How Chatbots Are Changing Banking and Financial Services
Every business seeks to incorporate artificial intelligence into its business strategy, banks and financial institutions are no exception. The constantly rising client needs and expectations and the demand for personalized customer experience are pushing banks to find innovative ways to deliver continuous customer engagement.
Artificial intelligence has changed the way companies communicate with clients. Chatbots not only enable clients to manage requests faster and more efficiently but also act as a listening channel that lets businesses better understand their customers.
With each conversation, companies learn a little more about their clients, their expectations, and plans for the near future. The data collected through chatbots can help brands deliver personalized services, like suggesting products or services that best suit the needs of a particular client. In addition to that, chatbots are said to improve the efficiency of customer service, minimize human error, and resolve customer queries quicker, which helps to decrease operational costs. In fact, according to Juniper Research, banks will save around $7.3 billion worldwide by 2023 thanks to chatbots. This means in 2023 banks will have 862 million hours of time saved, which equals nearly half a million working years.
The Concept of Conversational Banking
In essence, conversational banking means communicating with a bot about your finances, whether it’s checking your balance, finding out how much you spend on groceries, or developing a budget. Instead of calling your bank or browsing through its website to find the information you’re looking for, you can speak or send text messages to an AI program that deals with your inquiry. Conversational banking was created specifically to facilitate financial management for customers, and banks too.
Chatbots today are quickly replacing customer support specialists and become primary interaction points with banks to customers. They can help customers fulfill multiple tasks – from simple routine operations like checking account balance and paying bills to more complex ones like opening a bank account and processing loan requests.
Chatbot Use Cases in the Financial Sector
The rise of AI-powered chatbots in the financial sector demonstrates how quickly the business landscape is changing even in more conservative industries. Here are some of the most successful uses of chatbots in the financial sector:
Anytime Customer Support
Chatbots can assist clients in making financial transactions, be it payments, account reviewing, or reporting lost cards. Customers can handle simple tasks on their own without securing specialist’s assistance.
From a business perspective, having a customer support operations department to deal with millions of queries every week is resource-intensive. What is more, such departments are poorly scalable. Chatbots are a better option in this case. Chatbots offer a real-time filtering system that can communicate with customers and solve their problems, thus they can significantly reduce the workload on your customer service specialists and free them up for more challenging tasks. In fact, AI-powered chatbots can currently resolve up to 80% of routine queries. All of this can help businesses reduce customer service costs by up to 30 percent.
Lower Operational Costs
When it comes to supporting costs, chatbots are cheaper than live chat operators support as you will need fewer employees to handle all customer support queries. The cost to employ and train employees is far greater for the same task. Moreover, chatbots reply instantly, which means there is no need to keep customers waiting. With customer service specialists and even live chats, the response time can be delayed and will depend on the number of customers in a queue.
In addition to that, сhatbots provide adequate assistance to customer support specialists, by expediting routine tasks and processes and facilitating more complicated and time-consuming operations, such as managing internal paperwork or training new employees.
Every business is concerned about security and data privacy but for banks and financial organizations, their reputation relies on it.
The implementation of AI bots in banking and financial services often raises concerns for security. In reality, banking chatbots play a key role in fraud prevention. Chatbots can monitor and detect the warning signs of fraudulent activity and send alerts directly to banks and customers.
When building chatbots, banks design them with the ability to monitor clients’ purchases and buying habits so that the banks could collect data and make financial forecasts, as well as provide valuable investment advice. In addition to that, chatbots can recognize signs of unusual activity in an account. In such cases, the bots will raise alerts causing banks to take action.
Promotion and Cross-Selling
Banks and financial organizations often promote an extensive range of services and products. AI-powered chatbots can offer products and services to customers based on the data collected in previous conversations. Let’s say a client regularly transfers money from their account to their savings account through a banking app. The bank only sees the transaction but they can’t understand that it’s an expenditure pattern. But with an intelligent virtual assistant, a simple conversational question like “Saving money for something nice? can help turn a transaction into a loan, mortgage inquiry, or holiday insurance.
Better Reach and Sales
In contrast to mobile applications, chatbots can operate on channels that your clients already visit, making it easier to provide support, nurture leads and deliver omnichannel customer experience.
The way customers consume goods and services is constantly changing. Customers today are more informed than ever before and classic sales strategies become ineffective. Instead, banks and financial organizations should focus on selling through consulting. Chatbots are gradually outshining sales and pre-sales teams across the banking industry as the easiest and surest way to get warm leads. Unlike human specialists, chatbots can interact with customers on multiple channels. In addition to that, chatbots can collect and analyze huge volumes of customer data at lightning speeds. This makes them exceptional for the role of shepherding great numbers of potential buyers into the sales funnel.
Customer Tone Analysis
Sentiment analysis features could allow reporting on how customers feel when they communicate with bots. Algorithms are continuously being refined to better understand customer sentiment. Sentiment analysis algorithms use text analysis and natural language processing to classify words as either positive, negative, or neutral. This allows banks to gain an overview of how their customers feel about the interaction. Some chatbots can even analyze sarcasm.
This can help banks decide what to do next to better serve the clients. If a chatbot can’t provide a client with all the necessary information, it can route them to a human customer service specialist who knows how to resolve the issue.
In addition to answering all customer requests, chatbots are trained to inform clients about their finan