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State of chatbots in 2023 AI wave

With a recent AI breakthrough captivating the world's attention, the momentum of the AI market penetration shows no signs of slowing down and steadily paves its way through 2023 with the introduction of GPT-4 and Bard.

According to industry reports, the global market for AI is expected to surpass $521.3 billion by 2028, exhibiting a remarkable compound annual growth rate (CAGR) of 35% from 2023 to 2028.

Even though the global market continues to face challenging times, 2023 is expected to witness growth in the IT sector, with a 5,5% increase in IT spending globally, as reported by Gartner. Remarkably, amidst economic uncertainty, experts predict that AI will not only remain resilient but also recession-proof, helping businesses achieve more with fewer resources and investments.

 

Unveiling the Obvious: Chatbots Leading the Way in AI Impact 

As businesses seek innovative ways to enhance customer service and streamline operations, AI emerges as a powerful tool that can redefine the way organizations interact with their customers and achieve operational excellence.

But not all chatbots are equal. Banks need to look for more "evolved" chatbots – especially after the arrival of Natural language processing (NLP) at the high level that OpenAI is currently demonstrating.

Often referred to as virtual agents or intelligent virtual assistants, these AI-driven chatbots harness the power of ML and NLP, including its subsets natural language understanding (NLU) and natural language generation (NLG). 

If carefully trained and accurately implemented, these chatbots serve as invaluable tools for banks and financial organizations, helping them:

– provide a better, more dynamic customer experience; 

– streamline customer service and enhance employees' productivity;

– cut costs smartly, boost revenue, and achieve substantial ROI.

 

1) Customer service – a key differentiator and top priority

In such a competitive landscape as the financial services industry, where customers have numerous options to choose from, the quality of customer service has emerged as a crucial differentiator. 

However, according to a recent survey, 45% of bank executives regard their customer-centric banking experience as insufficient. 

Given the need to stand out and win customers' hearts, banks will seek to leverage AI to elevate their customers' experience, as 73% of business leaders see a direct link between customer service and business performance.

And modern AI chatbots can be an option to help here.

Traditional chatbots often rely on rigid decision trees and predefined responses, resulting in limited and frustrating interactions. Indeed, one such poor experience drives away 30% of customers, which results in the depletion of business opportunities and revenue accordingly. That's a statistic that bank executives cannot afford to overlook. 

On the other hand, modern AI chatbots leverage sophisticated natural language processing (NLP) algorithms and machine learning (ML) techniques and are powerful enough to cater customers' expectations and needs. 

Besides, the ability to learn from user feedback and adapt to changing contexts empowers these chatbots to handle diverse customer queries and become more intelligent and accurate over time, providing an ever-improving user experience.

  • A better focus on personalized interactions

Customers want to feel valued and assured that banks prioritize their time and acknowledge their unique financial circumstances and needs. They want to know that the bank genuinely cares about their financial well-being and is committed to delivering exceptional experiences tailored to their specific requirements. 

According to recent stats, about 73% of customers anticipate companies to understand their unique needs and expectations, while 70% of clients even spend more when offered a personalized service. 

When carefully trained, these AI chatbots can easily engage in dynamic and context-aware conversations. Not only do they seek to resolve issues, but are capable of taking into account the context and advising towards the best possible solution or product, unlike traditional chatbots.

  • More relevant, human-like responses

According to recent data, 64% of customers expect chatbots to deliver a service level on par with human agents. Indeed, customer expectations will only continue to rise, as people grow accustomed to the capabilities of ChatGPT and other similar AI tools.

The new wave of AI chatbots have great conversational skills and excel at understanding the nuances of human language. Being capable of understanding human sentiment, and intent, they are powerful in delivering more meaningful and empathetic interactions with users. As a result, users feel more understood and engaged, leading to higher customer satisfaction and increased conversion rates.

  • And such a positive experience pays off for the banks both in terms of customer loyalty and revenue.

Research shows that 61% of customers are prone to develop loyalty after a positive chatbot experience, and they are also more inclined to recommend the services to others. 

Furthermore, according to McKinsey, banks with higher customer satisfaction rates experience a 84% faster growth in deposits compared to their competitors. 

Summing up here – it is evident that higher customer satisfaction directly leads to better business results and ultimately, more significant profit. And that is what each company wants to achieve.

 

2) Better operational efficiency – an evergreen priority 

The need to optimize resource utilization, enhance staff productivity and reduce costs is an evergreen critical priority. AI-powered chatbots offer a promising solution to address the needs and challenges faced by banks, helping them on their way to operational excellence.

  • Chatbots to help banks cut costs in a smart way

Many organizations face the dual challenge of staff shortages and the need to reduce labor expenses, which can amount to a substantial portion of contact center costs, often reaching up to 95%.

Chatbots can really help here by automating some of the customer interactions, thus saving both time and money for banks – up to $80 billion in cost savings by 2026. 

  • Chatbots to support staff directly

In addition to automating customer interactions and reducing the burden on staff, chatbots can also support the team directly. Being pre-trained with information on products and service offerings, chatbots resemble knowledgeable colleagues and can provide relevant responses when staff seeks advice or guidance. 

Additionally, chatbots can streamline the customer onboarding experience by collecting necessary information, verifying identities, and facilitating smooth interactions between customers and various departments within an organization.

  • Chatbots to enhance staff productivity and elevate the employee experience

This capability of chatbots to seamlessly integrate into the team enhances the overall productivity and effectiveness of the staff, enabling them to focus on more value-added tasks and make faster, more informed decisions.

Consequently, fostering a positive employee experience yields numerous benefits, such as improved well-being and increased engagement.

And this ultimately translates to better business results. Recent research indicates that organizations that prioritize employee satisfaction can experience a remarkable upswing in revenue, with potential increases of up to 50%.


And what the future holds?

The point AI has already reached is remarkable. Now we already have an excellent GPT-4, and it's apparent that even better AI models are still to come in the future. 

Given the rapid AI advancements, chatbots will become even more intelligent and able to handle more complex requests.

And with everything moving towards automation, AI chatbots will become more mainstream. 

According to Gartner, chatbots are projected to become a primary customer service channel for a quarter of organizations by 2027.

With the increasing prevalence and advancing capabilities of modern AI chatbots, the landscape of digital banking is set to undergo significant improvements. As a possible result, the number of physical branches can decrease in the future. 

Looking ahead, experts envision a future where AI-powered assistants play a central role in managing various aspects of individuals' financial lives through ultra-personalization and hyper-automation. 

Yes, from today's standpoint, such a scenario might sound futuristic.

But still, with the advancements we have today, we are standing in some way at the beginning of an entirely new era, and it could be the AI one.

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