The entire fintech ecosystem is thriving and conversational banking is fast becoming the hottest new topic when it comes to engaging digital consumers. New technologies such as AI, combined with increased mobile usage patterns and new mobile innovations are creating vast opportunities for banks and financial services companies to redefine how meaningful dialogue and customer interactions are created and nurtured. With so much focus on banking technology and digital transformation, it’s easy to forget one of the most profound customer engagement tools of all – conversation. As always we’ve got our finger firmly on the fintech pulse and have been busy exploring a wide range of topics including the biggest trends to watch for in 2020, solving the unbanked challenge and the complete lowdown on wealthtech. Today we’re exploring how to leverage the power of conversational banking.
Welcome To The World Of Conversational UI
One of the hottest fintech trends that’s starting to emerge relates to the concept of the conversational user interface, or CUI as its also known. CUI’s are being deployed across the banking sector and are designed to emulate real conversations with humans. The major difference being with some traditional banking chat apps and bots is that use of human language is core to the experience rather than the use of syntax specific commands. CUI’s tend to be based around real-time messaging platforms, use of AI and either text or voice-based command systems. For many banks and financial services companies, CUI technology is a fantastic way to automate processes and provide fast answers to routine questions whilst reducing staff overheads.
“For banks thinking about artificial intelligence and how best to deploy it, CUI’s represent a commercially savvy entry point for consumer-facing, AI driven technology”
New CUI’s are anticipated to evolve in the next three to five years as an essential means of interaction for digital consumers seeking access to core banking services. For banks thinking about artificial intelligence and how best to deploy it, CUI’s represent a commercially savvy entry point for consumer-facing, AI-driven technology. Conversational banking also provides an exciting new channel for banks to explore and is considered as being a separate channel to mobile banking itself and physical retail branches. Through the adoption of AI and conversational banking mechanisms, banks can develop new forms of automated customer interaction, from customer service and guidance to marketing and transactional banking functionality. This promises to deliver a more unified, customer-focused platform to engage an older generation of banking customers and digital natives alike. To date, most AI initiatives in the banking ecosystem have been focused around back-office activities, processes and systems that are non-customer facing. Increasingly, AI and CUI can be leveraged by banks to convey a particular message and to create a dialogue based on the customers individual spending traits and patterns, bringing these new technologies out of the commercial back office and into the consumer-facing mainstream.
In order to seize the incredible commercial opportunities associated with conversational banking, banks will need to take a proactive approach to plan and executing new initiatives. Shifting towards new modes of customer interaction and dialogue means breaking old habits and embracing cultural change throughout the entire organisation. One of the major challenges for banks embracing conversational interfaces and AI will be talent acquisition and the ability to resource projects quickly. Making the required changes will also involve restructuring internal processes and the ability to create new integration layers between different digital channels. What role does artificial intelligence play in terms of adopting a CUI? How do these developments integrate with existing mobile apps, CRM’s and call centres? These are key questions that need to be addressed prior to embarking on a conversational banking initiative.
The Importance Of Mobile & Voice In CUI
Banking customers are embracing new technologies faster than ever before, whereby voice-powered assistants and slick mobile apps provide seamless access to core banking services and the ability to perform essential everyday tasks. Voice assistants such as Amazon Alexa, Google Home and Apple Siri are able to listen and respond to specific questions and customers are becoming increasingly comfortable with these new modes of communication. There are obvious privacy concerns in relation to the use of voice technology in banking, it’s certainly not something consumers would be at ease within a public space. But behind closed doors in a private setting, voice technology is already reshaping how consumers interact with banks and their own personal finances. Technology has the power to create increased consumer confidence and users are sharing more personal data than ever before, enabling banks to gain detailed insight into what we do, where we go and how we spend our money.
In the past decade, mobile has transformed everything. It’s changed how we work, how we communicate, how we travel and how we manage our time. Mobile has also had a transformative impact on the way we manage our finances and how we engage with banks and financial services companies. WeChat is a fantastic example of how mobile apps are becoming increasingly sophisticated and intertwined with our financial lives. The WeChat app is home to 860 million active users and the platform enables them to access a broad and diverse range of financial services without ever leaving the app. WeChat is hugely popular in the Far East, particularly in China, whereby using messaging apps and conversational platforms to manage finances is virtually second nature. This represents a monumental shift in consumer behaviour in that users can manage a variety of financial tasks via a single application via what is fundamentally a messaging app. In time we can expect these types of features to be integrated into hugely popular apps such as WhatsApp and Facebook Messenger, whereby peer-to-peer payments and core banking features are integrated into existing messaging apps with an added focus on interactions as opposed to transactions.
Messaging Apps, AI-Driven Chatbots and CUI
But what can banks, challengers and neobanks do to capitalise on these incredible opportunities? Creating meaningful interactions requires a combination of human input and artificial intelligence, the human aspect being essential in terms of creating experiences that provide emotion and empathy. These new innovations, particularly when developing intelligent chatbots, are all about minimising friction and user dissonance when experiencing new financial products and services. The banking industry has undergone an astonishing transformation in the past 50 years, shifting from ATM’s, through telephone, online banking and more latterly into mobile. Messaging apps are now the dominant form factor on mobile to the extent that they possess more MAU’s (monthly active users) than the biggest social networks.
There are huge opportunities for banks to integrate core financial services into existing messaging apps because most users already have WhatsApp or Facebook Messenger installed on their devices. This removes barriers to entry for consumers because they don’t have to download any peripheral apps and move outside the domain of the messaging app. For customers, there is a comfort in the familiarity of messaging apps that standalone banking apps would find very difficult, if not impossible to replicate. The beauty of this approach is that consumers, particularly millennials, can use these apps whilst on the move and interface with a plethora of features using both text and voice. Not only do users take comfort in the familiarity of these messaging apps, but they’re also non-committal in the sense that they can be picked up and put down again very easily, interactions tend to be lightweight and frivolous in a way that branded banking apps would find challenging. These platforms and messaging apps are also perfectly positioned for the integration of AI and the creation of intelligent bots and conversational chat agents.
The benefits for banks exploring the efficacy of messaging apps for conversational banking purposes can be summarised as follows:
- Messaging apps are now more powerful, ubiquitous and widely used than the world’s largest social networks
- Integrating with existing messaging platforms such as WhatsApp and Facebook solves a major issue for banks in terms of discoverability, creating new products for this purpose presents challenges in terms of how consumers find them in the first instance
- These applications are also intrinsically integrated with adjacent social networking platforms which provides a range of benefits and opportunities for banks
- Existing messaging apps possess integration opportunities for AI and an existing foundation for banks to build and automate CUI’s upon in a timely and cost-effective manner
- Messaging platforms possess the ability to manage one-to-one and one-to-many interactions
- Interactions can be performed via voice or text and messaging apps are perfectly suited to seamless interactions from any device at any time and from any location with longer average session times than alternative platforms
How to create a conversational banking strategy
The logical first step when designing a strategy for implementing conversational banking is to start off with a chatbot or virtual assistant. Chatbots and virtual assistants, or ‘cognitive agents’ as they’re also described, have flourished in popularity in the last few years, as banks increasingly start to understand their associated benefits. Not only are the commercial rewards starting to become more clear, but the technologies required to develop cognitive agents are becoming more accessible and easy to implement. New advancements in object recognition and NLP (natural language processing), combined with the availability of low-cost, highly scalable cloud architecture, are having a profound impact on the number of conversational banking initiatives taking place across the entire banking ecosystem. Another major advancement is the usage of existing chat and messenger apps such as WeChat and Facebook Messenger.
Apps such as Facebook Messenger have witnessed an explosion in the number of integrated chatbots on their platform. It’s estimated that WeChat now has over 100,000 chatbots and Facebook Messenger has over 33,000, all providing automated customer support mechanisms. For banks thinking about where to start with conversational banking, developing and launching a chatbot is just one part of the journey and can represent a pragmatic first step against the backdrop of a wider, long-term plan. Chatbots can be a great starting point when it comes to conversational banking initiatives, but it’s also crucial to be aware of their limitations and constraints. In some cases, chatbots can be a great way to create a dynamic FAQ section and this can be an obvious starting point for some banks. In order to extract the maximum level of value possible from conversational banking, banks are going above and beyond a simple FAQ and leveraging the capabilities of the technology to a much greater effect. From banking sales, advice and care, to automation and hyper-personalisation, let’s take a look at some real-world examples:
Capital One & Alexa
Capital One has recently implemented a series of Alexa Skills that enable their customers to pay bills, mortgage payments and to check balances and transactions, all through voice commands. This is arguably the first time ever that an established credit card company has integrated voice technology to enable customers to manage core banking services in real-time. Integration is super simple for existing Alexa users and Capital One customers can link their account to an Amazon Echo and get started straight away.
Garanti Bank is part of the wider BBVA group and is one of the largest banks in Turkey. Garanti Bank is currently in the process of completely re-engineering their entire customer service experience. The core aim of the project is to implement a conversational facility via their existing mobile app so that the customer feels like they’re dealing with a real person rather than an automated chatbot. The chatbot possesses wide-ranging customer-facing capabilities and enables customers to ask questions about exchange rates, buying and selling foreign currency, peer-to-peer money transfers, paying bills and a range of other core banking services.
Here are some additional elements to consider when developing your own conversational banking strategy:
Take a risk-managed approach
Deploying artificial intelligence on the customer service front line is not without its risks. Things can and do go wrong and mistakes can be costly in terms of customer satisfaction and reputation. It’s important to remember that businesses are still getting to grips with AI and that the technology is still maturing, particularly when it comes to full-scale enterprise implementation. In order to get something up and running in the shortest possible time-scale, think about taking a hybrid approach to manage risk, whereby humans can monitor and train chatbots, helping them to become more predictable over time. This enables humans to interject if the chatbot is falling short of customer expectations. Similarly, humans can still intervene where a chatbot has flagged up a specific issue or query that requires input.
Prioritise your channels
When designing and implementing a conversational user interface, banks must carefully consider which channels to adopt and ensure a consistent approach across each and every channel. It is always possible to launch CUI’s across multiple channels, but the ease of integration and consistency are absolutely crucial in terms of creating a harmonious experience for the user. There are fundamentally three options when selecting a channel: 1.) Integrate with an existing messaging platform such as WeChat or Facebook Messenger, 2.) Develop a custom CUI application, or 3.) Integrate with an existing, non-messaging focused mobile app. The path of least resistance probably lies in the first option given that billions of users globally already have these apps installed on their devices. The problem with option two is that users would need to install a new app and that means heavy expenditure on marketing and brand awareness to ensure that customers know how to download and install the app. The problem with the third option is that with non-messaging focused apps, users are not conditioned to interact in a conversational way. Another key consideration when prioritising potential CUI channels is the make-up of your target audience. Who are your customers? Where do they hang out? Which apps are they already using? Would they be likely to download a standalone CUI app? These are all questions that need to be addressed.
Source the best capability
At present, very few banks will possess a dedicated, in-house team of AI experts and employees with years of experience developing CUI’s and chatbots. In order to get something up and running quickly, banks need to work out how to attract and retain the best AI talent and figuring out the best way to do this can be a tricky proposition. There are a number of options worthy of consideration, each with their own merits and drawbacks. One option is always to retrain existing developers. This can be a time consuming and costly and pivoting into AI from mobile or web app development is not an easy task and could take some considerable time. Another option is to hire new talent. However, this also has its pitfalls and drawbacks in terms of time and risk. By the time various candidates have been through an interview process and embedded in the core digital team, this process alone can take a number of months. In addition, it may take some time to figure out if the AI developers skills are up to scratch and an appropriate fit for your organisation. The cost of getting this wrong can be expensive and time-consuming. The third and sometimes preferred option is to embed AI developers and team members via a reputable third-party agency. This can help to de-risk the process of building AI capability, operating it for some time within the company and over time transferring valuable AI skills and expertise into the company.
The ecosystem for chatbots and virtual assistants within the banking sector is evolving at a lightning pace and keeping up with your competition can be tough. It’s not just AI capability that’s high on the agenda, there is a wide range of skills to consider including machine learning, natural language processing, conversational interface designers and neuro linguists. These are highly specialist skills that are in huge demand relative to the availability of their supply. In other words, there aren’t enough people with these skills to fulfil current market demand and this problem will only become more acute as demand for AI and CUI talent continues to grow. Hiring directly into your company and retraining existing talent represents a monumental and time-consuming challenge not to be underestimated.
Be honest with your customers
We recently explored how AI is impacting banking and discussed the fact that banking customers will not always know (or care) when they’re interacting with a virtual bot or AI-driven chat assistant. As with any real-world conversation, the success of any given interaction is based on perceived trust, openness and honesty. Applying AI and CUI’s to existing banking processes, products and services are no different. Over time it will become increasingly challenging for banking customers to distinguish between conversations with real humans and chat assistants. As these lines become increasingly blurred, the need for openness and transparency becomes even more critical. The critical element to consider here is to be open and honest about when you’re using AI within your banking conversations. Customers will always appreciate the honesty and not only that but they’ll start to develop trust in relation to utilising AI and CUI’s if their banking needs are met in a fast and seamless manner.
Get to grips with the technology
This is arguably the first and most important step. Delivering CUI’s for banking customers is not an easy process and the overall customer experience will only be as good as the technology that underpins it. This all starts with awareness and knowledge of which technologies are available and how best to apply them. One of the first steps in this process is figuring out how bots and virtual assistants can interact with existing banking data in real-time. In order to provide the best possible experience for the customer, it’s essential that chatbots are able to access the right data at the right time. This also adds a high degree of personalisation which is likely to help the customer achieve their banking goals and objectives in the shortest possible time-scale and with the least amount of friction.
In terms of speed and time to market, there are a number of ways to accelerate the development and launch of AI-driven CUI’s within the banking arena. One method is to lean on third-party products and platforms that can accelerate time to market by underpinning core features and functionality. Wherever possible, the aim should be to utilise reputable third-party products and services rather than developing AI technology from scratch. When assessing third-party AI platforms there are a number of key elements to consider. Where is the company based? How big are they? Are they liable to go bust or cease to exist? How much control will they have over your data? How easily and quickly can you retrieve your data if you choose to switch to another provider or go it alone? Are any of your competitors using the same service? Do they have an impressive list of existing customers and can you get testimonials to verify reputation? There’s also a number of compliance-related issues (we recently explored how new RegTech innovations are making this process considerably easier for banks) to consider in relation to GDPR and audibility. All of these disparate elements need to be brought together and carefully considered during the planning phase of your CUI initiative.
There are a bunch of other important elements to consider. We’ve already discussed this in some detail, but existing messaging platforms such as WhatsApp are evolving all the time in terms of new features and functionality. The ability to effectively compare and contrast the availability of alternatives is critical to success. Another consideration is to leverage the capabilities of external API’s in order to accelerate complex development tasks. Given that customer expectations are evolving all the time and in many cases becoming more complex and sophisticated, the importance of agility and time to market can not be underestimated in terms of developing a unique competitive proposition. The key word to consider here is agility. Embracing a truly agile approach and adopting processes embedded in design thinking will dramatically increase your chances of a successful roll-out.
Artificial intelligence and conversational user interfaces are new technologies that still require time to mature and evolve in order to meet the commercial needs of banks and to fulfil the requirements of banking customers. Although these technologies and tools are still in their infancy, in time they will become mainstream features for all banks and it’s critical to start thinking about how to get started in order to get ahead of competitors. There are so many things to consider in terms of understanding the available technologies, how to adopt an agile approach, how to leverage third-party AI platforms and APIs and how to source the best development and integration talent. Increasingly, banking customers will start to expect that core functionality and services can be delivered via messaging platforms and apps and the rewards for banks who embrace change and adopt AI-driven CUI’s will be vast. At the core of conversational banking, there are two key considerations. Firstly, banks can reduce operational costs through CUI adoption and secondly, there is a huge opportunity to deliver banking products and services that delight customers and foster long-term loyalty and satisfaction. If you’re interested in learning more about AI-driven CUI’s, we’d love to hear from you. Contact Waracle today to start the conversation.