The acceleration of consumers using mobile devices represents how quickly society has adopted these technologies and the stress they are putting on traditional business models.  This is represented by the mass amounts of personal information being shared across social media platforms as well as how consumers engage retailers for the purchase of goods and services.  This rapid adoption and subsequent comfort levels with using digital channels have forced banks to also rethink how they engage with consumers for banking products and services.  This focus on customer engagement capabilities is now shifting to conversational and voice channels as consumers are now also accelerating their adoption of using voice to perform commerce, which includes banking.

The Shift to Conversational Banking

The transition has been driven by rapid changes in customer behaviour, as consumers increasingly use Amazon’s Alexa or Google Home or something else and become accustomed to using voice commands for more of what they do. Google estimates that more than 20% of consumers already use voice for searches, for example, and experts expect consumers to use voice for as much as half of their searches by 2020. Gartner estimates that 25% of customer service and support operations will integrate virtual customer assistants (VCAs) or chatbots by 2020, up from less than 2% in 2017. Indeed, consulting giant Accenture expects that conversational user interfaces (CUIs) will soon become a primary interface for everyday access to digital services.

Banks that use conversational banking to automate everything from providing routine support to advising on complex financial transactions have the potential to replace much of the work of call centres and even the back office, delivering faster and more accurate support for their customers while also driving down costs. With Gartner’s research showing organisations reporting reductions of up to 70 percent in calls and chat or email inquiries after implementing VCA as well as increased customer satisfaction and a 33 percent saving per voice engagement, it’s no surprise that banks are working fast to let customers converse.

Leading Players

Financial institutions (FIs) around the world are using conversational banking more and more.

In Turkey, for instance, Garanti Bank’s Mobile Interactive Assistant offers a conversational interface in its mobile banking app that talks with customers about account details, fund transfers, exchange rates, retail offers and more. Usage rates exceed 60%.

OCBC Bank has deployed artificial intelligence-powered voice banking to allow anyone to use Google Assistant or a Google Home device to start a conversation. Consumers can use the voice services to plan for retirement or a child’s education, calculate the mortgage loan amount they can afford, get foreign exchange rates or updates on financial markets, and more.

CIMB Bank recently enhanced its EVA conversational banking service so that it uses natural language processing capabilities and a spend analyser to enable customers to receive spending insights, manage their accounts better and make smarter financial decisions.

And customers like BBVA’s chatbot in Turkey so much that it has even received marriage proposals.  

Customers in APAC are moving to voice

Technology is Driving the Change

Three key technological changes are powering this move to conversational banking. First, the evolution of natural language processing technology enables banks to understand customers’ intent and deliver useful experiences. Second, the availability of data and APIs allow banks to use real-time context to adapt the conversations so that they feel more human. And finally, the proliferation of the voice-enabled Internet of Things devices such as the Amazon Echo or Google Assist to enable voice-led interactions with customers in their car, home or anywhere else.

Conversational banking is also opening up new challenges for FIs, however, as transactions, marketing, customer service and advice have to be reshaped in a unified customer-centric interface. FIs will need to build a people-first approach around natural conversation and replicate much of what a human customer service agent does so that customers can talk to digital technology in the same way that they currently talk to call centre agents. Banks will also need to develop the ability to use data stored in the cloud for real-time analytics and create new levels of integration between their digital channels, to create contextual conversations leveraging previous interactions and individualised engagement. Along with enhancing the technology, Accenture said that banks will need to define new organisational structures and hire new talent so they can differentiate their conversational channels.

The result, IBM opined, should be conversational banking with chatbots that can determine intent by using clarification, confirmations and examples to understand what the customer really wants. A combination of voice and video, as well as visuals and even text, will make conversations more enjoyable. And given customer concerns around privacy and cyber-attacks, chatbots will also protect customer information fastidiously to ensure data security.

From Customer-Driven to Bank-Driven Conversation

The shift to conversational banking will then lead to a shift in how customers interact with their banks.

Customers are currently options on the phone or the browser to specifically request the service or transaction they want to perform.  The intent of the customer in this scenario is explicit.  Conversations now must be able to derive the intent of the customer both where the customer initiates the dialogue or when the bank initiates the dialogue using customer insights base on the customer’s previous behaviour.

Conversational banking will enable a new level of services. Customers will be able to use their preferred channel, from a phone call or text to Alexa or WhatsApp, when they contact the bank. Conversational banking will enable the bank to pre-authenticate the customer to ensure security and carry on a comfortable conversation that adds value for the customer. The use of natural language processing capabilities and sentiment analytics to gauge tone and emotions can lead to solutions that are customised to the overall context of the conversation.

The bank’s automated conversational banking service may suggest ways to use credit card reward points, for example or discuss customised offers based on the customer’s preferences and transaction history. If a customer logs in on mobile or internet banking to pay bills or make transfers, the bank can suggest automating the process or using cheaper transfer methods that save the customer money. The bank may also recommend investment options based on the customer’s account balance and risk profile or provide insights on how market-related news impacts the customer’s portfolio.

Implementation takes Expertise

While some banks may be able to develop capabilities internally, many will need to leverage the expertise of service providers to develop the capabilities they need to engage customers effectively through conversational banking. Banks that implement it quickly can gain a strong competitive advantage, while those that lag will soon be left far behind.

The way forward for Conversation

The conversational banking journey is at a nascent stage. A conversation is implicitly a two-way dialogue and today, the conversations with customers represent the most basic of conversation capabilities.  While many of today’s conversations are transactional, banks will look to change how customers are engaged with conversational capabilities.  For a bank to initiate a conversation with a customer, the bank will need to understand the customer’s behaviour, preferences, lifestyle choices; just to name a few.  This contextual insight will drive broader and deeper conversations with customers allowing the customers to not just use the conversational channel for basic tasks but using this channel to extend to more meaning financial discussions around financial products or even estate planning.

The complexity to achieve meaningful customer insights isn’t just dependent on data and AI processing capabilities.  It’s also influenced by what regulators will allow the bank to do and what data customers will be comfortable allowing their bank to access; i.e. data privacy, data consent and data rights management.