Digital Workspace

Why Chatbots Are Gaining Ground Among Financial Services Companies

More banks, credit unions and others in the industry are deploying AI-driven bots to drive customer service, but caution is warranted.

Justin Hester

Justin Hester is a principal inside solutions architect for CDW's collaboration practice. He previously worked as the national collaboration lead for CDW’s vertical segment and a unified communications strategist.

The chatbots are coming. Recent data points to substantial adoption and annual growth as companies leverage the increasingly intelligent, computerized conversationalists to connect with customers and enhance their experience.

Consumers also report an uptick in their willingness to engage with chatbots; survey results from Salesforce show that 58 percent of customers believe emerging technologies have already “changed their expectations of companies” and 77 percent expect chatbots to transform expectations over the next five years.

Historically resistant to automate people- and precision-driven processes, financial institutions are now catching up to the market at large, using bots to answer client and staff questions — and are enjoying tangible benefits. According to Vijay Sankaran, CIO of TD Ameritrade, chatbot technology represents “a key part of our strategy, and we’ll continue to invest in it.”

With organizations now banking on bots to bridge the gap between customer expectations and experience, what’s the best way to make the most of this emerging interactive experience? And what comes next?

What Are Chatbots?

Put simply, a chatbot is a virtual assistant that is powered by AI. They’re designed to conduct real conversations with customers using a combination of preprogrammed responses to common questions and machine-learning algorithms that allow bots to improve their answers over time.

Chatbots also let users choose their preferred method of interaction, working equally well via text or voice to deliver relevant and timely answers on demand. First-generation deployments are already paying dividends, with bots able to answer 80 percent of common questions and 57 percent of businesses agreeing they deliver “substantial ROI with minimal efforts,” according to Entrepreneur India.

Current industry efforts focus on chatbots as stepping stones to more complex and costly service. In effect, bots offer consumers a self-service option if they need help with their account or have straightforward financial questions. When chatbots encounter questions they can’t answer, they move service up the chain to live agents. Armed with the history of the bot-customer conversation, agents are better able to meet client needs without forcing them to rehash essential details.

Initial successes have established chatbots as “a great first use case for AI” within organizations, according to Forbes. They’re relatively inexpensive to deploy, almost immediately reduce total overhead and help quantify the often ambiguous role of artificial intelligence in the corporate workplace.

The Essentials to Succeeding with Chatbots

Of course, there’s a caveat: Customers don’t always love talking to bots. In fact, 64 percent of U.S. consumers say brands have become so focused on automation that they’ve lost the ability to create personalized, human-driven experiences. What does this mean for banks, credit unions and other financial firms? Consider a recent J.D. Power survey, which found that while 78 percent of customers want financial guidance and advice from their banks, less than half were satisfied with the digital delivery of that advice.

To ensure banking chatbots address client needs rather than simply boosting the bottom line, banking chatbots must deliver across three key areas:

Enhancing the experience: Often viewed as a cost-reduction measure, the true long-term value of bots is boosting the consumer experience by reducing wait times, improving self-service and limiting repetition.
Evolving the interaction: As noted by research firm Deloitte, bots are not sophisticated enough out of the box to meet user expectations. Banks and credit unions that adopt them must commit resources to developing them over time.
Engaging with consumers: Dispassionate information delivery works if customers are asking for a balance statement or need basic data about interest rates. But this method falls flat if they have more in-depth questions about financial advice or planning. Chatbots must focus on connection to deliver ROI.

Building a Better Chatbot

The future of financial chatbots is friendly. It’s also compassionate, kind and slightly humorous. In short, it’s the integration of emotional intelligence as a companion to existing dispassionate data discussion.

This is the cutting edge of AI: Developing natural-language tools capable of filling dead air in conversation — with supportive “uh-huhs” or “mmm-hmms” — and recognizing the telltale signs of frustration or anger in human voices, allowing bots to bring in human agents when conversations go beyond their depth.

Just like cloud computing deployments or Big Data analytics, developing emotionally connected, secure chatbots capable of carrying on high-level financial conversations isn’t something banks should handle on their own. Here, it’s critical to find industry front-runners capable of taking the lead on AI development and helping bots become more than the sum of their parts.

What’s the bottom line? Banks are catching up to the market at large when it comes to chatbot adoption, but clients want more from their digital experiences. Conversational, knowledgeable and emotionally intelligent bots are critical to help financial firms walk the digital walk — by helping them talk the talk.