Too often organisations have used automation technologies such as chatbots as a ‘first line of defence’ against their customers, when actually there is often more valuable opportunity to create new and entirely novel experiences for customers.

While larger banks often consider automation solely or primarily a cost reduction exercise, challenger banks can’t take this position: if they do, they’ll leave themselves vulnerable to disruptors who are going to create better experiences and lure their customers away.

It’s not that creating cost savings is a bad thing, but if banks only approach automation with this in mind, they are limiting themselves. Challenger banks must ask themselves: do we pinpoint on giving automation to our call centre managers who will use it to get resolution times down as fast as they can? Or do we do more than that, and take a three to five year view on automation and chatbots as an innovation opportunity, and look to use them in a truly transformational sense to create novel experiences for customers?

When it comes to chatbots, challenger banks have got nothing to lose and everything to gain, and they can take more risks. It’s all about leading with innovation.

Your AI Pals

What chatbot innovation means in the banking industry is investing in understanding what customers really want so you’re not aiming solely at a transactional level and saying, for example, I think we can shift 10% of our calls to a chatbot. It’s about really examining and understanding customers and looking at what would be helpful and useful to them - and generating really useful experiences for them, rather than ways to get rid of them quicker.

Luckily, there are plenty of examples of challenger finance brands that using automation, AI and chatbots to create novel experiences to attract customers.

Look at Cleo: it’s a chatbot based virtual financial advisor that looks after your money, and helps you to budget, save and track your spending. So for example, if you’re on a night out, Cleo can track your spending and alert you when you’re on the cusp of overspending and going over your weekly budget.

K2’s Bankbot is another great example of a challenger really working to understand its clients needs. K2’s entire offering is centred on a chatbot interface not unlike workplace collaboration tool Slack, so rather than navigating menus and dropdowns, users simply type in their questions and commands, like ‘transfer 100 pounds to John Smith,’ or ‘set up a new direct debit for Virgin Active..’ It’s a great example of how a challenger bank paid attention to the actual workflow requirements of its users, and created its chatbots and entirely offering accordingly.

Scoring Your Conversational Interface Project

So as a bank, it’s important to ‘score’ your conversational interface projects in order to characterise your chatbot deployment and understand your motivations for engaging with automation. There are effectively three different facets of projects: cost reduction focused, experience focused and scalability focused.

While some parts of every organisation may be driven solely by costs, challenger banks must not solely look at costs at the expense of innovation or the value of easy scalability - otherwise, what they’ll find that they struggle to differentiate. In the worst case scenario, challengers may find themselves so focused on cost that they are delivering the exact same services as other banks and that their customers don’t notice or care that any sort of chatbot-driven innovation is involved: after all, who cares if you order a new cheque book from a human or a chatbot?

As players who must use customer experience and better products to differentiate their offerings from the bigger banks, challenger banks must be wary of resting on their laurels when it comes to automation innovation: having a great digital offering will be table stakes sooner than we might think, and challengers should be looking to lead the way in using chatbots and automation as a customer experience differentiator.