Less than three decades ago, in the late '90s, the first rays of digital disruption shone across traditional banking with the expansion of usage of home PCs and the development in home internet connections. Allowing customers to check their account balances, review their financial transaction and pay their bills from the convenience of their homes, or offices.
A decade later, and as smartphones became the channel of choice for many on the go customers, Mobile banking was born to fulfill the needs of those who need access anytime and anywhere, and although many banks started by just offering mobile-friendly versions of their internet banking channels, the overwhelming customer demand for more functionalities, forced banks to give mobile banking its own identity as a separate channel, developing powerful mobile banking apps with unique functions. Causing mobile banking to become the most frequently used banking channel in many countries around the world.
Fast forward to about three years ago, where development in technology and innovation accessible to the banking industry, allowed banks to consolidate their Internet and Mobile banking services into a single platform that allowed a unified user experience across different channels, whether it was online banking, Mobile banking (Mobile Banking apps, Virtual Wallets, etc .. ), and even through ATM Services, offering customers a unified, more personalized and on the go experience.
Technology role, Machine Learning, and AI
Advances in Machine Learning and artificial intelligence (AI), have allowed more and more banking organizations to leverage artificial intelligence to launch chatbot solutions, reducing costs and serving increasingly tech-savvy consumers, and to facilitate two-way communication, and in many instances, replacing channels such as phone, email or text, allowing customers to ask questions or request services using natural language.
As a result, the last couple of years has seen an increase in the number of banks adopting automated conversational agents or Chatbots in their mobile banking platforms, from Ally Bank’s Ally Assist in 2015, one of the first banks to implement a chatbot, the Bank of America’s Digital Agent Erica that with over 1M users, Wells Fargo’s chatbot, TD Bank’s Clari, Capital One text-based chatbot assistant Eno among others.
The goal is to provide customers with quick service and transactional support, handling the most basic tasks such as balance inquiry, bank account details, loan queries etc. that can be handled efficiently by a chatbot, freeing customer service representatives time for complex issues
“Chatbots will power 85% of all customer service interactions by the year 2020” — Gartner
Chatbots in Banking, common use cases
No AI has “yet” been able to successfully handle 100% of customers queries, and as we await further technology breakouts that will enable us to rely more and more on an automated solution, the banking industry has also its own policy and regulatory limitations that will still require licensed human bankers to handle certain tasks.
This means we’re still a long way from seeing an all automated, AI-powered banking service, yet, the cost of effectiveness of the tasks that a Chatbot can handle in a banking environment is more than enough to have banks racing to integrate such a service for their customers, where some of them has been:
- Frequently Asked Questions (FAQs): One of the most basic tasks of a Banking Chatbot or Digital assistant, providing an automated service that answers questions like where is the closest ATM or branch, how can I reset my password, how can I block my lost card, etc. Can easily free up very important and expensive contact center time, in addition to saving customer’s time by providing an answer on the go instead of the long waiting times, especially in crucial times when every minute counts, such as in the incident of losing your wallet with a credit card for example.
- Account Services: Answering simple account services and payment requests, questions about deposit and credit card accounts, transactions, payments etc … providing a seamless customer experience.
- Financial Goal-setting and spend tracking: Integrated with the right historical data, predictive banking, and other intelligent analysis platforms, Chatbots can answer customers questions around spending and budgeting, helping customers manage their financial life, and becoming their trusted financial advisor that they chat with on the go!
“ Chatbots will be responsible for cost savings of over $8 billion per annum by 2022, up from $20 million in 2017.“ Juniper
Digital Disruption: The Future for Banks
Startups and new entrants are changing customer expectations disrupting business models and revenue streams, development in technology and facilitation in regulations is allowing new players to enter the marketplace, Digital-Only Banks, Fintech disruptors are all looking for a piece of the pie.
Banking leaders who want to succeed in a digital economy need to make fundamental changes to how they operate; respond to opportunities for innovation, introduce services quickly, test and learn from the market’s response, and address the fast changes needed in the core business of banking. Only by adopting a digital mindset they will they be able to create value for customers and stakeholders and survive in the age of digital disruption.