Driven by the rise in popularity of new FinTech & InsurTech services and the changing needs of the modern banking customer, the banking industry is undergoing a rapid digital transformation.
The FinTech sector has already disrupted the banking industry by offering innovative new digital banking products and services that are customer-centric and convenient.
Banks are now adopting similar technologies to improve the customer journey and decrease the time it takes to resolve customer issues.
One of the most significant changes is the move towards conversational banking, changing how banks interact with their customers.
In this article, we'll explore the concept of conversational banking and some of the promised benefits driving its adoption among financial institutions.
What Exactly is Conversational Banking?
Conversational banking uses natural language processing (NLP), machine learning and artificial intelligence (AI) technology to enable humans and computers to communicate more naturally.
In banking, this technology can provide personalized customer service, answer questions, solicit customer feedback, provide recommendations about products and services, and carry out transactions.
A conversational banking experience promises to deliver a more flexible and personalized service for banking customers while reducing customer support costs. This is because the technology enables banks to understand the customer's intent and context and respond in a relevant way to the customer's needs.
The premise of conversational banking is not tied to a single technology, like chatbots, but rather encompasses a range of technologies that enable effective digital conversations between a bank and its customers. These technologies stretch across multiple channels, such as messaging apps, live customer service, and conversational interfaces like voice chat.
The primary goal of conversational banking is to provide the right guidance at the right moment of the customer journey, understand an individual customer's needs and offer solutions and advice in real-time. To do this, conversational banking technologies need to analyze customer data, understand conversational intent and language, and offer those relevant solutions at the right time.
A Progression of Digital Banking
Conversational banking is a natural progression from digital and mobile banking. While mobile banking apps allow customers to access account services and perform basic banking tasks on their smartphones, conversational banking takes this a step further by enabling customers to interact with their banks and anticipate their needs without a human agent.
This allows for a more personalized and convenient banking experience, as customers can easily access information and complete transactions without navigating through complicated mobile apps or websites.
Overall, conversational banking represents a significant evolution in how customers interact with their banks, making it easier and more convenient than ever before to access the services they need.
The challenge in providing customer support through these conversational AI technologies is getting teams at financial institutions prepared to offer great experiences with a personal touch.
Are Chatbots The Same as Conversational Banking?
Yes and no.
Chatbots have become somewhat synonymous with conversational banking because they are one of the most common ways to enable a conversational banking experience.
However, chatbots are not the only conversational banking solutions. They are just one tool that can be used to enable a conversational banking experience.
Implementing conversational banking is about using natural language technology to interact with customers through various digital channels. This could be done through a chatbot, but it could also be done through a voice assistant (like Amazon Alexa or Google Assistant), a messaging app (like Facebook Messenger), or a chat interface on a website.
On their own, chatbots are too limited to provide a truly conversational banking experience. But combined with other technologies, they can be a powerful tool to enable conversations between banks and their customers.
To create a genuinely conversational banking experience, banks need to think beyond chatbots and anticipate customer requests based on the current situation or past financial behavior. Only then will they be able to provide the kind of natural, human-like conversation that customers expect.
What are the benefits of Conversational Banking?
Conversational banking benefits both banks and their customers, so let's look at those separately.
How financial services benefit from conversational banking
With the advent of conversational and digital banking, consumers can now have a better way to bank. Conversational banking allows consumers to interact with their banks through natural dialogue, making it easy and convenient to get things done.
Customers can use conversational banking technologies to:
- Get quick answers to simple questions: Instead of waiting on hold or searching through a website, customers can get quick answers to simple questions through a chatbot. This can save time and frustration.
- Get help when they need it: When customers need help with more complex tasks, they can chat with a human customer service representative through a chatbot. This way, they can get the help they need without leaving the app or website.
- Find the right product or service: Customers can use chatbots to find the right product or service for their needs. By asking questions about their goals and providing personalized recommendations, banks can ensure that customers find the right products and services for them.
- Use their preferred channel: Some customers prefer to communicate via chat, while others prefer voice or text. By offering a chatbot, banks can provide customer satisfaction with the ability to communicate through their preferred channel.
- Save time: Customers can use chatbots to quickly get the information they need without having to wait on hold for a customer service representative. This can save both the customer and the bank time.
- Get support 24/7: Chatbots can provide answers and start support tickets 24 hours a day, 7 days a week. This is especially useful for customers who need assistance outside of regular business hours.
- Reduce frustration: Chatbots can help reduce frustration by providing quick and easy access to information. By eliminating the need to wait on hold for a customer service representative, chatbots can help make the customer experience more efficient and enjoyable.
What are some of the potential use cases for Conversational Banking?
The use of AI, NPL, and chatbots in the banking industry is still in its early stages. However, there are many potential use cases for conversational banking across the customer journey that include the following:
1. Customer Onboarding
As customer onboarding no longer needs to start at a physical location, digital banking interfaces are a great way to provide an efficient customer onboarding experience. Through a combination of conversational AI & human agents, customers can complete their onboarding quickly and hassle-free.
2. Customer support
Customers can get answers to their questions without having to wait on hold or speak to a customer service representative. The cost savings from this alone could be significant for banks, and the scalability of chatbots means that there would be no limit to the number of customer support inquiries that could be handled.
3. Product recommendations
Banks can use conversational agents to provide personalized product recommendations to their customers. Recommendations could be based on the customer's spending patterns, location, or other factors. The personalization would make the recommendations more relevant to the customer, and the chatbot interface would make it easy to find and compare products.
4. Financial coaching
Customers can receive financial coaching and advice through conversational banking chatbots. Normally, such services are only available through human advisors, which can be expensive and time-consuming. Chatbots can provide on-demand financial coaching that is personalized and convenient for the customer.
5. Budgeting and goal-setting
Conversational chatbots can help customers to budget their money and set financial goals. The chatbot can track the customer's spending, income, and bills, and help them to create a budget that meets their needs. The chatbot can also advise on saving money and reaching financial goals.
6. Investment advice
Some chatbots offer investment advice, which can be helpful for beginners who are unsure where to start. The chatbot can ask questions about the customer's financial goals and risk tolerance and provide recommendations on investing their money. The chatbot can also help customers to keep track of their investments and performance.
7. Fraud detection
Banks can use conversational AI to detect fraud by analyzing the conversation data for patterns that may indicate fraudulent activity. Chatbots' computational speed and accuracy can help banks quickly identify and flag suspicious activity.
8. Complaint management
Banks can use chatbots to manage customer complaints more efficiently. The chatbot can take the customer's complaint and forward it to the relevant department. The chatbot can also follow up with the customer to ensure that their complaint has been resolved.
9. Transaction processing
Banks can use chatbots to automate transaction processing. The chatbot can take the customer's information and process the transaction without human intervention. This can reduce costs and speed up the transaction process.
10. Lead generation
Banks can use chatbots to generate leads by engaging with customers who may be interested in the bank's products and services. The chatbot can collect customer information and pass it on to the sales team for follow-up.
Banking is a complex industry, and there are many potential applications for conversational agents or chatbots.
These are just a few examples of how banks can use conversational banking to improve the customer experience and increase efficiency.
We will likely see more applications for conversational banking in the banking sector in the future as technology continues to develop. At CDI, we’ll make sure to cover these developments.
What are the primary obstacles to the implementation of Conversational banking?
There are a few primary roadblocks to the implementation of conversational banking.
- Legacy Technology. Some banks are still hesitant to embrace new technology, including chatbots. Many banks still use legacy systems and are reluctant to invest in new technology.
- Lack of standardization. There is no one chatbot platform that banks widely use, so each bank would need to develop its own conversational banking system. This can be a time-consuming and expensive process.
- Lack of expertise. Developing a chatbot requires a team with a background in artificial intelligence (AI), natural language processing (NLP), and conversational design. These are specialized fields, and not all banks have the in-house expertise to develop conversational banking methods and technologies.
- Regulatory concerns. Banks are heavily regulated and must ensure that their conversational banking tech complies with all applicable regulations. Regulatory concerns can limit the technology when handling security and data protection for customer data.
Despite these roadblocks, conversational banking is becoming more and more popular. Financial institutions are investing in chatbot technology, and customers are increasingly receptive to using chatbots for their banking needs. In the future, conversational banking is likely to become the norm.
How The Conversation Design Institute Can Help Overcome These Roadblocks
Integrating it into your financial institution is the most critical step in offering successful conversational banking. This means that all teams involved in customer engagement need to be on board with technology and the use cases to be prioritized. Training and alignment are only the first steps to providing a seamless customer experience.
As world leaders in conversational AI and design, CDI can help train your teams to develop strategy, train in conversation design, and the creation of chatbots and voice assistants ready for the banking sector. Through high-quality e-learning programs and live sessions, our courses will help unlock the potential of chatbots and digital voice assistants within your team and organization.
To discuss your conversation design training requirements, talk to the CDI Learning for Business team member about our range of courses for UX developers, marketing, and customer services teams.
