Chatbots in Financial Services: Benefits, Use Cases and Key Features

The Banking, Financial Services and Insurance (BFSI) sector is ever-changing. The growth of Fintech, the generational change in clientele, and high earning in the first season of 2020 has accelerated the use of new digital technologies and increased the need to explore new ways of communication.

Here’s a look at how banks are re-imagining customer journeys to enhance customer engagement.

Banks already have mobile apps and their usage is still steadily increasing. But these apps are limited in several ways. Frequently, the apps can only be accessed on one or two channels, however, customers have no been able to continue conversations across channels – such as switching from mobile to a smart home hub.

Mobile apps often provide limited functionality, making the user access the website, or worse – phone the call center, to complete certain processes. Add into the equation complex menus systems, hard to find information, and a lack of personal financial advice and it’s obvious that a change needs to be made.

How banking transaction have moved according to the British Bankers Association
How banking transaction have moved according to the British Bankers Association

Chatbots not only allow customers to manage requests in a faster and more efficient way, but they also act as a listening channel from which we can better understand our customers.

With each conversation we learn a little more about our customers, about their likes, dislikes, plans for the near future, or changes in circumstances. All this information allows us to deliver a personalized service, like suggesting products or services that best suit their situation.

Improving the efficiency of customer service, minimizing human error and resolving customer queries quicker, has a major impact on operational costs. In fact, according to a Juniper study, the use of chatbots will save banks up to $7.3 billion worldwide by 2023. This represents a time saving of 862 million hours, or almost half a million years of work.

This type of deployment is crucial for financial companies to carry out their digital transformation and thus be able to compete with giants of their industry.

Chatbot Use Cases in the Financial Industry

The rise of AI chatbots in the financial industry indicates how quickly the business landscape is changing even in traditionally conservative areas. Here are some of the most successful uses of chatbots in the BFSI sector:

Enhance Customer Support

Financial services chatbots can assist clients in conducting a variety of financial transactions in a conversational and secure manner. From reviewing an account, reporting lost cards or making payments, to renewing a policy or handling a refund, the client can handle simple tasks on their own.

Provide Financial Advice

What if, in addition to dealing with all consumer requests, the chatbot was able to advise them on their financial health? They can keep track of their accounts, analyze their spending habits and recommend a budget or savings plan. In this way, they help their users keep their finances under control.

Prevent Fraud

Security and data privacy is a concern for any business. But for banks and financial organizations, their reputation relies on it. Chatbots can effectively monitor and recognize the warning signs of any type of fraudulent activity and issue alerts directly to the customer and the bank. 

Manage Internal Operations

Chatbots provide adequate support to employees, speeding up tedious and repetitive tasks and facilitating more complex, time-consuming back-office operations, such as managing internal documentation or training new staff members.

Promotion and Cross-Selling

Banks, insurance and financial organizations often offer a wide range of products and services.

With all the data collected in previous conversations, an AI chatbot can proactively suggest offers and services tailored to each user.

For example, with current banking apps, if a customer regularly moves money from their current account to their savings account, the bank only sees a transaction, there is no understanding of the customer’s requirements.

However, a simple conversational prompt such as “Saving for something nice?” from an intelligent virtual assistant can turn that transaction into a mortgage inquiry, holiday insurance or car loan.

5 Key Features for a Banking Bot

You might be thinking that you already have a chatbot or virtual assistant, but most have limited capabilities that provide few features that customers really want.

These lacking chatbots don’t instill the confidence a customer requires from their bank, and consequently, despite preferring to use a chatbot to carry out a variety of transactions, the customer still ends up speaking to a live agent.

The ideal virtual assistant should act as a financial adviser and not an FAQ chatbot. This means above all that the chatbot should know your customers, be an expert on your products and services, learn from real data and interact with users intelligently, just as a human would.

A banking chatbot should have the following characteristics:

1. Conversational

The most natural form of human communication is speech. Being able to talk normally when interacting with a bot is something we’d all like. In fact, when we talk to a chatbot who doesn’t understand us, the degree of frustration generated is immeasurable. Therefore, the most important thing in a virtual assistant is that it be conversational, so we can use terms like “my wife,” “my son,” “personal account,” or “common account,” just as we would when speaking with our bank adviser. In short, we want to express ourselves naturally, easily and be understood when we speak.

2. Transactional

There’s no use for a chatbot that’s not capable of executing operations. When we talk to a bank adviser, we hope to ask him or her to make a transfer, open a new account or create an investment fund. A virtual assistant must be capable of performing the same operations, so it’s important it can integrate with the bank’s back-office systems through Robotic Process Automation (RPA). These integrations are often complex and not all technologies on the market allow it. Our recommendation when looking for a conversational AI platform is to make sure it can be easily integrated with both external and internal systems.

3. Reliable

Money is a personal issue. A bank has to provide security and be reliable. It’s unacceptable to have errors of interpretation or incorrect transaction executions. Everything must work perfectly, otherwise, the only thing it will succeed in is losing the customer.

4. Multi-Channel

One of the advantages of this type of technology is that it can be deployed on multiple channels. This allows customers to choose their preferred channel, which helps to increase the use-rate of the solution. Some customers will expect to be able to use the virtual assistant through a phone call, others will want to do so through the mobile app or through Amazon Alexa or Google Home devices, or perhaps through WhatsApp or Skype. Therefore, choosing a conversational artificial intelligence platform that is capable of porting an app to multiple channels is a key requirement.

5. Security

In banking, privacy and data security are extremely important. It should be ensured that the ownership of the conversational data belongs to the bank and accessible only by the bank. In addition, the technology has to comply with the European regulation – GDPR (General Data Protection Regulation) and allow consulting, extracting, anonymizing, encrypting or deleting dialogues when necessary. Also, it’s important to be able to integrate the solution with a centralized authentication system.

Chatbots can have a positive impact on customer loyalty and brand engagement, while helping to increase revenues and drive down costs. But only if they deliver the experience customers want. Choosing the right development platform that provides the conversational intelligence, scalability and control that banks need is crucial to its success.

Digital Transformation: The Definitive Guide (2021)

This is the ultimate guide to digital transformation.

Everything from what digital transformation is, business benefits, challenges and what to expect in the future.

Read the Guide