Can Chatbots Promote Financial Inclusion?

Chatbots enable customers to interact with a product or brand in ways that mimic two-way human conversations. As a computer program, chatbots have been hailed as a tool that would enable companies to serve customers in meaningful ways at a substantially reduced cost. At Accion Venture Lab, we believe customer engagement is a key factor in driving underserved, low-income individuals to gain access to financial services and, more importantly, to use those services effectively. We’re intrigued by the investments that banks and insurance companies have been pouring into chatbots for customer engagement. And we are particularly curious about what this technology can do for financial inclusion.

As a seed-stage investor in fintech for inclusion, Accion is constantly on the lookout for innovative, cost-effective, tech-enabled modes of customer engagement. It’s easy to get excited about chatbots: they can be embedded into existing popular channels such as Facebook Messenger, WhatsApp or Skype — enabling immediate reach of customers. They are available 24/7 on a smartphone or a webpage, making them uniquely positioned to provide the sort of anytime, automatic information that customers demand. Chatbots enable customers to be “delighted” by a service or a brand, leading to increased conversion and loyalty — all at a lower cost.

Here are several applications of chatbots that we’re excited about today, and what we hope to see in the near future:

‘Humanizing’ financial services: Making banking and insurance explicable and relatable

Trying to understand the terms and conditions of a credit card or mortgage can be intimidating. Pages of fine print with undecipherable technical terms pose a challenge for even the savviest customers, let alone for customers who have little or no experience with these products and services. This can deter potential customers from completing the process — or worse, push them to apply for something without fully understanding the service.

Chatbots can potentially help customers better understand financial services via interactive discussions on pricing, repayment terms or coverage. The “robo-friendliness” of chatbots can help raise customers’ comfort level in making inquiries while avoiding embarrassment and without having to physically visit a branch or deal with a long wait time to speak to a customer service agent. A customer can post a question and review the response at a convenient time.

In India, online insurance players such as Policybazaar and EasyPolicy found that chatbots are enabling them to understand customers’ requirements better and to help customers choose the right policy, all at a fraction of the cost compared to human agents doing the same tasks and with a substantial increase in conversion rates.

Helping customers enhance their financial capabilities

Economies benefit from financially capable customers, but effective financial education, especially for adult learners, remains a challenge. Using chatbots, financial education content can be personalized and engaging. For example, users can subscribe to topics, such as budgeting, and receive information that matches their interests in a fun, conversational way. Providers can also design chatbots to send customers insights on their spending habits or automated loan repayment reminders.

Providing customers with the right financial solution at the right time

Artificial intelligence-powered chatbots can be designed to get “smarter,” developing a better understanding as they interact with users and “learning” from data from past interactions. This presents an opportunity for financial services providers to offer solutions that are tailored to customer needs. For example, if a customer makes frequent queries about his checking account balance, a bot can suggest budgeting or money management tips. Such “prompts” would enable customers to be aware of, and consider, the options that are available to them.

Helping staff deliver better services

Chatbots hold the promise of enabling financial services providers to better deliver customer service. Avaamo, an enterprise bot platform, provides banks with bots that help sales staff in the field plan their prospecting activities and customer visits, as well as update their customer relationship management software with notes and visit reports from their smartphones. Avaamo’s bots can help sales staff present appropriate offers to customers and clarify questions about new products — all in a conversational interface. Imagine how valuable this could be in helping banking agents in rural areas or microfinance field officers better serve their clients.

We’re still in the early days of discovering chatbots’ potential to transform the customer experience in financial services. As with all new technologies, chatbots’ potential challenges must be considered along with their promise. Accion is particularly interested to learn more about the security and use of customer data, as well as the cost-benefit analysis of using chatbots to cater to traditionally underserved customers.

In the meantime, we are excited to see more chatbot innovations driving financial inclusion.

This post originally appeared on the Wall Street Journal’s Multipliers of Prosperity.

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