Top 5 Reasons Banks Need to Launch Bots Now
Eight years ago Steve Jobs launched the Apple App store, today over 100 billion apps have been downloaded and the average American spends 5 hours a day on their smartphone. Mobile has had a profound impact on our day to day lives and fundamentally changed how many of us bank. In 2016 we find ourselves at the start of the next paradigm shift, moving from apps to bots in instant messaging and voice platforms. The impact on banking will be equally profound.
Reason #1: Bots Are Mobile Optimized Out of the Box
Mobile has had a huge impact on banking, but while valiant efforts were made, banks never got the implementation of mobile quite right. We’ve all experienced less than optimally designed banking apps and banking websites that don’t work on smartphones. This has given rise to a wave of new digital entrants who compete primarily on having a better, simpler mobile first interface. Change is opportunity though and the world is changing again. Instant messaging is the clear killer app on mobile mobile with over 3 billion people use a messaging service every month. By using bots, banks will be able to embed their services directly into these channels, from Facebook Messenger to Kik, WeChat, Line and more.
Reason #2: Strength in a Personal Money Management Assistant
Log in to your bank online or open up your banks app and you will see the same thing everyone else sees. The promise of chatbots is for banks to move away from this “one size fits all” approach towards a personalized ‘assistant’ experience. We can put a personal banker in every customer’s pocket at zero marginal cost. Just like a human assistant, it will remember who you are and what you’ve done in the past. It has the capability to will learn based on your questions, what account information you find useful and what products you’re interested in. Banks are now able to transform the standard account from being a place to park your paycheck to being a service to manage your money to improve personal wealth, with very little extra effort.
Reason #3: Attract Millennial Consumers by Talking on Their Terms
Millennials are now the largest living generation in the US. They make up 53.5% of the workforce and have an annual buying power of $200 billion (according to Forbes). This is the smartphone generation. They value quality digital products and have weaker loyalty to banking incumbents than other generations coupled with more trust in tech companies. And, as anyone who interacts with this demographic knows, they are voracious users of instant messaging.
If banks want to attract Millennials they will need to be where they are, on instant messaging platforms. Equally as important, chatbots are a way for banks to communicate with this generation in a way they are familiar with, by texting. Millennials require a different kind of communication for banks to engage them and chatbots are an opportunity to attract this integral segment of the marketplace.
Reason #4: Reduce Customer Support Cost and Increase Satisfaction
Call centres are a relic of a time gone by when people actually used their phones to call people. While the demise of the telephone conversation has been attributed to Millennials, I think any generation asked would respond to having a sub-optimal experience on the phone, especially around call centers.
Today we text. Chatbots can bring customer support to channels that are familiar to customers, Facebook Messenger, SMS, Skype, WeChat and more. Customers can message support, the same way they message their friends.
Telephone support centres are painful for consumers and costly for banks. The average call can cost $5–10 and a mid-size bank will receive tens of thousands a month. Bots, powered by machine learning systems, can learn to address the bulk of routine queries at close to zero marginal cost. Given the strength of this business case we can expect chatbots to have a transformative impact on the way customer support is done.
Reason #5: Bots Play to Bank’s Strengths
Incumbent financial institutions are uniquely positioned to take advantage of new technology like bots. They have huge customer bases and vast amounts of data: The foundation needed for any artificial intelligence system. Being the owner of the data infrastructure affords banks a valuable data asset. Those who embrace this future can turn ‘dumb pipes’ into ‘smart pipes’, leveraging data to build more intelligent systems, reduce costs and serve customers better. But, bots and AI systems do not become smart overnight. Foundational work needs to be done now to ensure a fully optimized, smart banking experience in the future.
If the eight years since the launch of the App store has taught us anything it is that big change happens quickly, and increasingly frequently. Change is opportunity, for those who embrace it.