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6 ways chatbots are shaking up the financial services industry

30 Nov, 2017
5 Min Read Dan Ward

6 ways chatbots are shaking up the financial services industry

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Despite their reputation for being slow to adopt technology trends, banks and financial services firms have taken to IT innovation in a big way.  Mobile banking has boomed, customers tap their smartphones to pay, and banks have their own innovation labs.

Fierce competition has also spurred financial services players on to use chatbots to enhance the customer experience. Chatbots are software programs that transform simple messaging applications into complex ecosystems. Using artificial intelligence, they can:

  • Engage with multiple customers at the same time
  • Participate in humanlike conversations
  • Provide highly personalised information tailored to customer needs

Chatbots are already having a significant impact across industries. Let’s take a closer look at the six ways they’re set to transform banking and financial services.


  1. On-demand customer service

Banks don’t exactly have a reputation for outstanding service. So it’s no surprise then, that the industry is interested in using chatbots to engage with customers more effectively.

While customers call banks and finance firms for all sorts of reasons, not all of them need human intervention. Institutions spend fortunes to maintain call centres and support departments for various tasks from Know Your Customer (KYC) activities, to answering queries and providing product information. Using a chatbot for customer service can significantly reduce costs and increase profits - while minimising time spent on hold or in queues.


  1. Streamlined customer experiences

When customers contact a bank or financial institution online, they need to complete authorisation sequences and enter personal information multiple times. With chatbots, these tiresome, repetitive practices are reduced. A user with a messaging app no longer needs to type in credentials over and over again. This makes it easy for customers to use your services. In turn, ease of use translates into higher levels of customer loyalty and engagement.


  1. Improved ability to make decisions using data

Chatbots are excellent tools for capturing data and analytics. Working with specific keywords, they can effectively capture a customer’s current needs and pain points. With the data captured by chatbots, banks and financial institutions can find out how satisfied customers are, and how well specific product promotions work. This data can also be used in a ‘virtuous cycle’ to improve the chatbot’s abilities, and to inform strategic marketing activities.


  1. Market products and services to customers at their time of need

Most banks provide a wide array of offerings, from home loans and credit cards to financial planning services. However, some customers may not be aware of the full suite of products and services available.

Chatbots can introduce new products and services to customers and even test the user’s interest level in certain products. If programmed correctly, they can also source competitive information. In this way, financial institutions can use chatbots to promote products and solicit feedback, which in turn provides a competitive advantage.


  1. Reach millennials through their preferred communication channels

Millennials have vast buying power, and their preferences cannot be ignored by any business wanting a competitive edge. Chatbots operate right from within popular messaging and social media apps, opening up a large consumer market to financial firms.


  1. Enhanced security and trust

Ask anyone working in financial services and they’ll tell you that keeping customer information safe is a top priority. However, the use of chatbots represents a new tension between convenience and a feeling of security. The trade-off comes down to ‘soft’ trust in the security of personal details, and ‘hard’ trust in the platform and infrastructure used to access the service.

While chatbots are generally secure, convincing customers of this fact may take time. They need to know that both ‘soft’ and ‘hard’ trust is well placed before they can enjoy the added convenience of emerging technologies.

Humanising interactions is key to building this trust. For instance, chatbots can be programmed to seem human and to have trust signals built in. They can be given names, personalities, and even emotions. Back-end encryption of chatbots, touch IDs, two-step authentication and other such tools must be implemented to guarantee customer security.

Chatbots already enable 24/7 customer service on simple matters, such as:

  • Initiating fund transfers
  • Setting up recurring payments
  • Checking bank statements

The day is fast approaching when chatbots will become fully-fledged financial advisors with the sophistication to help customers with their financial planning. With their data mining and analytical abilities, chatbots have incredible potential to transform banking and financial services. To find out more, download our white paper: Digital Platform Trends 2017: Diving into chat driven conversational commerce.

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