Conversational banking: Everything you need to know
Conversational banking has revolutionized how customers engage with their banks, providing a seamless and personalized experience through mobile messaging.
In almost every industry, the move to more personalized customer interactions delivered on mobile devices has been a megatrend of the 2020s. Customers demand it, and companies have been more than willing to embrace it, thanks to innovations in AI and chatbots.
While a bit slower to transform than its eCommerce and healthcare counterparts, financial services are gaining rapid ground, thanks partly to the proliferation of fintech or digitally native banking apps.
Here, we dive into conversational banking, its benefits, examples, and how AI chatbots play an integral role in delivering these experiences within the financial industry.
What is conversational banking?
Conversational banking, sometimes called chat banking, refers to the use of AI and chat technology to help customers conduct daily banking activities, such as transferring money, checking their account balances, or even paying bills.
The more a customer interacts with their bank through these conversations, the more a bank understands the customer’s preferences, habits, and needs – making it easier to personalize future transactional and promotional messages.
Like conversational commerce, which is essentially a way of using AI to sell products and services over chat apps, conversational banking applies the same principles to deliver a personalized experience to banking customers. Banks can lead customers through their entire financial journey over their favorite channels and create personalized interactions to enhance the conversational experience.
25%
is the estimated percentage of revenue by personalization for digitally native companies
Source: McKinsey
Significantly higher than companies with no or limited access to first-party data.
However, a solid foundation for any conversational customer experience today is omnichannel communications. Meaning the ability to reach customers where and when they want, on their preferred channels.
So, why use chat apps in addition to mobile banking apps?
The goal is to save clients time and to provide detailed information in the most convenient way possible. For some, downloading an additional app isn’t an option due to low mobile phone storage space.
For others, additional assistance helps reassure them that they are on the right track to completing big purchases or planning for many of life’s milestones.
Since chat apps offer instant, contextual, and personalized communication, clients can contact agents or chatbots over one platform where conversation history is saved and can be referred to later. This keeps them from tediously scanning through websites and apps and reduces customers’ waiting time for an inquiry they’ve looked into previously.
Chatbot-building solutions enable banks to create and deploy a smart virtual assistant to a marketing channel that brings a new level of automation, speed, and communication availability.
Infobip Answers, specifically, uses a drag-and-drop technology (no coding required!) that makes use of Artificial Intelligence (AI) to provide information on any channel, including:
Another important part of conversational banking is to enable a seamless shift to a human agent. For example, the customer should have any questions the chatbot cannot answer.
Conversational banking benefits
The benefits of conversational banking using chat apps are based on letting your customers reach you whenever and wherever they may be. This will help build the trust required for successful long-term client-bank relationships. Conversational banking using AI brings many benefits to banks, fintechs, payment processors, and other financial institutions through:
Increased revenue
Up-sell, cross-sell, and lead-generation efforts can all be personalized through conversational banking. The AI component works to understand what customers are looking for and then direct them to the products that meet their needs. Even if the transaction will eventually require a sales agent to close the deal, much of the preliminary research a customer does before purchasing a product can be enabled through chatbot technology.
Accenture research based on experience with global banks found that:
Conversational banking can accelerate revenue growth by 25 percent.
Customer lifetime value
Customers who have a positive experience with your brand from the start are more likely to remain loyal. The conversational banking experience should start from the moment a person becomes a customer with your bank or fintech solution.
Using a customer data platform to track and store customer behavior patterns as they start to interact with your brand, you can learn their interests and send targeted communications personalized to their needs.
Once you understand your customer’s needs, you can send the right messages and improve the chances of completing the sale throughout every stage of their journey.
Lower costs
Accenture research based on experience with global banks found that:
Conversational banking can reduce costs by up to 30 percent.
Conversational banking technologies help banks cut costs by:
- Better allocation of people: Using conversational banking with AI-supported chatbots significantly reduces agents’ time spent on real-time support calls. Customers prefer to seek out their own answers to common customer queries before calling a customer service number to avoid long wait times. Therefore, you can support more customers with the same number of agents using chat apps. This reduces the pressure on customer service reps and frees them up to handle more complex customer transactions.
- Access to entire chat history: This way, your customer support agents have more information and can resolve customer issues faster.
- Improving account access and security: Mobile verification solutions serve a dual purpose: they not only streamline the access process for customers trying to remotely manage their financial accounts, reducing the necessity for customer support but also play a crucial role in safeguarding customers’ sensitive data.
- Reducing fraud: 2FA SMS authentication and mobile text alerts proactively protect against fraud. These features promptly alert you and your customers of any suspicious activity, empowering them to take immediate action, no matter where or when it occurs.
Accelerating innovative experiences
Let’s face it, the banking industry hasn’t seen too much innovation since the introduction of the ATM machine. AI innovations for ATMs alone may include predictive maintenance, cybersecurity, facial recognition for security, and forecasting ATM cash demand.
In addition, as a supplier of payment processing, fintechs have the advantage of partnering with a chatbot vendor to enable them to accept and process payments through their API, bringing further innovation to the customer experience, as they can complete financial transactions through a messaging app.
Customer retention and loyalty
Providing instant support, personalizing interactions, resolving issues efficiently, offering a seamless multichannel experience, engaging proactively, showcasing a commitment to innovation, and more, contribute to enhanced customer retention and loyalty.
The role of conversational AI in banking
Thanks to artificial intelligence (AI), chatbots can understand customer voice or text communications but also able to reply, simulating actual conversations. AI uses Natural Language Processing (NLP) to allow chatbots to determine meaning from language through common data elements.
This article in Global Banking Finance Review explains how AI is evolving the banking industry beyond the ATM:
With conversational AI, banks can bring chat back into the banking relationship and really understand what their customers want. Rather than second-guessing them, they can allow the customer to quickly find what they are looking for themselves, or bring them through a series of pre-configured menus or forms.
Here’s where conversational AI in banking can offer real value for your customers:
Omnichannel support
Imagine this: your bank invested in a sophisticated conversational chatbot and integrated it into your mobile app. But, you realize only a few customers are using it. Why? The chatbot isn’t integrated into the channels your customers commonly use.
Now, imagine an AI-powered chatbot seamlessly integrating into your customers’ preferred messaging channels. This means customers can expect consistent customer support no matter what channel they use to contact your business.
Ensuring the availability of the right channels and methods to contact your bank is crucial for creating positive customer experiences.
Ease of contact
Using AI in conversational banking enhances access to your bank through various channels your customers already use. Whether a customer has a question about interest rates or their account balance on WhatsApp, Facebook Messenger, Viber, or SMS, a banking chatbot is available to help them promptly with this transaction.
This not only provides a quick and easy solution to their inquiry but establishes your bank as one that values convenience.
Faster response time and time to resolution
Conversational AI plays a pivotal role in freeing up valuable time for your customer service agents, allowing them to focus on complex queries. This means that banking chatbots can provide fast and reliable answers to frequently asked questions rather than your agents searching the knowledge base to find the appropriate solution. This results in quicker response time and time to resolution what customers will value.
Multilingual support
Conversational AI chatbots offer you a win-win situation – customer can interact in their preferred language on their preferred channel. Your customers feel appreciated, and your bank strengthens its global reach.
AI in banking use cases and examples
Here are several ways banks and fintechs are using conversational banking to improve the customer experience and drive revenue:
- Opening a new account
- Checking balances
- Transferring money
- Making a payment (may require a third-party integration)
- Account administration (change password, add an account user, etc.)
- Tracking data to identify upsell and cross-sell opportunities
- Sending personalized offers and messages
- Researching credit card options
- Requesting a loan
Remember, the option to switch to a live operator at all times is essential to a successful conversational banking experience!
Automating support
Automating certain processes improves efficiency of any customer service organization. One great example of how banks are effectively automating support using chatbots and virtual assistants is the way our client Bank Albilad did it.
They integrated our cloud contact solution with a WhatsApp chatbot to optimize processes, offload simple FAQs from agents and enhance support.
Watch the video to hear what their Chief marketing Officer, Abdulmohsen Al-Mulhem had to say about the evolution of conversational banking in KSA and the MENA region.
Automating international money transfers
One example of how to successfully use AI in banking is to follow the way our client Mukuru did it. As a leading Next Gen Financial Services Platform, Mukuru wanted to provide its customers with an additional channel to complete transactions and receive support.
The company chose to deploy a WhatsApp chatbot to automate account creation, money transfers, and payments in 10 different languages. The chatbot was connected to Mukuru’s contact center to enable customers to chat with an agent when necessary.
42%
of Mukuru customers now use WhatsApp for money transfers
15%
increase in customer satisfaction
Transforming customer service
Edenred UAE, a fast-growing payroll service provider, is another example of how an AI chatbot on WhatsApp can transform customer service. With a goal to scale customer service without compromising on user experience and increasing costs, Edenred decided to create a multilingual chatbot that can resolve common queries using rich media – 24/7.
69%
of the company’s chats are self-serviced through WhatsApp
96%
decrease in average wait time
Streamlining the support experience
Flamingo wanted to transform the support experience for its financial services customers. The retailer knew WhatsApp was its customers’ preferred channel when looking to connect with a brand, so they deployed a chatbot on the channel and connected it to its cloud contact center.
Now, the chatbot provides instant responses related to financial services and payment arrangements, and agents can take over conversations with access to customer profiles and conversation history for a seamless experience.
13%
higher conversion rate
39%
higher NPS score
5 star
ratings from customers for Flamingo
Tips for a successful conversational banking experience
Conversational banking can support customers throughout their entire journey with your bank or fintech solution.
To discover opportunities for enhancing value for your customers, begin by:
- Identifying every touchpoint customers have with your business
- Anticipating when and where customers are likely to require support
- Assessing potential areas for the integration of AI chatbots to elevate the customer experience
- Developing response guidelines that ensure a consistent experience for customers across various channels
Here are five ways to create satisfying relationships based on personalization that lead to long-term customer value.
Understand customers’ wants and needs
Customers today expect brands will connect with them in a personalized way, which is true for their banking experiences as well. A report by Merkle on the Customer Experience Impact found that consumers expect brands to offer personalized and seamless experiences.
To achieve this, brands must develop experiences that place customers squarely at the center. This begins with a comprehensive understanding of the entire customer journey, which allows marketers to learn and respond to the interests and needs of their customers. This ultimately results in more valuable, lasting relationships that lead to competitive advantage.
Open new channels
While push notifications are a popular choice, they may not always be the optimal solution for customers seeking conversational channels. As banking products become more complex, it’s crucial to communicate information through channels beyond SMS or push notifications.
This is where conversational messaging channels such as WhatsApp, Viber, or Line can play a vital role in establishing connections and engaging customers with visual, interactive digital banking experiences—exactly the kind of experiences they desire.
First, choose messaging channels that resonate with your customer base, recognizing that different platforms may appeal to diverse demographics. Remember that while conversational messaging channels are valuable tools, many customers may still prefer options like talking over the phone or meeting in person.
Orchestrate meaningful customer journeys
Banks, financial institutions, and fintechs have a unique opportunity to meet customers where they are throughout their life journey. From opening a first bank account or credit card to paying off student loans to securing a mortgage to saving for retirement, each stage requires a different conversation, and a different set of products and solutions to meet them where they are.
Conversational banking can be used to orchestrate meaningful customer journeys that keep them coming back to your brand because you’ve established trust.
Use AI to power customer support and engagement
Thanks to new strides in AI, chatbots have become an effective form of interacting with customers at every stage of their life journey. Support needs that historically could only be handled by a live service rep can now be handled digitally. Younger generations have grown up on these experiences and will seek answers digitally before contacting a customer service rep. Delivering quick, convenient, and contextual answers will ensure engagement and return visits.
Gather customer feedback
- Seek feedback: Reach out to customers with satisfaction surveys (CSAT) to gain insights into their experiences. Consider utilizing your new conversational channels for feedback collection.
- Efficiency improvement: Identify areas for more efficient issue resolution and pinpoint opportunities for improvement based on customer feedback.
- Reward engagement: Acknowledge and reward customer engagement by offering freebies or discounts as a token of appreciation.
- Measure Impact: Assess the impact of your efforts by monitoring key metrics such as the number of inbound queries and conversion rates. Additionally, analyze the performance of your conversational channels through metrics like average resolution time and time saved for contact center agents.
By following these steps, you’ll likely see positive results, showcasing that you’ve not only delighted your customers but also strengthened your organization’s bottom line.
Choose the right communications platform
CPaaS providers and Conversational AI can give you all the tools you need for a great conversational banking experience. But the key is to customize these tools to show that you understand what your customers want.
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