According to research, the use of chatbots in banking has increased 3 folds in the year 2020. While at the beginning of the year, only 4% of banks had deployed chatbots in banking, by the end the numbers went straight up to 13%.
With advancements in technology, artificial intelligence and machine learning have become a significant part of almost every industry. Among all, customer service is one of the most common use cases of AI, specifically with chatbots for the banking and finance sectors.
Chatbots have become a competitive necessity for the banking industry.
Today, in the remote everything era, tech-savvy customers want every solution over the internet. Chatbots in banking have been a game-changer. The industrial standards for the speed of query resolution and customer support have been minimized to the least, that is, 4 minutes per query.
Customers today are in a habit of using voice interactions over text-based support. With the increased recognition of Amazon’s Alexa and Google’s Home Assistant, voice bots or IVRs (Interactive Voice Responses) are gaining popularity in customer support, even in the banking sector.
Financial institutions deploying conversational banking chatbots not just ensure a smooth, modern customer experience with self-serve and instant query resolution capabilities, but are also setting up a foundation for the future of customer engagement.
Lets us now understand why this is the right time to deploy chatbots in banking.
Why are chatbots in banking required?
Let us sideline the benefits of chatbots for a while to understand the major driving factors for the need for AI banking assistants.
1. High abandonment rates
As per a study from Cornerstone Advisors, roughly 50% of the surveyed banks said that half of their checking accounts on digital channels were abandoned. And the abandonment of unsecured and secured loan applications was even higher.
Banks need chatbots to close the gap between a potential customer and the digital account opening systems. With the speed of conflict resolution of a chatbot, abandonment rates will automatically decrease, and customer experience will level up.
2. Data storage and management
Banks have a lot of data about their customers. But the data is disintegrated in a form that during a query resolution, customer service agents need to go through several files and folders just to understand what is the query about.
With the use of chatbots in banking, data can be collected, stored, and managed in a form that eases query resolution. Not just that, chatbots can help customers by providing advice. Data collected by chatbots can be used for Personal Financial Management (PFM).
3. Detailed and personalized conversations
Limiting personalization to just using the name of the customer will not be fair for a banking chatbot.
Chatbots can help in personalizing the marketing efforts of the bank on the basis of the immense data. Instead of marketing randomly, chatbots can help in marketing as per the need of the customers.
The need for chatbots in banks is clearly stated in the article- Every Bank Needs a Chatbot for its Digital Transformation.
Thinking about the use cases from the customer-first perspective, banks can build successful chatbots. With the virtuous usage of chatbots, the aggregate potential cost savings for banks from AI applications is estimated at $447 billion by 2023.
What are the benefits of banking chatbots:
AI technologies and automation in Customer Experience (CX) have transformed the customer support industry digitally. Customers now expect instant and convenient support from businesses. This is true even for banking and financial services. Conversational banking chatbots are beneficial for customers as well as for the banks.
There is a long list of usefulness and perks of intelligent chatbots and voice bots, but the few specific for banking are:
With automation, simple banking queries can be resolved in no time. Queries related to opening a savings/current account, credit card plans, various loans information, and even checking account balances can be easily automated with banking chatbots.
Customers don’t need to scroll through the website or application to search for a certain piece of information, and rather just use the voice bot. This automation can save a lot of time for the bank personnel as well as customers.
Banks have improved their response time by 60% by engaging banking chatbots for simple query resolution and mundane problem-solving.
2. Improved efficiency of banking personnel
By automating customer support for simple and redundant queries, banks can help their skilled and focused employees to deal with complicated and tricky issues faced by the customers.
Customers also feel comfortable with self-serve queries because of the zero wait time and instant problem-solving.
Yellow.ai has seen a 40% increase in the operational efficiency of banks using chatbots.
3. Personalized attention
Banking chatbots have all the data about customers including their names, account details, and even preferred languages. Using this data to personalize conversations in their preferred language and based on their account details can help banks build a positive customer experience.
This feature benefits customers by saving their time of providing details about their accounts to customer care executives and by resolving queries in a single session without any hindrances.
By giving personalized attention to customers, a 20% increase in upsell revenue is noticed.
4. Reduced cost for customer support
Banks need a huge customer support team because of their large customer base. To serve this cause, AI Chatbots for banking come with an excellent feature- scalability.
Unlike human agents, banking chatbots can interact with thousands of customers at a time. They can help in query resolution using AI technologies and close tickets within no time. However, some queries may need human intervention.
Using banking chatbots for scaling customer support can reduce the need for human resources for handling thousands of queries manually. Custom support agents can help customers with complex queries that chatbots cannot resolve. With automation, the cost of customer support can be reduced considerably.
With the use of AI Chatbots for banking, banks and the financial sector have seen 75% of cost reduction with quality and timely query resolution.
5. Round-the-clock support
Banking chatbots have facilitated customers with 24×7 support for all of their banking needs. This helps banks in building a sense of security with continuous and easy interaction.
Data-driven chatbots with NLP and Machine Learning (ML) provide banks with reliability and an edge over their competitors.
Gone are the days when features like high security, minimal fees, and bank branches at every corner would excite customers. In the digital everything era, what matters to the customer is how every service of the bank can be obtained digitally.
With the benefits mentioned above, banks can leverage digital expertise and change their customer experience (CX) game forever.
5 Use Cases of banking chatbots:
Artificial Intelligence is a technology that can flip the processes and usage of banking services. Today, most of the transactions have moved to online banking for good. With an increase in the use of digital banking, customers expect support online.
Banking Virtual Assistants are a practical solution to all the online interaction needs for banks and customers. Some of the most accepted use cases of banking chatbots are:
1. Lead Generation and Customer Acquisition
Chatbots have no match when interaction comes to play. They can interact with customers for the first time and understand their needs and sentiments behind the conversation.
This, very human interaction, can help banks acquire new customers and also get their personal details. These details are then transferred to the sales team for taking the conversation forward.
With real-time interaction, conversational banking can have a positive impact on customers’ perspectives. This, in turn, can help banks hit the spot sophistically and create a service opportunity.
2. Automated customer support
Conversational Banking Research shows that 90% of the interactions in banking and financial companies will be automated by 2022.
Banking chatbots, unlike traditional FAQ chatbots, come with Natural Language Processing (NLP), and dialogue management to better understand customer queries. Using artificial intelligence, banks can reduce customer wait time and resolve their 80% queries in the first call.
65% of the customer queries are repetitive and can be easily solved by conversational banking chatbots and the rest can be solved with artificial intelligence, and agent support.
3. Financial Advisory
Conversational banking can be effectively used by banks for financial advisory to customers.
Banking chatbots have all the data to predict the spending habits of the customers and help them keep their finances on track. With the help of artificial intelligence, banks can provide financial advice to their customers in natural language with the help of interactive voice recognition (IVR) and chatbots.
4. Smart payment processing
Banks are using chatbots for processing payments as per the instructions. This saves a lot of time for the customers by fetching all the data and processing the payments quickly.
Chatbots also help customers by reminding them of the due payments or bills. Removing the redundancy of entering details, again and again, chatbots help customers in sending as well as receiving money proactively and with 100% security.
5. Reviews and feedback
Customers would love to give feedback and reviews if their hard-earned money is taken care of by the banks. These reviews can be collected by the banking chatbots.
Instead of using the long survey forms, banks can now integrate chatbots on their websites and apps for collecting feedbacks and reviews. This feedbacks can be genuinely used to improve customer service and CSAT scores. Because a better CSAT score and a happy customer are the best sources of marketing.
These are the most common use cases of conversational banking. Depending on the services and offerings, banks can easily customize their own chatbots and use them for an improved Customer Experience (CX).
Case Study: Banking Chatbot
#1 HDFC improved its lead generation by 30 times.
A high rate of drop-offs (high bounce rate) of customers from the informational page to the application page for personal loans.
Conversational Banking solution: Yellow.ai deployed a banner chatbot on the informational page to educate customers in real-time and qualify leads by setting an automated outgoing call. Based on the call, leads would then be pushed to the HDFC Lead Management System.
30x increase in qualified leads and 10x growth on the personal loan page of customers at the top of the funnel.
#2 Ally Bank introduces Ally Assist
Ally bank was the first one to employ a virtual assistant in 2015. The goal was improved customer experience and help customers navigate through the website and understand and use their bank to its fullest.
Customers could interact with Ally Assist for a wide variety of tasks.
a. Initiate bill payments, transfers, and deposits.
b. Request detailed information about the user’s bank account details and transactions.
c. Obtain information and advice on the saving/spending process.
“Consistent with our focus on offering new features we believe will enhance the overall banking experience, we are introducing Ally Assist to enable customers to further customize how they manage their Ally accounts in an intuitive, convenient and easy-to-use manner,” said Diane Morais, president and chief executive officer of Ally Bank.
There is a lot to artificial intelligence and its application to banking. To have a detailed conversation with our experts or to get your own banking chatbot, request a demo with Yellow.ai and change your CX game with total automation.