Artificially intelligent chatbots promise to revolutionize the banking industry, but it’s not always immediately clear what chatbots can do for your bank. Here’s everything you need to know about chatbots and why your bank should care.
What are chatbots?
Chatbots are conversational interfaces that leverage natural language processing (NLP) technology to conduct interactive “chats” with human users. They’re most commonly used to provide customer service via websites, mobile apps and telephone systems.
AI-powered chatbots are destined to change the way banks interact with customers. They can tap into sophisticated neural networks and employ deep machine learning capabilities to understand, learn and interact like humans. Some chatbots can even “speak” with customers via voice.
Chatbots are the future; in fact, experts predict that by 2020 you’ll be more likely to have a conversation with a chatbot than your spouse. Financial institutions would be wise to embrace chatbots sooner rather than later, as they promise measurable benefits that offer superior competitive advantages.
Let’s look at what chatbots can do for your bank.
Chatbots save money
Chatbots interact directly with customers on your banking portal. They provide instant answers to customer questions and automate routine and redundant tasks that would otherwise demand staff time. That, in turn, frees banking staff to establish deeper relationships with customers.
1. Redundant task automation
For example, let’s say a customer is having trouble resetting their password or transferring funds from one account to another. Right now, they probably need to speak with a live agent or call your bank to get help. However, a chatbot can handle these tasks and eliminate the need for human interaction.
Rather than pay a staff member to reset a customer’s password or help them transfer money, you can instead pay them to help a high-value customer set up a new line of credit – a more complex and valuable interaction that generates revenue.
2. Low-cost scalability
Another example: as your bank grows, you must scale customer service to meet customer demands. Chatbots, however, are limitless. You only need to implement the technology once to service hundreds or even thousands of customers simultaneously. Rather than hire an entire army of live customer support agents, you can direct staff efforts toward establishing deep relationships with your high-level customers.
How will all this translate to your bank’s bottom line? Consider this: organizations that implement AI solutions for customer service report 70% fewer calls and email queries and a 33% savings compared to calls with live agents.
Chatbots enhance the customer experience
Chatbots tackle customer service “friction points” and help customers enjoy faster, more personalized service. They offer instant answers to common customer questions such as “where’s the nearest ATM?” and “what’s my account balance?” They reduce customer frustration by making it easy reset passwords and access codes with no need for human intervention.
3. Reduced wait times & unlimited accessibility
Remember how chatbots can handle multiple requests simultaneously? That means they eliminate wait times, so you won’t risk upsetting customers (or losing potential customers) when live agents are tied up.
Chatbots are available 24 hours a day, 365 days a year, too, so customers can get support around the clock, including weekends and holidays.
4. Customer-centric personalization
If you’re located in a multicultural market, you’ll find it interesting that chatbots can converse with customers in multiple languages. The ability to talk to customers in their native language helps personalize your service, lends itself to relationship building and ultimately influences customer decisions: when they’re comfortable with your bank, they’re likely to do business with you.
Chatbots offer other levels of personalization, too. For example, humans can struggle to recall important account details. Chatbots, on the other hand, easily remember customer preferences.
5. Convenient support & solution discovery
Chatbots can also work in conjunction with voice-operated virtual assistants, similar to Siri and Alexa. That means customers can verbally ask a mobile chatbot for directions to the nearest ATM, to transfer money between accounts, to find a copy of an old statement or to state their credit card balances without tedious typing.
When coupled with neural networks and machine learning, chatbots can identify customer insights and offer personalized finance recommendations based on preferences, circumstances and transaction histories. Thus, they can help customers discover products and services that offer greater benefits than the ones they’re currently using.
Chatbots can communicate customer input with other AI-driven technologies to share insights with banking staff, who can then use the data to engage in stronger, more meaningful conversations with customers. That, in turn, also results in an enhanced customer experience.
Chatbots grow revenue
Improved customer satisfaction is one way chatbots influence sales, but they can also harness powerful AI algorithms to spark unprecedented revenue growth for your bank.
How? By leveraging sales, transaction history and market data to deliver personalized offers, upsells and cross-sells your customers are likely to act on.
6. Personalized offers, upsells & cross-sells
For instance, many banks currently use pop-ups and banner ads to promote products such as mortgages, auto loans and small business loans on their websites and mobile apps. Such advertisements aren’t very targeted; they’re often deployed site-wide, so they’re irrelevant to many customers. Even when ads are targeted, it’s not very granular and still results in wasted opportunities.
Enter chatbots. They can analyze multiple layers in the neural network and employ machine learning to offer financial guidance, real-time insights and initiate action on their own. Then, rather than present offers with an informal ad that must be clicked, chatbots can directly engage customers in conversation about their specific needs.
For example, let’s say a customer tends to make a lot of international wire transfers. When that customer logs in to your banking portal, a chatbot can greet him by name and voice, then offer a well-targeted, personalized benefit:
“Hi Joe! I noticed you sent five international wires last week. Did you know there are other electronic payment options available at less cost?”
Naturally, the customer is far more likely to respond to the chatbot than to click a pop-up or banner ad. Now, he can ask the chatbot which options are available and how much money he can save. The chatbot can answer his questions in detail, then make an immediate upsell or transfer the warm lead to a banker for a deeper conversation.
7. Trusted, data-driven financial guidance
Chatbots can also serve as “robo-advisors” that help banking customers identify the best products for their needs. For example, a small business might want to compare the differences between a small business loan and a line of credit. A homeowner might want to weigh financing options. A young couple might want to learn about retirement investment opportunities. In each case, chatbots can offer data-driven, personalized advice customers can trust, then deliver targeted offers, upsells or cross-sells – all without the need for staff to get involved. For more complex interactions, those leads can again be sent directly to a staff member for follow-up.
Though most chatbot technology to-date has centered around retail banking, new opportunities are emerging for commercial banking. In fact, one recent JP Morgan pilot project targeted treasury users. Instead of navigating its commercial banking portal with a mouse and keyboard, B2B customers could direct certain cash management tasks like balance inquiries by voice.
If all this sounds a bit futuristic, know this: many of the largest banks are already implementing advanced chatbots to grow revenues. The best part? They’ve found that chatbots result in 30% higher sales conversion rates with prospects compared to live agents.
What would a 30% conversion rate increase do for your bank’s bottom line?
Why your bank should care about chatbots
Chatbots represent one fork of new, innovative AI technologies that will collectively save the financial industry $1 trillion over the next 10 to 15 years. Though the benefits of artificial intelligence branch into many areas of banking, chatbots perhaps offer the most exciting opportunities to gain market share.
The bottom line: chatbots save money, enhance the customer experience and generate revenue.
Editor's note: Always consult with legal counsel to understand your obligations before adding a chatbot to your website.