An increasing number of banks now use AI-powered chatbots to “talk” by text with their customers, with two-way communication sophisticated enough to replace the usual channels of phone, email and text. Chatbots cut costs for banks, and their tech-savvy users are slowly getting used to conversations with a machine, favouring their quick responses to customer inquiries and 24/7 support.
Gartner predicts that 85 percent of all customer service interactions will be handled by chatbots by 2020, which could result in savings of over $8 billion a year by 2022. The remaining customer service representatives employed by banks can dedicate their time to more complex issues, which in theory should provide customers with a more positive banking experience. Future developments will likely move beyond text into digital voice, enabling live conversations with speaking chatbots.
Advantages of chatbots
Cost savings – Chatbots are relatively cheap and easy to implement and maintain, compared with hiring human workers. Chatbots are less complex to develop than standard banking apps, use cheap cloud storage, and can be used on a range of devices.
Personalised service – Chatbots are already simpler to use than a banking app, and machine learning make them intuitive and convenient for users as it adapts to their personal requirements over time.
Instant conversations – Phone calls can be slow and require more time and concentration than instant chat, while emails and online forms slow interactions down with waiting times. This makes chatbots more attractive to busy customers looking for quick, personalized responses from their bank.
Financial advice – The most advanced chatbots in banking can access to all of a customer’s data to track outgoings, calculate credit scores, create and maintain budgets, and provide in depth spending analysis to customers. This kind of financial service can be personalised for all customers using algorithms for useful product recommendations and money management advice.
Engaging new customers – Just as in the real world, a friendly, helpful greeting from a bank to potential new customers from the interaction help greatly with account generation. A chatbot provides banks with a chance to demonstrate high quality customer engagement to even a casual site visitor, by initiating conversations on new products and providing useful answers to queries.
24/7 support – The modern consumer expects answers almost immediately, especially to pressing financial issues, which instant chat can often provide. By cutting frustrating wait times and overriding inconvenient office hours, chatbots give banks a big advantage in terms of convenience and the customer’s peace of mind.
Limitations of chatbots
While their functions and forms are being developed all the time, chatbots still have limits when it comes to customer service.
Chatbot dialogue is limited to the programming of the developer, and is not a sophisticated as human conversation. They currently lack complex human conversational abilities such as recognising accents, slang and colloquialisms, which are vital in order to successfully localise conversations for a multi-lingual market. Plus, chatbots can only follow a single thread of a conversation at once, and so cannot answer more than one question at a time.
These issues may be resolved in future as the technology is developed. For now, the newness of chatbots is biggest barrier holding back this technology. Many consumers are unfamiliar with such functions and are not yet comfortable with using an AI-based chatbot, preferring to continue with human interaction, for the time being at least. Meanwhile the development of chatbots is limited by the relatively small number of qualified teams who can make them, plus a lack of familiarity or interest shown by many companies when it comes to implementing the newest technologies.
Chatbots on the rise
Banking giants including Bank of America Corporation and Wells Fargo have seen the potential of chatbot technology for finance, and invested accordingly.
Bank of America has Erica, a virtual assistant that provides 24/7 financial guidance to its 45 million customers.
President of Retail Banking at Bank of America, Thong Nguyen stated: “Incorporating artificial intelligence into our mobile banking offering will help customers manage their simple banking needs more efficiently and consistently, which then allows our specialists in our financial centers to spend more time with customers to understand their more complex needs and help them improve their financial lives.”
Wells Fargo pioneered their chatbot service via Facebook Messenger, leveraging the popularity of the social media app to reach customers who have bank inquiries or password issues.
Head of Wells Fargo’s Innovation Group, Steve Ellis, said: “AI technology allows us to take an experience that would have required our customers to navigate through several pages on our website, and turn it into a simple conversation in a chat environment. That’s a huge time-saving convenience for busy customers who are already frequent users of Messenger.”
According to a recent survey, AII executives believe that chatbots will be the innovation to make the biggest consumer impact over the next five years. Considering the huge range of other emerging technologies also vying for this accolade, it’s clear that chatbots have the potential to redefine how customers interact with banks.