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Everything You Need to Know About Smart Conversational Banking and Chatbots

Karol Przystalski c529978f2b

06/02/2020 |

8 min read

Karol Przystalski

A report from Gartner states that by 2021, 70% of businesses will employ chatbots to increase the productivity of their staff. By automating tasks and eliminating human employees from non-essential interactions, companies will improve their effectiveness and speed. And the financial services sectors definitely stand to gain a lot from implementing chatbots into their daily operations and customer service. Another report showed that financial chatbots could save more than 4 minutes on every single customer interaction. 

Thanks to the progress made in areas such as Natural Language Processing and speech generation, chatbots are no longer a vision from the future. Smart conversational banking is on the rise because it realizes one of the most important goals all banks aspire to improve the customer experience. In fact, customers of banks and other finance companies now rely on conversational user interfaces to provide them with 24/7 service, quick response to queries, and fast complaint resolution. 

Conversational interfaces provide an easy and cost-effective way for companies in the financial industry to receive customer feedback, improve their relationship with customers, and increase loyalty. According to Accenture, conversational banking can speed up revenue growth by 25% and reduce costs by up to 30%. 

Read this article to learn more about the smart conversational banking trend and get practical tips for implementing it in your business.


Table of contents:

  1. What is smart conversational banking?
  2. Benefits of smart conversational banking
  3. How to implement a conversational user interface

What is smart conversational banking?

Let's start with the basics. What exactly is smart conversational banking all about? This powerful trend in the financial sector refers to the transformation of traditional digital banking we have seen during the recent years to a new level: smart conversational banking that offers a hyper-relevant and real-time customer experience. 

This transition was made possible by the development of software solutions that combine artificial intelligence and data analytics. Today, banks invest in tools that automate tasks and deliver tailor-made and fully personalized customer service. 

Moreover, conversational user interfaces such as chatbots can communicate with customers using their own language. This is what smart conversational banking is all about - meeting customers halfway and providing them with a personalized experience.


Smart conversational banking – example scenario

Imagine a customer who sees a picture of a car on sale on their smartphone. The customer adds a comment: "I'd love to drive this car." Using social listening tools combined with conversational UI, the bank can notice this and make an offer in a private chat window. The bot can start a conversation about how this user could adjust their finances to be able to buy the vehicle. 

For example, the chatbot could say something like this: "Hello X, if you want to drive this car you should sell your current car for at least €10 000, reduce your electricity use by 20% and pay for your next holiday in installments. Would you like to talk about your options in the private chat?"

In this example, the chatbot mimics the words of a financial advisor. It looks into the household economy, analyzes the user's spendings, finds areas for optimization, and - on top of everything - speaks to the user in a language they can easily understand. It also provides the user with a solution; it's just one click away.


Here's why conversational banking solutions are so valuable

Smart conversational banking allows consumers to take advantage of services through interactions in natural language. After all, this is how they are used to communicating, and it feels most comfortable to them. By using their own voice or texting through any device such as a tablet, smartphone, smartwatch, or even a smart TV, customers can easily request information, purchase new products, and perform bank transactions. 

But that's not everything. Smart conversational banking can be easily integrated into the communication channels your customers use most such as Facebook and Instagram or virtual assistants such as Amazon Alexa or Google Assistant. 

That way, customers can start talking to the bank about their needs for financial products at any moment. Users who are familiar with such applications will find it easy to communicate with a bank this way. It will just another contact they can talk to in natural language and manage their financial situation.

Benefits of smart conversational banking

  • Conversational interfaces help to reduce the acquisition costs and boost the conversion rate of digital channels. For example, they increase digital adoption for routine requests and streamline critical sales interactions like collecting required documents.
  • Conversational banking offers companies access to critical customer data about goals, financial behaviors, desires, and intentions. Banks can use that data to upsell or cross-sell and offer relevant advice. All in all, this type of data allows us to create meaningful interactions with customers and increase the rate of conversion. Cutting down customer churn is another positive effect of this as it increases the customer's lifetime value.
  • Conversational interfaces improve productivity. You can cut back on time your employees spend on tasks that can be automated and re-deploy them to mission-critical roles like budget advisory and sales. According to Accenture, 81% of banking professionals believe that by 2021, artificial intelligence will work side-by-side with humans in organizations as a collaborator, coworker, and even trusted advisor. The majority of bank customer interactions will be carried out through AI solutions that will feed the data they acquire to human employees who will then be able to take advantage of it when interacting with customers in real life.
  • Conversational banking makes sense on mobile devices. Since consumers now rely on mobile apps for managing their finances, it's natural that conversational banking enters the scene. Bank of America and Wells Fargo have been using chatbots for a few years now. Their example shows us that such solutions can offer a diverse range of capabilities delivered on mobile devices - and that includes virtual assistants. For example, the users of mobile banking applications can benefit from tailor-made services based on their real-time location.
  • Conversational interfaces make true omnichannel possible. Banks still fail to provide customers with a consistent and unified omnichannel experience where all the communication channels are integrated to streamline the buyer's journey. Conversational banking will enable companies to remove such disconnects easily.

How to implement a conversational user interface

Now you know what conversational banking is about and what advantages it brings to banks, here are a few practical tips to help you make the most of this innovative technology for your business. 


1. Start with crafting a conversational banking strategy

When thinking about conversational banking, many banks restrict the concept to adoptions dedicated to specific channels. Instead, it's better to think about use cases and areas of the maximum impact regarding customer value and ROI. For example, your use cases can range from simple informational bots to more sophisticated bots for relationship management. 

When crafting your strategy, consider how these bots would work in quick succession or simultaneously. You need to have a clear picture of how bots will streamline processes in your organization and provide a better customer experience before building your solution.

2. Build AI capabilities first

You might be tempted to jump on the conversational banking bandwagon as quickly as possible. But in reality, you won't get far if you don't invest time in developing specific capabilities first. 

For example, you need to build a core data management platform that brings together all of your data (both structured and unstructured). This platform needs to provide enough computing power for exploration and sophisticated solutions such as machine learning. Once it's ready, you can consider implementing solutions that take advantage of AI technologies such as speech recognition, Natural Language Processing, text-to-speech chatbots, virtual agents, robotic process automation, and others. 

Next, you'll be ready to build products for specific use cases and process automation goals. Such bots will take advantage of the AI technologies present in your ecosystem. It's important to separate the various bots that use the same technology implementation into different layers for clarity.


3. Rethink your operating model and culture

The introduction of conversational user interfaces into your company will mean that your operating model will have to evolve. When combining humans and bots, banks embark on a massive change in their internal cultures. 

You will need to define processes for human-bot interactions and set governance frameworks. Moreover, you will have to help your workforce develop new skills in managing artificial intelligence solutions. Investing in employee training to develop such skills is essential if you want the highest return of investment on conversational UI.


Smart conversational banking - wrap up

Just like in any other sector, banks aim to implement conversational user interfaces to increase the productivity and efficiency of internal processes. Conversational UIs like chatbots help companies to cut costs and offer customers personalized banking experiences that are going to become the new standard in the sector.

Are you looking to deploy conversational banking solutions at your company? Reach out to our experts. We have delivered similar solutions to organizations in the financial services sector and beyond. Contact us and let's talk about your project.

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Karol Przystalski c529978f2b

Karol Przystalski

CTO at Codete. In 2015, he received his Ph.D. from the Institute of Fundamental Technological Research of the Polish Academy of Sciences. His area of expertise is artificial intelligence.

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