Financial Services

The guide to conversational banking in 2023

Conversational banking. If you’re hearing this term for the first time, you’d be forgiven for assuming the obvious —that it means, quite simply, having a chat with one’s banker. The truth, however, is that its meaning has evolved over time, especially in the context of the banking industry and how personalization has become a key factor. From interacting with tellers over a bank counter, customers moved on to phone banking. This improvement, though, came with the tedium of having to key in yet another password and often being put on hold for a mindless 15-20 minutes before connecting with a human voice.

Now, artificial intelligence (AI) promises to ease that conversational banking experience, marrying the convenience of digital banking with a high degree of personalisation. Studies have shown that in recent years, the adoption of conversational AI tools in the financial sector has accelerated rapidly, with banks vying to improve customer experience and, in the process, boost their own business outcomes.

Conversational banking is thus an umbrella term for a type of digital banking that enables banks and their customers to “talk” to each other using a variety of options — phone apps, websites, text messages or video chat. It’s a win-win for both sides.  Here’s why:

• Customers can resolve most of their financial concerns with convenience and speed from anywhere, using their mobile devices to connect with virtual entities or human agents for advice. As a bonus, they rarely need to visit their bank branch.
• Banks win customers’ loyalty;  importantly, the technology that runs conversational platforms helps banks to track customer interactions and gain valuable insights into what their customers want, including preferences for personalizing their account balance inquiries. Conversational AI can help them to constantly fine tune their services to improve on customer experience.

Let’s take a closer look at how conversational banking has revolutionised financial services.

For customers:

While digital banking has already greatly simplified customer-bank interactions, the availability of multiple  channels and deeper personalisation is what differentiates conversational banking from existing modes of digital communications. AI-enabled tools like live chats, chatbots and smartly designed mobile apps take customer experience to another level. Here are some examples of how this works:

Quicker response.

Waiting in “queue” to talk to a live agent is passe! AI chatbots can now simultaneously handle a large number of routine queries, thereby cutting down substantively on response time.

Personalisation

AI-enabled tools offer a high degree of personalisation using:

• Data tracking to collect information during virtual conversations helps personalize banking services for each banking customer.
• Analytics related to customer behaviour
• Chatbots with intent recognition capabilities

Multilingual options

Multilingual chatbots programmed to respond in several languages can now “talk” to customers in their native language, making them feel more comfortable.

Flexibility

Millennials and Gen-Zers are accustomed to using their mobile phones on the go for a host of activities ranging from communication, shopping, entertainment to socialising and even job-hunting. This cohort demands services from financial institutions with a similar flexibility and ease of use. To meet their expectations, banks worldwide offer services across multiple channels such as social media (e.g. Facebook), chat (e.g. Whatsapp) and bank mobile apps.

For banks:

The automated processes that drive conversational banking deliver enormous value to institutions that adopt them, by helping them to work smarter. Some of these benefits are:

Reduced costs, better allocation of human resources

Chat messaging systems can be scaled up according to the rising demand for customer support. Intelligent Virtual Assistants  (IVA) can seamlessly handle anywhere from 70 % - 90% of common queries posted by customers, significantly enhancing the mobile banking experience. For banks, this is a double benefit:

1.  Significant savings on operating costs as they need to hire fewer customer service staff.
2. Better use of live agents to resolve more complex customer queries enhances the seamless banking experience.

Stronger customer engagement

Customer lifetime value (CLV), an important metric for any business, increases proportionately with customer satisfaction. For banks, conversational banking has proven to be beneficial across several parameters, leading to a more personalized banking experience for each customer:

• increase in loyal customers
• reduction in customer churn rate
• positive word-of-mouth publicity, helping to impress new customers

Enhanced fraud protection

Data security is enormously improved when banks use AI-enabled tools to detect fraud. Using IVAs, banks can send customised alerts to account holders  to help them check transactions or illegal credit card activity and take immediate steps to protect their accounts.  With conversational banking, banks can enable two-factor authentication on varied channels (SMS, WhatsApp, mobile apps etc.) to ensure security for their customers’ transactions.

Some tips to develop conversational banking

Track your customers’ digital footprints

The first step to conversational banking is to find out your customers’ preferred choice of digital channels. Older customers may be on Facebook Messenger while millennials would prefer WhatsApp. You should also have an understanding of the most frequent queries customers pose and the issues that most often crop up with customer service.

Locate an appropriate AI vendor

Not every bank has the bandwidth to develop in-house AI solutions for conversational banking, which has become crucial in the banking industry. Most institutions typically collaborate with specialist vendors to develop chatbots, IVAs to personalize the banking customer experience. that will replace live agents to handle standard customer queries.

Combine AI with live agents

Technology cannot entirely replace the human intelligence needed to handle more complex customer concerns. AI-based solutions like chatbots can fail for varied reasons and must therefore be supported by human help.

Beef up cybersecurity

Conversing with customers entails accessing their personal information; it is essential for banks to protect this data, both to comply with the law and to maintain customers’ trust. For this, banks can implement measures such as:

1.  Consistently testing apps, chatbots, and websites
2. Use of data masking
3. Training for staff on finance-related cyber crimes, focusing on how to safeguard the banking experience against cyber threats.



Seek customer feedback

Find out how your conversational banking initiatives are working with regular surveys sent to customers. This will help you understand their ease of use, and how to improve and innovate further.

*For organizations on the digital transformation journey, agility is key in responding to a rapidly changing technology and business landscape. Now more than ever, it is crucial to deliver and exceed on organizational expectations with a robust digital mindset backed by innovation. Enabling businesses to sense, learn, respond, and evolve like a living organism, will be imperative for business excellence going forward. A comprehensive, yet modular suite of services is doing exactly that. Equipping organizations with intuitive decision-making automatically at scale, actionable insights based on real-time solutions, anytime/anywhere experience, and in-depth data visibility across functions leading to hyper-productivity, Live Enterprise is building connected organizations that are innovating collaboratively for the future.