From hype to hero: How chatbots can revolutionize your bank’s customer experience

Physical banks are seeing less foot traffic because customers have turned to online and mobile banking for everyday tasks. Current trends suggest that all bank branches could be closed by 2034.

Source: EnterpriseAppsToday

This means customers are changing the way they bank, forcing financial institutions to evolve their processes and way of work. 

The challenges don’t stop there. Digital platforms, fintech companies, and other nontraditional players are changing the industry with innovative technology and new business models. Gartner’s predictions are clear: 80% of ‘heritage’ banks will be out of business or unable to compete by 2030 if they don’t abandon their outdated business and operating models. 

But how can banks effectively approach these challenges?

Banking chatbots. They provide 24/7 support, streamline routine processes, and offer personalized financial advice no matter the channel. Chatbots have the potential to help banks cut costs, improve customer satisfaction, and stay ahead of the curve. 

According to NMSC, the global chatbot in the banking, financial services, and insurance (BFSI) market was valued at $586 million in 2019. By 2030, the market is forecast to reach $6.83 billion. 

Major firms, such as J.P. Morgan Chase, Bank of America, Deloitte, BDO Global, PayPal, Wells Fargo, Capital One, Mastercard, and others, have already successfully implemented chatbots to enhance customer engagement. 

Let’s explore how chatbots can transform your bank. 

Chatbots can:

You can choose between rule-based, intent-based chatbots, and AI assistants depending on your bank’s wants and needs. They differ in their level of sophistication and ability to understand user intent.

Rule-based or keyword chatbots analyze text input based on keywords and give appropriate answers. These chatbots mainly help with simple customer queries and FAQs but struggle with complex language or unusual requests. 

These chatbots leverage natural language processing (NLP) to analyze user queries and understand the underlying intent. They can handle a wider range of inquiries and even guide users through multi-step processes. 

On the other hand, AI chatbots use machine learning, natural language processing (NLP), and natural language understanding (NLU) to bring the conversational approach to customer service.  

The advantages of chatbots in banking are numerous. Here is how they can benefit both your customers and your bank: 

When dealing with finances, questions or issues can arise at any time. And they need to be resolved as quickly as possible. AI chatbots offer 24/7 support and faster response times. It doesn’t matter if a client needs an answer to account questions or schedule an appointment; chatbots are always available to deliver personalized interactions.  

Banking chatbots do more than answer customer queries; they reduce operational costs and increase efficiency. They can save around $7.3 billion for financial institutions in customer support costs.  

We all often forget our passwords and need to reset them. So, you can imagine how many times a day customer service agents get an inquiry to help reset a password.  

Chatbots can take over this simple task and direct customers to relevant resources while your staff can focus on complex issues. 

Once a lead shows interest, chatbots seamlessly guide them through account opening, form completion, and data collection, ensuring a smooth transition into becoming a customer. This lead generation process allows customers to initiate and progress through onboarding at their own pace, outside office hours, rather than waiting for customer service representatives. 

Banks offer a wide range of products and services, including checking accounts, loans, credit cards, check-cashing services, wealth management services, insurance, and more.  

Customers may use only one or two of them, not realizing their bank offers much more.  

Chatbots can start this conversation by leveraging customer data and recommending suitable financial products.  

For example, the bank’s system recognized that a customer’s salary deposits have increased, and her spending suggests that she could be saving more. The chatbot can suggest a higher-tier savings account based on the customers’ financial activity.  

Banks must handle customer data securely and safely while identifying fraud quickly and without negatively affecting customer experience. 

AI chatbots can spot real-time suspicious patterns, flag potential threats, and improve banks’ fraud prevention rates. They can even assist with identity verification to keep user accounts more secure.  

Chatbots record every question, complaint, completed transaction, and moment when customers get stuck within the conversation flow. 

From gathered data, banks can determine what customers ask about most often (e.g., fee structures, specific products, branch hours). This informs marketing, FAQs, and even product development. 

Identifying where in the customer journey customers drop off will help determine the pain points in a bank’s interface design and process.

Chatbots also track sentiment over time, alerting the bank of emerging issues or positive responses to a product launch. Banks can address these issues swiftly rather than waiting for survey data, improving the customer experience before they churn. 

Additionally, the real-time nature of chatbot data allows banks to pivot quickly in response to market trends or changes in customer preferences.

Chatbots can be programmed to communicate in multiple languages, breaking down barriers for customers who prefer banking in their native language. 

For customers with limited dexterity or difficulty typing, voice-enabled chatbots allow them to manage their finances using just their voice. 

Offering diverse interaction modes shows customers that the bank values inclusivity and understands their needs, leading to increased trust and loyalty. 

Banks across the globe are seeing results, here are a few successful chatbot examples: 

Since launching in 2018, Erica® has had over 1.7 billion interactions with Bank of America clients and helped 37 million clients manage their finances. 

Bank of America clients most often use Erica to: 

Singapore Bank DBS developed a digibot to address customer queries quickly and easily. Their chatbot can perform transactional requests such as loan applications, check pending transactions, check cheque status, report a scam, enquire about reward points, and more.  

J.P. Morgan Chase launched COiN (Contract Intelligence) to analyze commercial loan agreements, which has reduced work from 360.000 man-hours to seconds and is less error-prone.  

This is the first in the series of bots they plan to roll out. 

Additionally, they filed a trademark for IndexGPT, similar to ChatGPT. They aim to simplify financial investment in securities, funds investment, financial affairs, and monetary affairs. With IndexGPT, J.P. Morgan Chase clients will be able to learn about the various investment products in the market, as well as the reasons for them, and pick suitable options based on their current financial health. The chatbot will guide clients on investing in these stocks and funds.  

Eno, a chatbot for Capital One, allows users easy access to balances, transactions, and account details. 

Top advantages:

The banking sector is rapidly embracing chatbots and AI, and for good reason. 77% of bankers believe that the ability to unlock the value of AI will be the difference between the success or failure of banks. These technologies aren’t just a trend, they are the future: 

Chatbots enhance efficiency, personalization, and the overall customer service experience. As AI advances, they will become even more sophisticated, fundamentally reshaping interactions between banks and customers. Investing in conversational AI will help financial institutions prepare for the future and increase their chances of finding clients among Gen Z. 

GenAI will be a crucial driver of chatbot evolution. Chatbots will become more ‘human-like’ and better interpret and predict behavior. 

According to research from EY-Parthenon, there are three main areas how GenAI is already impacting their banks: 

Voice-activated chatbots take convenience a step further by offering customers a broader, more convenient range of interaction options. And they are set to become even more sophisticated in the near future. 

However, the benefits extend beyond the customer experience; they improve internal efficiency with automated data workflows. 

Data shows this trend is significant for engaging Gen Z, with a projected 64% of the US Gen Z using voice assistants monthly by 2027. 

Chatbots have the potential to revolutionize financial planning, making it more accessible and engaging. They can assist with investment planning, goal setting, budgeting, risk profiling, interest calculator, debt management, and retirement simulations. This personalized guidance builds deeper, more profitable customer relationships. 

AI assistants can also act as investment concierge. They’ll analyze your profile, suggest investment options that fit, or even help you set realistic FIRE (Financial Independence, Retire Early) goals.

The future of banking lies in the intersection of customer preferences and technological capabilities.  

Here is how to succeed: 

Success ultimately rests on keeping the customer experience at the heart of all strategic decisions. 

Try out our Infobip banking bot by scanning the QR code or clicking the link: