Conversational AI technology is on the rise. Chatbots for banking are becoming more efficient in providing businesses with high customer engagement. They also provide reduced costs in terms of human resources.
In recent years, the banking industry has focused on customer experience (CX). AI assistants, such as chatbots and voice applications, are one of the technologies at the forefront of this change. They are making everyday banking easier.
The modern customer demands an AI conversational banking system with a high degree of personalization. Chatbots meet the customers' needs in a fraction of the time it would take to speak to human agents.
This article explores the best use cases for chatbots in digital banking, some of the most successful examples, and how chatbot training helps financial institutions improve customer service.
What is a banking industry chatbot?
An AI chatbot for banks and financial institutions is a computer program that understands and responds to human language.
Natural language processing (NLP) is behind every chatbot. Natural language processing allows artificial intelligence to understand the nuances of human conversation, both text and spoken.
NLP is well suited to online banking. It enables chatbots to handle numerous customer queries without human intervention.
Banking chatbots successfully replace human agents in helping customers with everyday banking tasks.
Here is a list of what AI virtual assistants, such as conversational banking chatbots, help customers with:
- Personal financial management
- Account information requests
- Checking account balance
- Requesting a personal loan
- Information on money transfers
- Basic account information
- Information on a loan status
- Making bill payments
- Managing digital account opening systems
- and more.
Chatbot AI assistants provide a high level of personalization. They are able to remember customer preferences and tailor their responses accordingly.
There are many different chatbot platforms available, including:
- Microsoft's Azure AI platform
- IBM Watson
- Google Dialog Flow
The benefits of a banking chatbot
Some of the benefits of using chatbot AI assistants include the following:
- Increased customer satisfaction
- Improved customer retention
- Reduced operational costs[1]
- Improved customer engagement
1. Increased customer satisfaction
Well-trained chatbots provide a higher level of customer satisfaction. They can handle a wide range of customer queries without the need for human intervention.
2. Improved customer retention
Well-designed chatbots improve customer retention rates by providing a high level of personalization. They remember customer preferences and tailor their responses accordingly.
Studies revealed that negative word-of-mouth and service performance have the most powerful impact on the customers' decision of whether to stick with your services or not. [3]
As a result, if the customers are satisfied, they are more likely to stay and recommend your services to other people.
3. Reduced operational costs
Chatbots help with the reduction of operational costs. They automate the number of tasks that would otherwise need to be carried out by human employees.
Chatbots go beyond replacing human customer service. They gather a high amount of data you can use to increase lead generation. This result in a higher cost reduction.
In 2019, the banking industry gained around $209 in operational costs. By the end of 2023, the gain is estimated to be around $7.3 billion.[4]
4. Greater customer engagement
Chatbots can increase customer engagement. They provide a more convenient and interactive way to communicate with customers.
Why are chatbots so crucial for the banking sector?
Customer service is one of the key differentiators for banks. In a world where consumers can choose from a wide range of financial service providers, chatbots help banks stand out from the crowd. They provide a more efficient, convenient, and personalized customer experience.
The reality is that modern customer has never had a wider range of choices of financial service providers than they do now. They are also more than capable of switching to a new provider if they feel their current bank fails to meet their needs.
The communication needs of customers in the banking sector
Around 30 percent of millennial and Gen X customers prefer to communicate through a digital banking portal or the bank's app[5]. This statistic makes it clear that banks need to move away from traditional customer service methods if they want to stay relevant.
Fifty-eight percent of banks surveyed by the Economist[6] rely ‘heavily’ on artificial intelligence to supplement their customer service.
How banking chatbots fulfill customer needs
The most efficient way of increasing customer engagement and satisfaction is to listen to their needs and develop solutions.
Banks are under pressure to improve customer satisfaction levels, and chatbots offer a quick and effective way to do this.
Here is how having well-designed chatbots help you fulfill your customer's needs:
1. Provide personalized services
Bank customers want personalized services. Studies suggest that service personalization is positively correlated with customer satisfaction.[7]
Chatbots are more efficient than human customer service agents. They also provide more personalized service.
2. Identify the most relevant information for the customer
By using artificial intelligence (AI) banking bots can engage in natural conversations with customers. They also understand their needs and provide them with the most relevant information.
3. Non-stop availability
Banking AI chatbots are available 24/7, which means they offer a convenient service that is not restricted by office hours.
Constant availability is important. Many people now conduct their banking online or on their mobile phones outside of traditional office hours.
Banking chatbots: where to use them?
Chatbot AI assistants are useful to financial industries in various fields. These fields include customer service and support, products and services, and marketing and promotion. Lead generation, customer feedback, and complaint resolution can highly benefit from well-trained chatbots also.
1. Customer service and support
Chatbots provide quick and easy answers to customer requests, freeing up staff to concentrate on more complex tasks.
AI assistant chatbots provide 24/7 customer support, even outside of normal office hours. They provide a personalized service by engaging with customers on a one-to-one basis.
2. Banking products and services
Customers can use chatbots to:
- Find out about banking products and services.
- Get recommendations.
- Compare different options.
- Make transactions, such as transferring money or making payments.
3. Marketing and promotion
Banks use chatbots to promote their products and services to customers.
A chatbot can send targeted marketing messages or provide information about special offers and discounts.
4. Lead generation
Banks use chatbots to generate leads for new products and services.
For example, a chatbot can collect customer information such as name, contact details, and address. It can then use this information to follow up with the customer at a later stage.
5. Customer feedback
Banks use chatbots to collect customer feedback. This feedback is useful when improving the products and services banks offer.
Collecting feedback via chatbots is more cost-effective than using customer service operatives.
6. Complaint resolution
Banks use chatbots to resolve customer complaints.
Modern customers expect rapid resolutions to their complaints. Banking chatbots offer quicker and more convenient solutions than traditional methods such as call centers.
Financial sector chatbot success stories
Banks around the world use chatbots to provide a better customer experience.
Here are some examples of banks that are successfully using chatbots:
1. Bank of America - Erica
Bank of America's chatbot, Erica, uses AI and machine learning technologies to help customers with their finances.
Here is what Erica does:
- Is available 24/7.
- Help customers check account balances.
- Finds ATMs.
- Provides guidance on financial planning.
Able to actively analyze a customer's financial situation, Erica can provide personalized recommendations on products and services that fit the customer's needs.
Erica has been successfully used by over 5 million Bank of America customers since its launch, in 2017.
2. HDFC Bank - Eva
HDFC Bank is one of the largest banks in India, and they have chatbots to match. Their chatbot, Eva, was designed to provide customer support and digital banking assistance to HDFC Bank customers.
Here is what Eva does:
- Is available 24/7 on Facebook Messenger, WhatsApp, and the HDFC website.
- Help customers check their account balance.
- Provides clients with their transaction history.
- Helps clients transfer money.
- Can recover information from hundreds of sources in less than a millisecond.
Her sheer speed and accuracy of Eva have made her one of the most popular chatbots in India.
3. HSBC Bank - Amy
Part of HSBC Bank's customer service platform, Amy, is a chatbot that helps answer customer requests. It was initially developed to help HSBC scale its customer support capabilities.
Here is what Amy does:
- Offers information on clients' accounts, products, and services.
- Provide accurate and prompt responses to customer queries 24/7.
- Responds in English and both traditional and simplified Chinese.
Amy can understand natural language and provide accurate answers to customer queries. If the chatbot cannot answer, it will escalate the query to a human agent.
What are the challenges of implementing a banking chatbot?
Despite the many benefits of banking chatbots, certain challenges need to be considered when implementing them. These include:
1. Ensuring data security and compliance with regulations
When handling customer data, banks need to be extra careful to ensure that all data is stored securely and in compliance with regulations such as GDPR.
2. Training the chatbot
To provide accurate answers, chatbots need to be trained in the specific domain (banking in this case). This can be a challenge, especially for more complex queries.
3. Training staff to use the chatbot
Once the chatbot is up and running, it's critical to train staff on how to use it effectively. This includes everything from customer service representatives to marketing and sales teams.
4. Measuring success
Setting up KPIs and tracking your chatbot's performance over time is necessary. This helps you identify areas for improvement. It also ensures that the chatbot is providing value to your business.
Bottom line
The most important step in creating a successful chatbot is to integrate it into your business fully. This means you must get all teams on board with the chatbot and its capabilities. Only then can you hope to provide a truly seamless customer experience.
How the Conversation Design Institute can help you make the most of your chatbot for banking
Implementing an effective banking chatbot requires not only chatbot development but also a shift in how customer service is delivered.
It's best to integrate a virtual banking assistant into an existing digital banking infrastructure and workflows. It also needs training on the bank's specific use cases and data sets.
It is equally vital that the staff knows how to use the chatbot platform to its full potential. Only then it can truly improve customer service.
Banks can use chatbots for a wide range of banking services. Chatbots can handle up to 80% of routine customer requests, freeing up staff to deal with more complex issues.
Conversation Design Institute is the world’s leading training and certification institute for designing conversational interfaces. Our expertise enables customers around the world to design and implement chatbots that provide real value to their business.
As the world’s leading provider of conversation design training, our "Learning for Business" courses are helping banks make the most of their chatbot platforms. These courses are designed to help teams in the banking field design effective, inclusive, and human-centric AI assistants at scale.
Our training courses help you develop the essential skills and knowledge needed to implement chatbot platforms successfully and improve customer service.
You will have access to:
- An approach rooted in design thinking means we put users' needs first.
- The best practices for building chatbots that are accessible to everyone, regardless of ability or background.
We’re proud to have trained teams at some of the world’s leading banks, and 100s of customers worldwide already rely on CDI courses to keep their skills up-to-date.
If you’re looking to get started with chatbot development in banking or want to make sure your team has the skills they need to succeed, get in touch with us today.
We’d be happy to discuss your training needs and tailor a course that’s right for you.
