Chatbots in Financial Services

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Let’s face it, customer service is subjective, and it can make or break a company’s reputation. So what if there was a way for financial companies to guarantee an exceptional customer interaction, by adapting to their customers’ preferences and behavior. Would the world suddenly be filled with happy consumers? That’s a dream the Financial Services Industry has been chasing, propelled by the conversational chat client known as a chatbot.

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For the past several years, the banking industry has been taking advantage of smart-phone applications to help its’ customers monitor transactions, deposit checks and locate office branches. Likewise, the Insurance industry has released several apps to file claims, document personal property and assess risk. These capabilities of convenience were made possible by mobile technology and have quickly become standard points of customer contact.

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In the same way that web and mobile presented new opportunities, and created a need for Financial Services to adapt, chatbots will drive future innovation in how customers interact with institutions. Over the next couple of years, more banks and insurance companies will jump on the bandwagon and develop chatbots. These chatbots will drive conversations held on both proprietary apps and messaging platforms, such as Facebook Messenger. Use of this technology is just now becoming popular, and before it becomes mainstream, some challenges lay ahead.

The Customer Landscape

A chatbot must be intuitive enough for a wide array of digital savvy consumers. According to a Global Consumer Banking survey, customers have mixed levels of comfort with financial products and digital channels. For example, “thirty-six percent [of respondents] are neither financially nor digitally savvy,” while only “16% are both” (EY, 2016). With such a small percentage of respondents being “well placed to use today’s digital banking offering[s]”, the ease of use and customer satisfaction in any technological interaction needs to be superb. This becomes more challenging when customers demand multiple channels of interaction, because younger generations, who’ve adapted to messaging and new technologies quicker, prefer the ability to control exactly when and how they communicate. Chatbots are one answer to this challenge by providing instant contact, integrating across systems to give a holistic view of the customer, and responding to queries in a standard yet individualized way. However, trust in this faceless technology arises another issue for Financial Services.

Consumers struggle to trust a robot (or bot) with their savings. In a recent “Trust in Technology” study, it was found that “8% [of respondents] would trust a machine to offer mortgage advice, compared to 41% trusting a mortgage broker.” Therefore, consumer trust needs to increase exponentially as the adoption of chatbots becomes mainstream.

Developing the Experience

Chatbots present major opportunities for organizations to reach customers more efficiently and effectively than ever before. Yet firms still struggle to create apps that are versatile enough to hold a lifelike and relevant conversation. Developers also face the task of creating chatbots which can continue to learn the behavior and preferences of each individual user, and adapt accordingly. As such, chatbots must leverage technology which can incorporate various data sources and draw conclusions based on that data.

Designing a chatbot that will provide value to customers creates a need for a customer experience based approach. According to a recent study by the IBM Institute for Business Value (2017), 70% of consumer respondents who did not adopt voice command capabilities after trying them citied the reason as a ‘disappointing experience’. A common reason for bad experiences with chat bots is the lack of depth to which the bots and customers can converse. According to VentureBeat and Retale (2017), “53% of those who had interacted with chatbots said that they needed to be more ‘accurate’”. This frustration may be caused by the current programming style of bots. For example, the most basic chat bots are pre-programmed with defined questions and answers. If the user strays too much from the pre-programmed script, the chat bot does not know how to respond. Therefore, a more conversational style chat bot is preferable and possible using cognitive engines, but these types of chat bots are just emerging in the financial services industry.

IBM Use Case

Currently, IBM is helping a large domestic retail and commercial bank develop content strategy for a chatbot that is being released within their mobile application. This process involved three key components:

  1. Meeting with various teams including brand, product, and user experience to understand how the firm wanted their chatbot to interact with customers.
  2. Crafting a content framework to guide editorial staff on how to create dialogue, structure user flows (e.g. out of chat hand-offs), and apply best practices on interjecting personality within speech patterns.
  3. Sifting through hundreds of lines of dialogue to demonstrate how to employ our recommendations and position the chatbot to scale as further functionality is added.

Navigating the Future

Mobile has provided fertile ground for innovation in finance, as consumers more heavily rely on mobile applications to orchestrate their everyday banking activities. In particular, mobile chat agents provide a compelling avenue for enhanced customer engagement. As mobile moves towards a ‘conversational user interface’ (compared to a graphical user interface), limitations, such as privacy concerns or integration challenges, will present themselves and unforeseen hurdles will emerge. Firms will also find it necessary to create partnerships and re-think customer service dynamics to adjust to a new, cognitive paradigm. This is still an emerging field with a long road ahead, but the reasons for pursing it are compelling, and the sophistication of bot conversations will continue to increase as the technical knowledge base grows. Yet, no matter how advanced the technology becomes, it will all come down to consumers’ trust. Without consumer trust in the financial chat bots, the advancement of this technology will be limited.

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EY’s 2016 Global Consumer Banking Survey

HSBC Trust in Technology Report

“The Experience Revolution: Digital disappointment — why some customers aren’t fans.” IBM Institute for Business Value

Into The Future

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