The case for conversational banking

Carrie Russell: 7% of Canadians and 11% of Americans switch banks every year

In today’s experience economy, customer expectations couldn’t be higher. Thanks to companies like Netflix, Spotify, and Amazon, consumers have grown accustomed to having relevant, always-on, and highly personalised offers and services curated for them. Not only that, they now expect the same kinds of experiences from every brand they regularly interact with. Their banks are no exception.

At a time when the war for customers is raging, that means that any bank that fails to take action could find itself in serious trouble. Just consider, for example, that around 7% of Canadians and 11% of Americans switch banks every year, according to a survey by Accenture, “Banking Shaped by the Customer”. That means that millions of customers are up for grabs every year. And while those customers historically just shuffled back and forth between providers, today the majority are moving to banks that can give them the kinds of convenient, personalized experiences they’re looking for.

For today’s banks, this poses a serious challenge. They have to figure out how to transition from the product-centric business models they have relied on for years, to one that’s far more customer-centric. Practically speaking, that means that they need to promote much greater customer engagement by putting their customers at the center of everything they do. As we’ll see, the key doing so at scale is adopting the right technology.

Greater customer engagement through chatbot technology

One of the best ways for banks to put their customers at the centre of their engagement strategy is to let them control the conversation. Standing up a chatbot is a perfect way to do so because it gives customers the opportunity to interact with brands on their terms using natural language.

That’s an important shift. historically, banks have required their customers to speak the same way they do, using jargon and product names. With a virtual banking assistant, by contrast, customers have the opportunity to start the conversation from their perspective, which typically begins with their needs. For example, banking customers might ask a bot questions like:

• When is my next bill due?
• Am I saving enough for retirement?
• Can I afford to buy a new car?

Giving customers the ability to interact with brands and ask questions in this way via a conversational assistant is incredibly powerful. Not only does it help build greater customer engagement, it also gives banks access to valuable data about what their customers actually care about. Armed with that data they can define future product offerings much more effectively.

Equally if not more important is the fact that chatbots can be used to help customers take control of their financial lives. Being able to explore their own bank accounts and initiate transactions is empowering. It not only frees up operational resources within the bank so that they can be dedicated to higher-value work, it also results in higher net promoter scores since customers like the greater independence that comes with it.

The other big consideration is the role that virtual banking can play in promoting financial literacy. The right virtual assistant can help fulfill the aspiration of every bank to serve as a personal advisor to each of its customers, helping them to make better financial choices. That’s something that, while always the goal, is only now possible thanks to advances in artificial intelligence (AI).

In short, adopting AI is a way for banks to create much more engaging experiences, while also solving a number of customer problems. Specifically, these can be summarised as:

• Access. Adopting a chatbot gives customers around-the-clock access to the support they need, allowing them to interact with banks at any time day or night.
• Convenience. Not only are chatbots available 24×7, they can be deployed in all of the channels where customers are already spending their time making them incredibly easy and convenient to use.
• Context and personalisation. By collecting data, chatbots can provide the kinds of personalised experiences that customers wouldn’t otherwise get by simply walking into a bank, which helps them to feel like they’re understood.
• Empowerment. Chatbots can help people to get ahead with their financial lives by nudging customers to take specific actions that will improve their financial lives.
• Judgement free. Not every banking interaction is comfortable, such as when a customer’s credit goes bad. Chatbots can help in situations like these by giving customers a judgement-free way to interact with their bank.

Although these are just a few examples, they start to give you a sense of the different ways in which smart banks are taking advantage of conversational banking technology to better serve their customers.

The way forward

Banks that invest in launching a chatbot are really investing in a larger customer engagement strategy – one that can deliver the access and capabilities that today’s customers value (thus earning their loyalty), while also driving much greater operational efficiency. By adopting a conversational strategy, banks can scale with confidence, allowing them to better serve their customers in a way that’s consistent and that aligns with their brand. In a world with fierce competition for customers, it’s something that every bank should be considering.

By Carrie Russell, chief product officer, Finn AI
Carrie is a 25-year veteran in the financial services and technology industry, formerly serving as SVP of everyday banking, payments and savings at TD Bank, and EVP and CMO at D+H, one of Canada’s
largest fintech companies (now part of Finastra). She is recognised for her strong customer and segment orientation that has led to various product innovations to support advancement in financial literacy and financial wellness.