February 1, 2023

Strategic challenges moving from homebanking to conversational banking

Table of content

Advances in customer service in recent years lead us to have solid grounds to affirm that the best experiences are conversational. Companies have begun to understand that automation is fundamental to offer 24/7 customer service, but that this is no longer the only thing that matters to users. This is how conversational banking emerged. It came to revolutionize the way in which each query is resolved, the level of personalization and the communication channels: key aspects to offer a true conversational solution.

Everything indicates that we are moving towards a 100% conversational future, and we have more and more clear examples. On the one hand, we can talk about world-renowned assistants such as Siri, Cortana, Alexa and the Google Assistant, which accompany us every day from our most widely used devices. These types of voice assistants are immersed in our daily lives: they facilitate everything from simple internet searches to managing the lighting or temperature of a room. 

On the other hand, there are intelligent text processors such as ChatGPT, which have arrived to provide us with new conversational tools that revolutionize the experience of interacting digitally.

Artificial Intelligence is becoming less artificial and more natural in users' daily lives.

Of course, what runs through us all as individuals also plays a leading role in the way we consume, shop and communicate. That's why the examples of conversational AI applied to various industries are legion. For example, chatbots with conversational artificial intelligence, which answer and resolve queries in telephone companies, social services, public services, all types of e-commerce and any other industry that works with customer service.

In this article we will discuss the most important challenges brought about by the combination of conversational artificial intelligence with customer service in the financial industry: conversational banking.

What is conversational banking?

Conversational banking is, in short, a new way of interacting with financial institutions. It is about banks offering automated conversational journeys: resolution experiences similar to those they would offer face-to-face to their customers, but through digital channels.

Messaging apps are the preferred channel for conversational banking, as they are the ideal ecosystem to engage in 1-to-1 conversations, express themselves effectively without character limits, and, of course, they are a medium with which most people are already familiar.

It so happens that 87% of businesses agree that traditional banking is an insufficient way to keep all users satisfied. In the digital age, digital solutions must be equal or superior to those offered face-to-face.

Through conversational banking it is not only possible to offer instant solutions, but it is also the ideal way to truly connect with users, get to know them in depth and have a broader picture of what each person expects from the brand. The expectations, needs and preferences of each individual user are different, and conversational banking is the path to truly personalized digital solutions.

Related article: Complete guide to conversational AI for the banking industry

Homebanking vs. Conversational Banking

The reality is that digital banking presence is nothing new to users. Homebanking has been around for years. Users are used to making transactions in a self-managed way, by logging into their bank's app or website, but this is far from a conversational experience.

Homebanking is undoubtedly a fundamental step between traditional banking and conversational banking: we can say that it acted as a kind of bridge between one and the other.

Over time, both users and banks themselves have discovered that homebanking is a one-way street and does not always leave room for dialogue or the resolution of queries. The range of transactions that can actually be solved via homebanking is, unfortunately, limited.

On the other hand, while homebanking is intuitive for many users, it is not intuitive for everyone. It can be a big challenge for seniors who do not have extensive knowledge of mobile applications, or who may not have access to web pages from a computer. Another big problem is that not all banks have the same interfaces, and again, this can be complex for people of a certain age range who may find it difficult to adapt to using different interfaces.

The latter is no small challenge, as elderly users make up a crucial part of the banking industry's audience, so ensuring a smooth and easy experience for them should be a priority.

Benefits of conversational banking

This is where conversational banking comes into play, with all the general benefits of conversational AI: the ability to offer personalized and responsive service across different platforms; the ability to interpret natural language and have almost human-like conversations; and the processing of data and analytics to improve the experience with every interaction. But, in addition, conversational banking has some advantages specific to the financial sector, namely:

  • 24/7 availability, even during non-banking hours.

Time is a crucial factor for users, and while waits for answers are getting shorter and shorter, overall satisfaction rates are getting higher and higher.

  • Resource and time optimization

Conversational AI is synonymous with optimization. By betting on conversational banking, banks can maximize the productivity of human agents, reserving them for more complex cases. In addition, 24/7 automated resolution results in an increase in the number of queries and transactions. 

  • Improved customer value

Personalization strategies and anticipation of customer needs are a key focus of conversational banking. Users' perceived value improves as their particular needs are taken into account.

  • Fraud prevention

Tools powered by conversational AI can effectively prevent and detect fraud attempts. Thanks to conversational banking, financial companies can send their users personalized notifications related to transactions. Customers can confirm fraudulent transactions, disown charges or report stolen credit cards for immediate cancellation or restrict the ability to transfer money from their bank accounts.

  • Scalability

Conversational banking, like all conversational AI-powered solutions, has the characteristic of being 100% scalable. No matter how many queries are received in a day, an hour or a minute: the immediacy of responses will not be disrupted by system overloads.

  • User experience

A great benefit of conversational banking is that it runs through applications with which users are already familiar. Thanks to this, the user experience is much more user-friendly as they are not forced to download new applications or learn how to use new platforms.

Challenges to overcome

Of course, conversational banking is here to stay, but that does not mean that all is said and done. The involvement of new technologies always brings challenges to overcome, and even more so in an industry of sensitive data and information such as banking.

Some of the points that the banking industry will need to consider in order to successfully implement a conversational AI solution:

  1. Developing an omnichannel strategy.

There is no point in having conversational AI solutions if they are not supported by a strategy of presence on the main platforms that users use to interact with the bank. For a customer to communicate with the bank and be able to engage in a personalized conversation, they must first know where to find the help they are looking for. A presence on social media and messaging channels with a solid strategy is the first step in delivering successful conversational journeys. The strategy should consider which platforms your users are actually on, so you can offer services where customers feel most comfortable.

  1. Solve, not just respond

While immediate and natural response is a primary aspect of conversational banking, it is not the only one. For a true conversational experience to exist, the response must be responsive and instant, which can be achieved through integrations. This means giving users the information they want, when they want it, on the channel they want it on. Only by connecting the bank's platform with its conversational AI solution provider will it be possible to provide accurate answers that meet the user's needs.

For example, if a user wants to know their account balance and sends a typed query that says "what is my balance?", the answer they are waiting for is the exact number. If he receives an answer such as "you can check your balance through the bank's app...", his experience will not have been resolute, therefore it will not have been satisfactory either.

  1. Continue to strengthen security measures

While conversational AI has the means to ensure secure transactions, it is important to understand that conversational banking is managed from each user's personal devices. This means that financial institutions must not miss any opportunity to verify the identity of the person they are talking to, and must ensure confidentiality and security at every stage of the conversation. For example, it is important to have two-factor authentication and encryption of banking data. 

  1. Familiarization with users

Trust is not built overnight, and even less so when it comes to a user's trust with a financial institution. For this reason, banks must guarantee transparency in their communications and develop strategies to accompany users in their familiarization process with the new channels.

  1. Proactivity as a priority

By using instant messaging apps as a medium, conversational banking opens up a new range of possibilities for banks. Starting conversations with your customers is now an option, and it should be leveraged because it has multiple benefits. Through AI solutions such as Engage, they will be able to send notifications to users proactively to streamline different processes, for example: send security alerts, request confirmation of payments or account movements, give notice of special promotions, updates on the status of a transaction, and so on. This facilitates the response to users, who can voluntarily respond to the notification and continue the conversation by the same means.

  1. Humans are still part of the conversation

Conversational banking is instantly resolvable, but it is true that some users will still need to communicate with a human agent from time to time. For more complex cases, they can be transferred to a live agent in the same chat to receive more specialized solutions immediately and asynchronously.

  1. The power of data

Conversations with customers are a great source of valuable data. Financial institutions must leverage each conversation to continue to improve interactions on a daily basis.

Is conversational banking the future of homebanking?

Based on the trends, we can say yes. While conversational banking still has challenges to overcome, its pros outweigh its cons. In 2023, and especially after the last few years that have accelerated digital management processes, more and more banks have decided to start improving their customer service with conversational banking.

Through solid digital presence strategies, strengthened security measures and integration with the appropriate platforms, the overall experience of interacting with a bank will become more natural, simple and an everyday aspect.

Are you looking for new ways to improve your CX?

Our customer service solutions powered by conversational AI can help you deliver an efficient, 24/7 experience  to your customers. Get in touch with one of our specialists to further discuss how they can help your business.