We are living in an increasingly digital and connected world, which has had consequences on consumers’ expectations and exchanges with brands. Consumers today live in the moment, place great importance on customer experience and expect instant gratification. The interest in simple, intuitive technology has grown significantly within the banking sector in recent years. Thanks to technological advancements, banks can now interact with customers on their preferred messaging channels to improve customer experience, reduce friction and drive growth. We are starting to witness an increasing number of banks creating a conversational banking application, be it chat or voice based.
A trend too big to ignore
Conversation banking, which refers to managing your finances through a voice and/or text interface, has taken off partly due to the increasing popularity of messaging platforms such as Whatsapp, which sends an average of 64 billion messages on a daily basis, as well as social media chat provided by the likes of Facebook. The market is expected to continue to boom, with experts predicting that messaging platforms will acquire one billion extra users by 2018, bringing the total to a whopping 3.6 billion users! Furthermore, platforms such as Amazon’s Alexa, Google Assistant, Apple’s Siri, and Microsoft’s Cortana are being increasingly present in consumer lives. Strategy Analytics predicts that 24 million smart speakers will be shipped in 2017 on a global level. This reflects a 300% increase on the previous year. The increasing presence of smart speakers and messaging platforms is driving banks to create innovate conversational solutions in order to keep up with customer expectations and touch customers on the channels they use the most.
The current state of conversational banking
Recent improvements in Natural Language Understanding and Machine Learning mean that we can create even more sophisticated conversational bots that make it even easier for banks to communicate with customers in a two way manner across multiple touchpoints. As a consequence, an increasing number of banks are employing schemes that enable customers to interact with banking assistants in order to get information and make payments using their own voice or via textual chat. Over 10 000 bots exist on Messenger including large financial corporations such as MasterCard and American Express. In October 2016 Bank of America announced the arrival of Erica, a bot that is designed to aide customers to make more intelligent decisions. Customers can interact with Erica using voice and text. Capital One launched its Alexa Skill that enables users to check their account balance in addition to making bill payments on Amazon’s smart speaker. Santander is also piloting a scheme to allow customers to make transfers to existing payees through speaking to their SmartBank app. The German online bank N26, Monzo and the Royal Bank of Canada also offers voice payments via Siri, and Bank of America and USAA are rolling out conversational interactions for their customers.
Advantages of conversational banking for banks
Beyond advantages of being available 24/7 and giving instant responses, conversational banking offers a seamless customer experience, enabling customers to interact with their bank in a frictionless manner using their preferred channels and methods of communication. Conversational AI is also making banking easier and more accessible to groups that may have had issues with traditional banking, such as the elderly or illiterate.
Proposing innovative banking solutions will also help banks to better reach certain customers. 92% of Millennials say they would make a banking choice based on digital services.
There is a common misconception that AI is making services standard and non-personable, when in fact it can make the customer experience even more personable. Banks can collect more nuanced data thanks to conversational banking, which can be used to create a more tailored service with cross and upselling opportunities. Identifying customer behavioural patterns and flagging anomalies could also help fight fraud. Banks can also connect their bots to customer services to enable humans to intervene when necessary to provide a better integrated and enhanced customer experience.
Conversational banking bots can manage tasks such as customer enquiries, servicing accounts and opening new accounts. Through automating these tasks banks can reduce costs associated with customer support and free up staff to deal with more complex tasks.
Bots can also help banks crack The Trust Equation. Trust is one of the most crucial factors for business success. The Trust Equation is an analytical model of trustworthiness. It uses four variables to create the following equation:
CREDIBILITY (Words) + RELIABILITY (Actions) + INTIMACY (Emotions)
SELF ORIENTATION (Motives)
Bots can help increase credibility through giving the right responses. They can also increase reliability through being available 24/7, and inspire intimacy through honest communication. All this plus focusing on customer needs means that bots are a real asset for improving trust.
The future of conversational banking
Conversational banking is new, but it is growing. AI and machine learning mean that banks can provide personalised and contextual responses to make banking even more convenient for the customer. Voice solutions will be important in banking as more smart speakers find their way into customer homes. The potential of voice in banking is enormous. Unfortunately, smart speakers are currently limited as they are not proactive or able to combine several elements of a consumer’s life (calendar, finances, e-commerce, etc), but it is only a matter of time before voice banking applications will be able to actively notify users when they are in their overdraft or warm them of their balance before they make a purchase. Although the future and limits of conversational banking are not 100% clear, one thing is certain, banks who are first to move and innovate in this sector will gain a competitive advantage over those who don’t!