Conversational banking: Financial services firms must invest or be left behind

Last year, I wrote about conversational interfaces and how they have the potential to disrupt business and technology paradigms over the coming years. To recap, conversational interfaces are an emerging high-level system design model where interactions occur in the user’s spoken or written natural language. Most commonly they are a voice-driven virtual assistant like Alexa or a text-driven ‘chatbot’ embedded on a website or within Facebook Messenger. Though bots may not have taken over every transaction and interaction yet – I’ve talked to many clients who are beginning to strategically plan where these technologies fit into their digital roadmaps.

Many firms have started building out their potential use cases and strategies, budgeting innovation funds, and building proof of concept systems. With the smart speaker market predicted to hit 150 million household installs by the end of 2019, virtual assistant technologies like Alexa and Google Assistant continue to capture the consumer space and make inroads into the enterprise with solutions like Alexa for Business, driving increased customer and employee expectations around these new technologies.

While a chatbot or virtual assistant may not be appropriate for every interaction or use case, these tools can work especially well in a number of areas:

• Customer support and self-service

• Customer intake and on-boarding

• Customer outreach and preventive interactions

• Structured, predictable tasks and workflows

• Tasks where opening an app is too slow or cumbersome

• Tasks that don’t require review of significant amounts of data

We’ve seen interest from our financial services clients in these types of use cases, where progressive firms are making investments in automation technologies like Machine Learning and RPA. My colleague, Jeremy Wortz, recently wrote about the differences between different emerging AI technologies like RPA, Machine Learning (ML), and Conversational Interfaces (CI). While these technologies can make a significant impact when combined together, there are quite a few “low-hanging fruit” use cases where conversational technologies alone can drive significant ROI for financial services firms. The three largest banks in the United States are all leveraging chatbot technology in one way or another, with JP Morgan piloting a virtual assistant for corporate treasurers, Wells Fargo piloting a Facebook Messenger-based customer service bot, and Bank of America rolling out their branded, app-based conversational assistant ‘Erica’.

I'll highlight several use cases in the financial services industry that can improve the customer experience, drive productivity, or reduce costs.

Customer Self-Service

Offering customers a new and easy-to-use channel for self-service (in addition to traditional mobile apps, web portals, and IVR channels) may be one of the conversational use cases with the largest potential ROI. A customer self-service bot could take the form of a text-messaging chatbot accessed by the user via SMS or Apple iMessage, or may take the form of a full-fledged Alexa or Google Assistant voice assistant skill that the user may access through their phone or home speaker device like the Echo Dot. Several large banks in the US, including Capital One and US Bank, have launched Alexa-based virtual assistants that can quickly perform simple transactions and answer common questions from customers including:

• What is my account balance?

• What is my loan balance?

• When is my loan payment due?

• How much did I spend at Starbucks last month? (or any other merchant)

• What are my most recent transactions?

• I’d like to make a payment on my credit card

Many banks still have hundreds of contact center agents answering simple questions like these, which are the exact types of queries that virtual assistants and chatbots excel at answering. With some of the largest banks handling thousands of these questions per day, offloading even a small percentage of these queries to automated technologies can produce a savings of millions of dollars per year. This type of customer service bot provides a new channel that offers a more frictionless experience for the customer when compared to traditional processes of tracking down and calling a customer support phone number or logging into a mobile app. After the initial setup of a virtual assistant, these types of questions can be answered quickly and seamlessly - comparable to asking a question to a person sitting next to you or sending a text message to a friend.

Outbound Preventive Outreach

Reaching out to customers to prevent an adverse situation before it occurs is another high-value use case where financial institutions can make use of chatbot technologies. Currently, these bots most commonly take the form of text-messaging bots, interacting with users by reaching out over SMS channels – though automated, phone-based bots are growing in popularity. Several common examples include:

• Verifying suspicious or potentially fraudulent transactions with a customer before they are approved

• Following up with a customer prior to a missed or late payment

• Confirming important changes to the customer’s account

• Proactively notifying the customer about market-related news and potential impact to their portfolio

• Reaching out to a customer to conduct a survey

These types of outbound, proactive interactions often provide value in two different ways – first, by preventing the adverse issues from occurring (for example: stopping a fraudulent transaction) and secondly, by deflecting the need for an oftentimes contentious follow-up interaction with the contact center to resolve the issue. Though preventive interactions are one of the more obvious outbound use cases, these bots can also be used in marketing campaigns targeting specific customers to up-sell and cross-sell new products, or to drive enrollment in loyalty programs.

Personal Financial Management

One emerging area for chatbots within financial services is assisting customers with their personal finance matters. This type of bot can help increase customers’ financial literacy by offering advice and insights, as well as helping to organize and track the customer’s ongoing financial situation, goals, and progress. Personal financial management bot functions include:

• Providing quick access to customers’ banking and credit information

• Offering investment advice based on the customer’s goals and current allocations

• Explaining complex financial terminology in easy to understand terms

• Tracking customers’ spending habits and setting budget alerts

• Suggesting financial products that could save the customer money

• Helping customers cut expenses and set savings goals

• Providing access to educational videos or other content

While a personal financial management bot may not directly impact the bottom line, customer expectations are changing to expect these types of personalized features and functionality from their banking experience. Providing access to a personal financial advisor with 24x7 availability can help banks build long-lasting, trusting relationships with their customers.

Employee Support

Bots are increasingly being used to assist agents with common tasks in the contact center – this use case is often known as “intelligence augmentation” or “intelligence amplification.” These bots are available through a standard, chat-based interface and can be made available in existing IM applications used by contact center agents. They are often being used to replace messaging systems such as Skype for Business, historically used by many contact centers to message co-workers or supervisors for knowledge sharing and escalation purposes. Intelligence augmentation bots can assist contact center agents with many tasks including:

• Performing complex calculations for agents based on inputs

• Retrieving information about the customer or their call history

• Pulling together information quickly from multiple systems

• Providing information about terminology or frequently asked questions

• Suggesting pre-written responses to customer inquiries

• Assisting agents in explaining financial or insurance terms or other information

• Alerting agents to patterns indicating potentially fraudulent activity

These types of bots can make agents more efficient by automatically handling basic customer inquiries, making tasks easier and faster to execute, and providing instant access to customer information. Mentally integrating data from a variety of customer information sources can be exhausting, and automated bots (often using RPA) are able to pull this information together quickly for presentation to the agent. For low-risk, repeatable tasks these intelligence amplification solutions can introduce significant efficiency. However, change management is imperative for introducing these types of tools – employees will need to understand how these tools will help them better perform their job, introducing opportunities for career growth and freeing up cycles to solve more important, more complex problems requiring analytic skills that bots just can’t yet provide.

Gartner predicts that 25 percent of customer service interactions will involve conversational technologies by 2020. Regarding investment in artificial intelligence and other digital technologies that improve the customer experience, JPMorgan Chase Co-COO, Daniel Pinto summed it up well in a recent letter to shareholders, noting “The banks that don’t invest [in these technologies] will lose ground and will have a long, difficult catchup process.” IT and business leaders in financial firms will need to determine the vision for AI and bots within the organization, develop the business case, and start targeting the wide variety of low-hanging fruit use cases. As this next generation of “digital disruptors” becomes the norm, it is critical that businesses invest in emerging technologies like chatbots, RPA, and machine learning if they don’t want to be left behind by more nimble, digitally-savvy competitors. Only by adapting to this new age of bots will firms, especially those in financial services, succeed in building their brand, optimizing their processes, and growing their business.

Our financial services, CX, and technology consulting professionals have experience with the challenges inherent in navigating the world of conversational user experiences. Contact us for more information on how West Monroe can help enable your business to drive more powerful customer engagement using these emerging technologies.