Chatbot: The new UI for a better CX in banking

“Device to fade away. We’ll move from mobile 1st to an AI 1st world.”- Google CEO, Sundar Pichai 

This famous quotation of Sundar Pichai, declaring a major conceptual revision for Google, points out a real paradigm shift in the realm of user experience. In the recent years of exponential technological change, the user interface has been transformed in an evolutionary, may be revolutionary manner. Focusing on the banking industry helps us to illustrate this road from the old days of customer representative at a branch to the AI-powered robots mimicking the former via instant messaging and chatbot.

In the pre-internet era, the customer representative, providing the Bank a human face as the prime actor of customer interaction, gives the customer only the information that is requested and relevant to that specific situation.[1] Bringing web sites in the scene means interacting with our banks by clicking on links, menus, and buttons, and filling out forms which are often hard to use and complex, rarely user friendly with very limited personalization. Lack of true customer-centricity and technological inadequacy resulted in a frustrating banking experience.[2]

In the subsequent period, brands have focused on the development of branded applications, however a Forrester Research on mobile apps has shown that, on average, users engage with only five apps for 80% of their usage.[3] That brings us to a recent phenomenon, “app fatigue”. The average American downloads zero new apps per month. As Parmy Olson at Forbes expressed recently, “The golden era of apps is already over”.[4]

A turning point indicating “back to the basics”

The year 2008 was a turning point in the realm of internet when Apple launched the App Store.[5] Now, we are witnessing a new turning point where the internet is changing again. The first time ever, people are using messaging platforms more than they are using social networks. Today, the big 4 messaging platforms – Facebook Messenger, Whatsup, Line, WeChat – have more than 3 billion monthly active users. [6]

It is not surprising to see “AI is the new UI” as a number 1 trend in the Accenture’s Technology Vision 2017 Report, as the conversational interface emerged allowing the user tell the computer what to do via chatbot.[7] As Pichai declares, “In an AI-first world, interactions become even more seamless and natural”. Bots help consumers via messaging, find solutions no matter where they are or what device they use. Nobody needs forms, inboxes and scrolling through the content. Unlike the self-serving marketing of the times of web and apps, bots provide a service just like the banking customer representative. As the customers need to communicate with the “human face” of the Bank and the perception that somebody helping them, instead of dealing with mechanical interfaces, conversational banking provides that humanized experience. Chatbot enable the customer to contact and gain access to a Bank in the most direct manner. The interaction is instant and quick. For the user, chatbot are an omnipresent support system with trust, authenticity, simplicity and speed, that has a considerable positive impact on the overall customer experience.

Advances in AI

Mentioning the evolution of the user interface and the paradigm shift in the realm of internet, advancements in artificial intelligence (AI) is another factor behind the rise of chatbot. Bot technology has been around for decades, however machine-learning has been a development that holds a place on the agenda of key Silicon Valley players. Open source contributions from leaders are plenteous and investments are growing, with 180 bot companies raising $24 billion in funding.[9] Amazon, Google, Apple and Microsoft all introduced voice assistants and are developing them to be smarter.

Advances in natural language processing (NLP) and voice recognition accuracy enable conversational interaction with only 5.9% error rate.[10] But, the intelligence does not result from only getting a natural-language understanding, machine learning, deep learning and context awareness. Also the mutually empowered relationship between big data and AI should not be ignored. AI can be used to analyze the data already produced by other means and improve the quality of chatbot service. On the other hand, chatbot interactions can feed into data science projects. Combining big data with AI will create new possibilities and innovations in the banking business.[11]

The ease and simplicity that enhance customer experience in AI-powered chatbot can be attributed to the enormous efforts to create comprehensive data analytics and algorithms, reminding us the famous expression by Leonardo Da Vinci “Simplicity is the ultimate sophistication”. The idea is clearly explained by Shane Mac, CEO of Assist as “… bots have the illusion of simplicity on the front end but there are many hurdles to overcome to create a great experience. So much work to be done. Analytics, flow optimization, keeping up with ever changing platforms that have no standard. … you have error checking, integrations to APIs, routing and escalation to live human support, understanding NLP, no back buttons, no home button, etc.” [12]

Shifting banking customer preferences

To remain competitive, banks face two major increasing pressures and try to position themselves accordingly – first from the customers, especially the Millenials, second from the fintechs and bigtechs that offer user-friendly, cheaper products to the former. According to an Accenture report in 2016, the most crucial challenge banks face is “eroding customer trust and satisfaction”.[13] Additionally, Millenials Distruption Index 2017 reports that (1) 1 in 3 Millenials would be open to switching banks in the next 90 days (2) 73% of millenials would be more excited about financial services offering from Google, Amazon, Apple, PayPal than from their own bank (3) Nearly half of Millennials are counting on tech startups / fintechs to overhaul the way banks work. [14]

It seems obvious that banking customers expect the same contextual, personalized and predictive experiences from their banks that they have every day in messaging platforms or ohter digital services.

Banks bet on chatbot

These three trends mentioned above have motivated the banks for the massive deployment of chatbot. A research by Accenture, executed among 589 bank executive respondents, reported as Banking Technology Vision 2017, indicated that within the next three years, banks will deploy AI as their primary method to interact with customers.[15] Gartner projects that more than 85% of customer interactions will be managed without a human by 2020.[16] Oracle suggests that 80% of brands will be using chatbot by the same year.[17]

As Banks recognize the power of AI-driven bots to create contextual, predictive and personalized experiences in addition to the power of conversational user interfaces, they are increasingly using chatbot or “conversational banking” to interact with customers, or employees better. AI-powered bots and assistants are crucial components of the banks’ digital transformation strategy. The aspect of efficiency by answering customer questions and reducing call center volumes is just the tip of the iceberg. The area of implementation in the customer interaction side is not limited to customer support but includes frequently asked questions, personal finance management, payments, money transfer, wealth management, lending and financing. Inevitably, we witness the proliferation of financial bots as the largest banks roll out theirs empowering the customer to manage their own financial lives. Bank of America, Capital One, Citibank, Mastercard, AMEX are just a few examples of global banks and non-bank financial institutions that have released voice & text capable chatbot.

Human and AI…

Despite the massive digital disruption and positioning Al-powered conversational banking as an important point of the competition and distinction, human is still preserving its essential and indispensable role in the financial industry. Robotic banking can only be a complimentary to the talented employees who focus on high value tasks that requires creativity, deeper human insight and judgement. This trend may also support the employees to be stronger experts in their fields by passing the repetitive actions to their robotic colleagues. Customers really need this human touch and banks should build a strong collaboration between human and AI to deliver enhanced experiences and support financial wellness of their customers.

First Global Examples of Banking Chatbots – I –