AI-enabled banking distribution models
Whether through chatbots or voice assistants, bank customers are beginning to experience Banking AI and are responding favourably. Initially, the focus of these interfaces is similar to the task-oriented nature of channels that banks already provide. Though
conversational interfaces have yet to attain the level of adoption expected in the banking space and has not yet matured as mobile has, there are already a variety of approaches for establishing a conversational banking capability. Going forward, I believe
there will be at least four distinct banking models supported by apps and conversational interfaces. These are:
The majority of banks will begin their journey in the conversational banking space by implementing a conversational interface as an additional channel with a task-based focus. This interface will fulfil the role of an innovative self-service banking option,
allowing customers to query and transact with greater ease and convenience. A number of banks have already begun to expand beyond simple self-service functions, incorporating PFM services to provide customers with useful financial insights such as savings
goals updates and spending alerts. These helpful interactions are welcomed by customers, increasing trust and providing proactive engagement. The satisfaction and popularity of interfaces designed to transact and inform is clear, with DBS’ Digibank in India
handling 82% of all service enquiries through their bot9.
The banking introducer model focuses on a sale-oriented approach where origination is key, providing a marketplace of financial products that may or may not feature products that are bank-owned. For example, Starling offers third party products including
micro-investing and P2P loans alongside their own account, while popular chatbot Cleo does not possess any products of its own. Instead, Cleo sits atop existing bank accounts, aggregating data and providing the customer with rich insights. Both approaches
to the introducer model can prove successful and lucrative, depending on the aims and goals of the institution.
Pure introducers of financial products include companies like MoneySuperMarket and mortgage specialist Habito, specialising in helping customers find products best matched to their needs, though currently these services do not offer customers’ advice beyond
sourcing the best-suited products.
When implementing the banking advisor model, the primary aim is to become a trusted advisor to each customer. This is achieved by guiding and supporting customers, helping them reach financial goals by offering personalised and targeted advice. Players intending
to operate as banking advisors typically either focus on single products, such as Marcus from Goldman Sachs for Savings or Acorns for micro-investing, or on offering general advice as provided by Albert.Com and Ava. These services heavily prioritise driving
customer engagement, coaching customers to achieve their goals by incorporating nudge strategies. As trust is built through frequent use and well-received advice, these advisors will then request consent to automate actions on behalf of the customer, such
as adding to saving by rounding up transactions.
The personal assistant banking distribution model looks beyond banking to assist customers in managing specific stages of their lifecycle, fulfilling a holistic advisory role effecting many areas of their lives. Providing such enriched and personalised support
requires interactions that are empathetic and draw from deep customer insights, understanding the customer and gaining firm trust in order to provide and manage choices for the customer. Actions initiated through this model need not be limited to financial
advice and support, and may include making purchase on behalf of the customer or providing assistance for more general lifestyle choices through coaching and training. Banks assuming such an assistive, central role in the customer’s life is already beginning
to be experimented with by certain banks, through apps such as BBVA’s Valora, a lifestyle app designed to help manage your home, and BBVA Baby Planner, to prepare and budget for baby expenses.
It is clear from early success stories, like customer service savings made by DBS and the rapid adoption seen at Bank of America, that conversational interfaces are here to stay and that adoption by banks will drive clear benefits both for banks and their
Given the breadth of use cases for conversational interfaces, banks will need to create a clear strategy for rollout that applies not only to customers but staff and business partners too. However, conversational interfaces should comprise part of an overall
UX strategy and not just another independent channel. We are seeing a clear trend towards multi-modal interfaces; user interfaces with multiple modes of interaction in the one app as well as seamless handoffs to human agents where appropriate. Increasingly
voice devices are shipping with screens, so voice conversations can trigger screen push of data (thus overcome some of the privacy concerns about voice devices) as another example of multi-modal interfaces
In the future, banks should consider how omni-channel behaviour can be adopted to ensure users can move between devices and interfaces, such as moving a conversation from Alexa on a speaker to Siri on a mobile phone.
Banks will need to new roles to help with the design of conversational interfaces both linguistic and visual design. Basic conversational design will need marketing influence to create persona’s for the conversational interface. Screen designers will have
to create design for “micro-interactions” rather than complete App interfaces.
However the real heart of a conversational interface, and to banks that want to own distribution channels to customers will be Engagement. Engagement is more than just offers and strategies should cover all products and all parts of the customer lifecycle.
Decisioning must be centralised to manage engagement priorities and thus move towards the truly personal banking experience that customers deserve and crave for.
Conversational banking is set to revolutionise the banking experience, and the time is right now for banks to invest in the skills and solutions to support it.