Bots in conversational banking: Is a revolution underway?

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Banks have begun transitioning to “conversational banking” and are viewing chatbots as new- age contact center executives

Consumers of information in the financial services sector range from end customers of the bank to CXOs. Forward-looking financial institutions have taken a leap of faith by investing in chatbots to deliver “contextual insights” to the right person at the right time and through the preferred channel. This should come as no surprise since chatbots have been predicted to save banks over $8 billion annually by 2022, according to a recent report by Juniper.

Banks have begun transitioning to “conversational banking” and are viewing chatbots as new- age contact center executives, minimizing TAT and costs along the way. Chatbots are designed to answer queries such as:

  • How much money did I spend on travel last month?
  • Can you share a list of ATMs nearest to my location?
  • Can you transfer X USD to ABC vendor right now?

Financial institutions with a digital-savvy customer base are testing out various approaches to proactively deliver insights to the customer based on his or her transactional history and digital profile:

  • Recommending investment options based on savings bank balance and risk profile
  • Providing market-related news and impact on portfolio
  • Suggesting ways to utilize reward points of credit cards.

A number of companies have developed their own chatbots using proprietary technology and algorithms. Chatbots utilize application programming interfaces (APIs) to integrate with data management platforms. This allows them to analyze the extracted data as well as web-based and mobile-based user interfaces, and deliver the necessary insights to the end customer.

And it’s not just a question of having access to and using new products that is threatening the bottom line of traditional banks and financial institutions.

We’ve seen more volatility recently, especially after the 2008 financial meltdown, which had profound economic implications for banks, but also on how much financial risk consumers were willing to take on when buying a new house, car, or other high-ticket items. Because consumers started buying less of everything, banks were forced to become more competitive in offering “never before seen” interest rates for credit cards, personal loans, mortgages, and everything in between.

In short, profit margins for banking companies have declined significantly over the last decade. In return, banks have attempted to compensate for this reality by trying to improve the overall internal operational efficiency and reduce the cost to serve customers in an effort to maintain profitability even at reduced interest rates.

This is exactly where bot technologies come into play by offering an automated, easy-to-use, launch-and-maintain system that promises to reduce customer care call volumes and increase satisfaction while also potentially help change customers’ opinion of banks. Customers call banks for a variety of reasons, many of which can be automated and do not necessarily need call center reps to engage with end users by phone. The first step towards this has been the adoption of interactive voice response technologies, but this still requires people to call a toll number. Chatbots can take this to the next level without the hassle of calling in.

With chatbots gaining traction, many firms across the globe have started offering off-the-shelf products that help developers to build, test, host, and deploy these programs using Artificial Intelligence Markup Language (AIML), an open-source specification for creating chatbots. A few platforms support integration with payment providers for seamless processing of customer payments based on a customer’s interaction with the bot.

This trend will only increase as we move toward a banking sector that will successfully embrace bots even more. To continue this conversation, feel free to connect with me via my profile or on social media.

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