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24-7 banking through chatbots or mobile apps?

The proliferation of smartphones and messaging apps and the always-on mentality of many consumers changed the communication behavior of people. What used to be communicated by using SMS messaging and making voice calls has evolved into an exchange on chat platforms such as WhatsApp, Viber or WeChat instead. Digital natives, in particular, are used to communicating primarily using these chat solutions.

 Meanwhile, many of these messaging apps have evolved into independent platforms with universal value-added services. Here, chatbots take on customer interactions and present themselves as the new interface between customers and companies.

 

Does this mean the end of mobile apps?

The rise of instant messaging apps completely transformed the way we use and perceive social media. In 2015, after messaging apps have surpassed the social media, a revolution began. Changed behavior of the millennial generation opened a whole new market for the companies. No matter the industry, advances in technology enabled businesses to engage with their customers whenever and wherever in a personalized matter. With predicted 15,5 % growth by the end of 2017, mobile messaging apps are expected to reach 1,82 billion worldwide regular users by the end of this year.

 

Will chatbots replace the mobile apps? More than 500,000 customers of N26, a German startup with mobile-first bank approach, might disagree. The changed behavior, messaging apps trends, and recent successes of mobile banks and banking chatbots suggest an omnichannel approach to banking.

 

How do chatbots fit into the omni banking strategy?

Chatbots were the catalyst for a general change in the behavior of many people so customers today expect dialogue-focused communication from their provider of financial services. This could be in banking or customer support scenarios: those who fail to offer chatbot solutions will lose the battle for market share. Additionally, modern chatbots make it possible to use natural language commands to communicate with computers. These commands are analyzed by the computer system in real time to trigger relevant actions. When using a chatbot solution, the consumer enjoys an experience that mimics a dialogue, which can greatly contribute to brand loyalty.

Banking chatbots are exposed to users without relying on a separate user interface because the interaction is carried out using their preferred chat platform. Providing a wide array of always available functionalities, banks can use this technology as an opportunity to reach new customer groups, particularly younger people.

 

Open APIs are required

If a financial services provider wants to implement a chatbot-based banking solution quickly and efficiently, the existing software infrastructure must be prepared for it. Ideally, a bank already uses a universal API platform to connect software solutions from various departments and external partners. It's this integration of IT systems that makes it possible to exchange the required data automatically and safely and once the IT landscape has been opened for access, additional services can be rolled out. For example, a bank could take on identity management for its clients. In this case, a bank acts as the central administrator of a secure and verified identity towards other payment service providers or e-commerce providers.

 

In addition, open interfaces also make it possible to implement the EU PSD2 directive (Payment Services Directive). This will enable banks to provide third parties with an interface that allows access to account information, a service that needs to be provided by 2018. For example, this could enable customers to carry out financial transactions and transfer funds directly from their shopping platform without the need for an intermediary payment service provider. Again, these services can be accessed and used conveniently using a banking chatbot.

 

Conclusion

The banking systems digitalization works across platforms: in the future, consumers will increasingly handle all banking transactions using their smartphone, relying on support from chatbots. Furthermore, in some countries, Instant Payments have already made available the technology for fast direct deposits, which is an ideal pairing for chatbot banking. Which solution will ultimately establish itself in individual countries is a question of the culture of use. Everyone can test this for themselves as they pay their bills at the gas station, in the supermarket, at the kiosk or in the hotel. Although cash is accepted everywhere, some prefer to pay for gasoline with the debit card, while they use a credit card in the hotel. For banks, this means their IT Infrastructure needs to be as flexible as possible in order to offer a suitable service in line with the ever-changing customers' requirements. 

 

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Johan Loennberg

Johan Loennberg

Director Business Development

Comtrade Digital Services

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03 May

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Vienna

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This post is from a series of posts in the group:

Digital Banking Trends

Digital Banking trends and Industry Intelligence for Bankers, Fintechs, and Solutions Providers


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