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how chatbots and AI might impact the B2C financial services industry


In Alasdair Graham article about how chatbots and AI might impact the B2C financial services industry, there is an interesting perspective on new emerging trends for Financial Services Industry

Amazon, Netflix, … and Fintechts present powerful customer relationship models and have set the bar high for all industries showing them the path to move forwards. It’s like everyone wants to become the Amazon on their Industry. The Fintech movement best capitalizes emerging technological capabilities, starting from a unique vision of the client and using client knowledge to make personalized proposals in real time, resulting in high customer experience.  FichTech tools and capabilities have the potential to enhance the key capabilities across the banking and insurance value chain. Digital technology and analytics Influencing and successful companies will be those who leverage these capabilities to improve their sales process, enhance customer service, reduce cost and boost efficiencies.

Generally speaking automation and mobile-centric solutions enable banking and insurance to streamline processes and provide customers a seamless experience and new business models have come-up leveraging technology, which can transform the way banking and insurance products are distributed and consumed. As with most emerging technologies, smaller, agile fintech startups have been quick to adopt chatbot technology out of both necessity and choice. This mitigates the issue of expensive traditional customer service interactions and ultimately benefits the end users through savings and improved customer experiences.

A Chatbot is a computer software program that is able to communicate with humans using artificial intelligence and Machine learning is a branch of artificial intelligence that gives computers self-learning ability through pattern recognition and periodic human intervention. The idea behind machine learning is constructing computer algorithms that automatically improve themselves by finding patterns in existing data without explicit instructions. Machine learning relies entirely on data. As the quantity and quality of data increases, so does the machine’s predictive accuracy.

The combination of Robotic, Machine Learning y Big Data and Analytics in a single platform has a broader scope of application aimed at Chats emerge as new fronts for customer service and advice, in an optimal combination between humans and robots. It converts data and interactions on your customers into proactive knowledge with analytical and machine learning tools.Having a strong Big data and analytics architecture will set the capabilities to:

  • Understand text and spoken language
  • Digital recognition of images and objects
  • Detection of feelings and emotions
  • Make predictions and recommendations
  • Automation of repetitive and routine tasks
  • Advanced analytical tools enable banks and insurers to analyze data from various sources and offer highly personalized value propositions

Why “now” for the Chatbot?

These technologies are at the heart of the Digital Transformation of the Financial Services Industry to better

  • Provide affordable advice to consumers.
  • Improve and increase access to advice.
  • Address industry concerns relating to future liabilities and redress without watering down levels of consumer protection.

Given the abundance of data available to financial services firms and the often methodical, process-driven nature of consumer financial advice, chatbots seem like an easy decision for most consumer-facing financial services companies. The fact that mobile is now a huge factor in financial services and particularly banking is also a huge opportunity for chatbots and AI.

Financial service chatbots could easily be integrated into applications that billions of consumers already have and are using daily such as Facebook Messenger and WhatsApp. This removes a significant barrier to entry in that consumers don’t have to download another app or alter their existing mobile behavior patterns. AI and chatbots will be  implemented as part of a well-considered, omnichannel strategy.

A couple of weeks ago, at Facebook’s F8 conference, one of the major announcements was that they are opening up the Messenger platform to Chatbots. Today, Facebook Messenger has 800 million monthly active users – more than 100 times the number of iPhone owners when Apple launched the App Store. Conversational user interfaces are about to change the way billions of users interact with the world around them.

As Tom Hadfield mention in his post “Facebook’s Messenger Bot Store could be the most important launch since the App Store” Bots Are The New Apps If the 800 million Facebook users start discovering bots in Messenger. How long until other messaging platforms, such as WhatsApp, open their platforms to developers too?. Humans have substituted verbal communication (human to human) with written communication (human to machine to human). Humans are already chatting with computers and Chatbots make it possible for the machine to chat back!.

Tom Hadfield also highlights the fact that we are in App overload. Research shows that we only use about 5 regularly, and half of these are social media apps. Chatbots don’t need an app to engage with customers. People are more engaged with a digital chat experience than they are with an analogue email exchange. It will be the brand that customer’s connect with as they distributes for example insurance products using their automated insurance agent.

Banking and the financial services industry has been seen to lag behind, and this could be due to various factors including complex legacy systems or even the fact that a significant portion of high value clients, are more likely to belong to senior demographics and may have a higher propensity for non-digital communication such as calls or face-to-face meetings.

A couple of years ago, BBVA bank clients visited the branch on average six or seven times a year. Now, that average has dropped to about four times. What goes from one number to another is an acceleration in the digital transformation of the bank. The cornerstone of the digital project is the mobile phone, already conceived by the BBVA as a kind of remote control with which the customer relates to the bank: if the visit to a traditional branch is reduced to those four times a year, The virtual ones skyrocket to 150. The network of offices of the bank is also diminishing in parallel, a tendency that follows the sector as a whole. As younger, digitally native clients begin moving into the market for financial services at both a consumer level and professional level, becoming ‘digital first’ is now imperative for the financial services industry. Chatbots are essentially pieces of software that simulate human, natural language conversations and can respond to and act upon queries and commands from users. The advantage these systems have over a ‘real’ conversation with a human is that they are able to extract and analyses a user’s needs and intent and ultimately return the information a user has requested or perform actions for them faster, at any time of day or night, more accurately and at significantly lower cost than a human counterpart. This new AI technology has been taken note of by financial institutions on a global scale, with 80% viewing them as an opportunity.