How Conversational Banking is changing the banking and finance industry

A life without the internet has become almost unimaginable. Today, our society is constantly online: the smartphone accompanies us everywhere in everyday life, permanently connected to the rest of the world through apps and messengers. A lot of interactions that used to be analogue are nowadays taking place online. In banking, it’s no exception. Online banking has established itself as the new standard and was thus a consistent reaction to the change in customer behaviour – away from traditional banking. 

Bank employees used to be responsible for transactions such as transfers, withdrawals or investments at the counter. Now, customers prefer to use their mobile phones or laptops and complete their financial transactions digitally from home. This is more quickly, easy and independent of opening hours. The convenience of online banking is beyond question, but banking transactions are based on more than just convenience – it is also based on trust and personalisation. Therefore, a banking app offers customers hardly any opportunities for personalised advice on complex financial matters such as a loan and is also less trustworthy than advisors in the branch. Even though banks provide a lot of additional information on the homepage or blogs, this rarely fits the individual customer situation, nor is it easy to find. At the same time, digital services should not be at the expense of personalised services. 

Conversational Banking enables banks to interact directly with their customers via live chat or messaging platforms with service agents or intelligent chatbots. In this way, Conversational Banking bridges the gap between customer’s need for convenience and personlaised service – and thus offers an uncomplicated and trusted relationship between customers and financial institutions. Through established messaging platforms, users can flexibly contact their bank to receive support in financial matters.

Conversational Banking – thanks to artificial intelligence

Conversational Banking enables customers to communicate directly with the bank via messaging platforms and live chat. The personal consultation takes place either with a bank advisor or with the support of artificial intelligence (AI) via chatbots. Conversational AI allows customers to communicate with applications, websites or devices in their natural language. Financial institutions thus have the opportunity to break new ground in terms of customer orientation – and as a holistic concept. 

Although banks have expanded their digital services in recent years, these have mainly been separate stand-alone solutions. Apps and websites, for example, can deliver large amounts of information and process a multitude of commands, but they are not capable of handling complex enquiries and personal requests. The customer can diligently search for information needed from different sources, initiate banking transactions via selected channels, or contact the bank advisor in the branch. Hence, no uniform and simplified customer journey is in place. This is where Conversational AI and chatbots come into play as a logical reaction to the change in customer requirements. Used in conversational interfaces such as SMS or Messenger, they act as a digital financial assistant and create a unique banking experience.

Chatbots as bank advisors for an optimal customer experience

Today, messaging services are the preferred way of communication for all target groups in different application areas and it determines digital user behaviours. As a result, the different channels are central points of contact to get in touch with users. An increasing number of customers prefer to carry out their transactions from home, sitting on the couch, via their digital end device. According to Federal Statistical Office surveys, 56 % of research participants used online banking in the first quarter of 2020 – this is 3 % more than in the previous year and 19 % more than in 2010. According to a survey by Statista, 76% are using online banking regularly in Great Britain in 2020.  It is more convenient to send a quick text message than to pick up the phone and make a call. Plus, it is easier to instantly ask your bank a question via WhatsApp than search for the desired information or function in the app or on the homepage. 

AI-based chatbots can be integrated on different channels and answer frequently asked questions around the clock in real-time. Moreover, chatbots can initiate routine processes, such as blocking the credit card, automatically. Furthermore, by linking it to the CRM system of financial and customer data, chatbots can provide financial recommendations and individual advice. Personal spending behaviour, for example, can be evaluated, analysed and summarised for the customer within seconds, including individual savings potential and financial advice. When travelling, chatbots can inform customers in real-time via push messages. In addition, chatbots can offer improved support for customers and reduce moments of frustration. This way, questions are answered directly, precisely and without long waiting times. 

Synergy effects between the bank advisor and AI

Conversational AI enables a customer-oriented communication process along the entire customer journey. The personal dialogue with the bank advisor is not replaced but complemented and improved. Through AI-based chatbots, customers requests can be solved faster, more easily and in a personalised manner. Frequent requests can be automated, and more complex inquiries are pre-qualified and then forwarded to the bank advisor. Especially a hybrid chatbot solution offers a perfect user experience for customers. The interaction takes place in natural language and can be transferred to a live chat if needed. For example, in case the bank customer has a specific request that is not in the knowledge base, the hybrid chatbot transfers the conversation, including the most viable answers, to the service agent. The service agent also receives valuable information on the customer’s history and can thus directly follow up with competent advice without asking the customer for more background information. 

Conversational AI can be integrated into various channels, ensuring seamless digital advice delivery across all devices and platforms. Using an omnichannel approach offers the advantage that the entire service process can be logged and does not have to be started all over again when switching between different channels. This saves valuable time for both the customer and the advisor. Also, it reduces previously existing inhibitions, such as the search for a branch or opening hours. 

Thanks to Conversational Banking, the rare exchange with customers becomes a continuous communication opportunity. Moreover, the chatbot can have conversations with thousands of customers at the same time. Conversational AI also enables the multidimensional evaluation of financial and customer data. The collected data volumes can be automatically analysed and evaluated for preferences, investment behaviour, savings goals, and spending behaviour to identify individual customer needs. The service agent can use the results to address personal customer requirements in an even more targeted manner and tap unused cross-selling or up-selling potential. The customer relationship is thus strengthened by the competent and flexible service option.

Branch opening hours, the point of contact for customers or functions provided by the banking app – until now, customers had to adapt to the banks’ service and circumstances. With Conversational Banking, banks adjust to their customers’ needs and enable a way to integrate themselves into their everyday life. Services can be offered simple and smart on the spot whenever customers are in need of support. Conversational AI allows communication with thousands of customers at the same time while offering individual dialogues with personalised advice. For banks, this is a critical success factor in response to changing customer demands in an agile environment.