in the banking sector. 

The “art” of digital conversation is starting to show its potential with benefits being spread amongst customers and banks alike. 

What’s in it For the Customer?

Don’t mistake this for automated responses. The technology behind conversational banking has reached impressive levels of accuracy, making the offering as close to perfection as it has ever been. In an era where availability and speed of information is everything, customers are seeking contextual engagement. 

Personalisation is key and every customer wants their finance app to be more than just an interface that stores and reflects numbers. People want the app to be a virtual assistant, someone that can offer advice, updates and timely notifications that have the sole purpose of preserving the user’s financial health.

Spending breakdowns and budgeting can be instructed and brought to life using a simple message or a voice command. Imagine being able to ask your banking app if it’s ok to spend a hundred dollars on a fancy dinner and getting a reply based on a real-time analysis of your balance and savings. Pretty cool, right? 

Financial chatbots have the ability to use predictive analytics to push out live and informed responses that can affect your lifestyle in the best way possible. 

What’s in it for the Bank?

The rapid developments in AI technology are huge for large, rigid organizations like banks. Why? Where do we start?

First and foremost, it’s cheaper. The impressive computational power of AI technologies allows financial services to do more work with less monetary investment in resources. Coupled with being cheaper, the calibre of work performed by AI is of higher quality and less prone to error. 

Then you have customer service: an area where banks have been challenged severely the past couple of years. The fintech revolution gave birth to new, cool and trendy companies solving financial problems through beautifully designed apps and carefully curated user journeys. Banks were left behind in the customer service game, trapped in their legacy systems and bureaucratic organizational structures.  

Conversational banking is giving banks another chance at the customer service game. It allows them to compete with fintechs on an equal playing field and get rid of the bad rep of being faceless companies that don’t seek meaningful relationships with their client-base. 

The fact that this technology is natively integrated with social media (e.g. Facebook/Facebook Messenger) opens the door to so many business development opportunities. Most people see conversational banking as a tool that services existing bank customers. Whilst that’s not wrong, it’s also not entirely true. 

conversational banking

This tool has the potential to be an amazing sales funnel for banks, an original way of acquiring new customers. Can you imagine the possibilities of marketing campaigns through a social media messenger platform? Because let’s be honest, email marketing is not having its best days. People are more responsive to messaging than any other means of communication, giving banks an opening to market their products and services. 

Last but not least is the abundance of data and information the banks will be able to acquire by using conversational banking tools. As you may very well know, people are very reluctant when it comes to giving away sensitive information. A cold, stale onboarding process has proven to be an unsuccessful way to gather such information. 

What if the process of asking though came through…a conversation? The entire paradigm of conversational banking is built on the idea of a more close, intimate relationship between bank and customer. The customer will feel more relaxed and prone to share information to their banking provider through a casual conversation, giving banks great insights to the spending habits and preferences of their clientele. 

That information could later be used as the basis of targeted marketing campaigns, tailored offers and personalised services suggestions. The bank gets smarter and more informed and the customer enjoys a relationship that speaks to their specific needs and wants. 

What’s the Next Topic in This Conversation? 

The future looks exciting for conversational banking. Think of it this way: the more you get to know a person, the more knowledge you acquire about them. You only ask about their favourite colour, food and movie once (or twice). As time goes by, your library of information is enriched and expanded so you don’t need to ask those questions again. 

The same principles apply to conversational banking. Chatbots won’t just relay information to you but they will be “listening”, building a user profile based on past conversations. Every time there is customer interaction with the bot, you’ll be starting your conversation from where you left off, assuming the chatbot remembers what you have previously discussed. 

The more you interact with the chatbot, the more personalized the customer experience will get. The bots will be able to pick up on details and nuances such as tone of voice, humor and preferences, building “digital rapport” between the two parties. 

Are you excited, yet? Because there’s more.

What if we told you that conversational AI would develop to such a point, where the chatbots would be the ones to initiate the conversation. That’s right. A proactive chatbot that would provide advice based on real-time analysis, ranging from simple balance updates to spending pattern suggestions. 

This sentence from a blog written by Jim Marous, co-publisher of The Financial Brand, says it all: “Organizations that create excellent conversational banking solutions will enjoy the rewards of the most engaged and loyal consumers available.”