Messenger apps and conversational AI will develop a significant impact on the client experience of banking. Financial institutions are busy establishing robo-chatbots for service requests or use AI-supported human conversation to support their relationship managers (RMs).
This development is not only a – long overdue – adjustment to the client’s preferred channels. Adoption to conversational banking becomes the decisive factor for banks to stay competitive with their service costs against new challenger banks.
What is conversational banking?
Conversational banking means the inclusion of messaging apps – with all their native abilities to communicate in text, voice and rich formats – into a bank’s client experience. Given the intensity of a conversational style service, AI-powered chatbots have to jump in and answer the bulk of repetitive questions. This will free up human agents for non-standard requests. In the case of wealth management, the goal may be to sustain in-person communication. Here, natural language detection offers the potential to support relationship managers in engaging their clients in effective conversations.
Banks start to integrate AI-powered chatbots as well as AI-supported human conversation into their client experience. This trend has clearly been sparked by a shift in the usage of mobile communication from SMS to instant messaging. And while many industries embraced the opportunity of messenger apps from the very beginning, the financial industry had a more conservative take on that matter.
All existing ways to interact with a bank forced clients to use channels which are owned by their bank: branches, contact centres, ATMs, web banking, mobile banking apps. One defining characteristic of a conversational banking solution is to break through these boundaries and include messaging services and voice assistants into the bank’s universe. This involvement entirely changes the style of communication, as clients can use natural language and their preferred channels when speaking to their bank. Or, in other words, requests that used to be a self-service task for the client become part of a natural conversation.
While the inclusion of messaging apps is the common denominator of a conversational banking strategy, the actual design of a solution leaves room for differentiating approaches. For retail segments, where client requests are numerous, but repetitive, a fully AI-powered chatbot is the envisaged solution. This segment is, indeed, the spot in the market where efficiency potential is the highest and where adoption has set in first.
However, conversational banking does not necessarily strive to replace the in-person conversation with a relationship manager. Highly personalized advisory for HNWI and UHNWI individuals will see a shift to conversational banking, too. Rather than powering a chatbot to replace in-person communication, AI will be applied to support the RM.
Why is conversational banking important?
There are three major drivers pushing financial institutions and wealth managers to make their services available on messaging channels.
Successful service providers simply must be where the clients are. And this is, increasingly so, on their mobile phone. Consumers averaged a daily 3 hours and 40 minutes on mobile in 2019, up 35% since 2017 (Annie, A., The State of Mobile 2020). Companies from every vertical are benefiting from making mobile the centre of their digital transformation investments. With WhatsApp (1,600m), Facebook Messenger (1,300m) and WeChat (1,151m), the market has three messaging apps that recorded more than a billion monthly active users in 2019 (wearesocial).
Messenger apps: monthly active users in 2020