BlogKristen Jansone
Kristen is a seasoned professional with extensive expertise in new business development, IT consulting, and IT outsourcing. Her in-depth knowledge and strategic insights make her a trusted advisor in the industry, helping companies navigate complex challenges and capitalize on emerging trends.
9 min
AI Chatbots in the Banking and Financial Services Industry
Today, it would be difficult to picture this world existing without chatbots. If earlier such an invention seemed like an extraordinary and even fancy idea, now it is in demand in many industries, including banking and financial services. The introduction of AI in Fintech has completely changed the way in which companies communicate with their customers, providing them with 24/7 support and a more personalized touch. It is easy to see that this trend has been evolving with traditionally human employees being replaced by their artificial analogs – with more and more people interacting with them instead.
The impact of chatbots in the banking sector is undeniable. By 2020, banks were saving $0.50 per chatbot interaction. A well-designed chatbot system can handle a staggering 80% of simple user queries without human intervention. And when it comes to more complex customer interactions, the response rate can soar as high as 90%. Everyone wins with AI chatbots: customers appreciate the instant support, employees enjoy lighter workloads, and businesses save money while boosting efficiency.
What is a Banking Chatbot?
Let us start with the fact that chatbots are not something new. We all know them and use them on a near daily basis. However, when it comes to the industry of finances, you may be wondering: What are chatbots in banking? To provide exceptional levels of service while transforming the industry, most businesses are using AI to automate their operations. The banking chatbots are nothing but intelligent digital assistants that, based on artificial intelligence and natural language processing, perform human-like conversation with the customers. They can understand and respond to customer queries and requests as if you were chatting with a real person.
One of the most striking peculiarities of chatbots in the banking sector and any other is that they can be integrated with the existing systems and databases. This means that the chatbot application can “see” the required customer data, bank accounts, or other information to provide a relevant, personal answer. Unlike traditional customer service channels, bots are available around the clock, ensuring customers can get the help they need, whenever they need it, without being bound by business hours or staffing constraints.
It should also be noted that the chatbots do not stick to the strict human-created scripts. Also, they are not just simple response systems. They are highly sophisticated virtual assistants that understand the context, consumers’ intent, and are capable of conducting natural conversations.
Banking AI chatbots are a game-changing technology that financial institutions should definitely consider if they haven't already. Thus, later in the paper, we will review the motives and incentives that prove why banks must have chatbots if they want to succeed in the industry.
Benefits of AI Banking Chatbots for Your Business
Although the decision to adopt this pioneering technology may seem daunting at first glance, the revolutionary advantages it brings to the table are worth the hassle. Here are a few of the remarkable benefits of chatbots in banking:
Objectivity
Chatbots do not have emotions or personal biases and can provide bank customers with objective and unbiased financial advice or information. This trait can be especially helpful in the case of investment advice, loan approval, or financial planning, where emotional reasoning can lead to suboptimal outcomes.
Large Volume Handling
Independent of the level of passion and enthusiasm of humans, their physical capacities are, unfortunately, limited. At the same time, chatbots can quite effortlessly serve numerous banking customers simultaneously, delivering prompt responses without any risks to the quality or pace of work.
Linguistic Flexibility
A chatbot can communicate in many languages and dialects. Thus, the bank can attract an even greater number of customers, expanding the target audience thanks to the bot’s linguistic capacity.
Scalability
Chatbots for banking can be up- or down-scaled as required by financial institutions to enhance their reach, covering a wider population of customers.
Automation
Utilizing chatbots can assist in streamlining routine and laborious responsibilities traditionally carried out by human representatives. This would allow human agents to free up their time to focus on more complex inquiries and enhance personalized customer experiences. Studies indicate that over 85% of customer interactions in sectors like banking can be efficiently handled through automated chatbot conversations.
Data Collection and Analysis
Chatbot technology facilitates the capturing of various interactions with customers, which can be promptly analyzed to define the wants and needs of the target audience and identify emerging trends. Thus, AI banking chatbots facilitate the data-driven management of this business function.
Personalization
With access to customer-related information, chatbots can adjust their conversations and suggestions. This provides a relatively high level of personalization that customers do not experience in other customer service channels.
Efficient Security and Verification
Secure and advanced banking chatbots can ensure the safety of the customer’s financial details and their transactions. Technologies such as biometrics, QR codes and 3D facial recognition systems are commonly used to provide access to certain data banks. But when performing sensitive transactions, most chatbots go even further and use multi-level authentication systems to ensure the highest level of security.
Easy Integration
One of the things that may stop banking business owners from implementing chatbots is not knowing what to do with existing systems. The good news is that they do not need to be removed or replaced. Chatbots are quite easily integrated with banking infrastructures and various platforms that financial enterprises are accustomed to.
Up-selling and Cross-selling
The automated system can learn the customer needs and suggest the best possible financial products or services offered by the bank. Besides, the chatbots can prompt the customers to avail any service that might benefit them. In these ways, the use of bots can automatically initiate up-selling and cross-selling techniques.
Omnichannel Capabilities
The bots can interact with the customer in a personalized manner in various platforms like smartphones, desktop, website, & others. This method of interaction ensures omnichannel experiences to the modern generation banking customers.
Cost-Effectiveness
Introducing chatbot technology in the banking system is much cheaper than retraining the staff, hiring new workers and paying them salaries. The savings can be used to enhance the quality of the offered products and services.
24/7 Availability
Chatbots offer instant responses and are at your service around the clock, so customers will not feel cut off from access to the bank’s support when needing immediate answers outside of the bank’s business hours.
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