Conversational AI in Banking 2022: Definition, Trends, and Benefits

The Banking, Financial Services, and Insurance (BFSI) industry are on the cusp of a significant digital transformation. Traditional, in-person appointments, advising, and other services can now be completed using artificial intelligence (AI) and conversational AI agents. Considering the rise in popularity of these technologies, it is crucial that banks are actively moving away from traditional banking methods and leaning towards conversational AI-powered banking ones.

In research conducted by Digital Banking Report in July 2020, it was found that 75% of financial institutions had already begun considering various conversational AI technologies, data, and analytics to determine the best course of action for the coming years. Nearly two years later, the need and popularity of these technologies have grown significantly. Banks have further begun optimizing their use of technology by utilizing conversational AI, which leverages Artificial Intelligence (AI), Machine Learning (ML), and Natural Language Processing (NLP) to enhance their customers' experience.

Below, we will take a closer look at conversational AI in banking, what it is, how to use it, expected trends, customer and business-focused benefits, and how modern technologies enable the banking, financial services, and insurance industries to meet ever-changing needs and customer expectations and requirements.

What Is Conversational Banking?

Conversational banking consists of digital banking through chat functions, voice menus, mobile applications, or other visual and interactive engagement tools. It enables the user to chat directly with the bank through the application and does not require the customer to call the company or physically go into a bank location. Conversational banking also enables banks to gather substantial amounts of data on their customers, their goals, financial behaviors and patterns, intentions, wants/needs, and present opportunities in which the company could upsell, cross-sell, or offer other relevant advice and services.

Conversational banking is a much broader concept than many consumers realize. Its functionality is not limited to only text, chat, or voice functions. The technology engages in intelligent interactions with your clients. For the banking industry, the goal of implementing this technology is to understand their customers better, uncover their needs, and begin to offer better solutions for them. 

Conversational AI Trends in Banking

1. Conversational AI Helps Customers Make Better Financial Decisions

The financial and banking industries and their landscapes are complex and rigid; finding the right bank that understands your needs, credit scores, security requirements, and other needs can be challenging. Customers face many financial decisions during their life and depend on their trusted financial organizations to provide them with guidance when they need it- during any and every step of their journey.

Some banking institutions have begun addressing these needs and challenges by providing their clients with valuable resources from the beginning of their professional relationships. One of these resources is conversational AI. This technology helps deliver insights into a customer's finances and recommend the best next step for meeting their financial goals. This personalized approach simplifies the number of available options; tools, offers, and products are downsized, and only the relevant ones are presented to the customer. 

Conversational AI in the banking industry has grown exponentially during the last few years and is expected to continue. It will continue to be integrated and incorporated into various customer experience and financial journey touchpoints. It will ultimately help customers deal with complex financial decisions and guidance that an advisor in person has long offered. Financial institutions will be able to gather a rounder picture of their customer base and various circumstances and facilitate better resources for the range of decisions to be made.

2. Technology Is Meant to Supplement Agents, Not Replace Them

We mentioned before that some tasks would be able to be carried out by a conversational AI bot, but that does not mean that human agents will be unnecessary. Companies utilizing automation and conversational AI technology are doing so to empower employees, boost productivity, save time and money, and better support their customer service, IT, and HR teams. This support can help to increase efficiency and team morale and, as mentioned above, boost team members' and company-wide productivity.

3. Conversational AI Will Eliminate Silos and Provide More Holistic Experiences for Customers

Companies like Amazon and Netflix are leading "digital-first" organizations because they have extensively trained employees to be consistent and engaged during every interaction. This has forced other companies across industries to catch up and meet those exact expectations. For banking, customers often engage through ATMs, branch locations, customer service call centers, and mobile and online banking applications.

Companies must provide up-to-date information, modern solutions, and engaging content with many access points, regardless of channel. Fortunately, this is precisely what conversational AI offers. Whether through a phone call, email, text, surveys, or online banking assistance, conversational AI is there to help, answer questions, solve problems, and provide relevant information to each customer--available 24/7.

Gone are the days when customers have to search extensively for financial information, guidance, and suggestions. Relevant customer suggestions should be readily available when companies learn about their customers and their behaviors across channels. Conversational AI can help optimize and gather this information. Modern banking will continue to evolve, increase personalization, and seamlessly offer necessary and relevant consumer recommendations.

Benefits of Conversational AI in Banking

Implementing conversational AI in the banking and financial sectors allows customers to further engage and communicate with their banking institutions; through virtual AI assistants, voice assistants, live human agents, mobile applications, or other access points, customers can receive a personalized experience, relevant advice, and more. Conversational AI helps bridge the gap between technology, communication, and customer's desire for a personalized experience across channels.

Benefits for Customers

Below are a few significant benefits that customers gain from utilizing conversational AI in their banking experience:

• 24/7 Availability – Clients no longer need to wait for a response to their question from a live agent. Intelligent bots are readily available to provide support and handle any common financial inquiries.
• High-Quality Service – With the assistance of digital engagement tools, potential errors are identified much faster, and a practical solution is provided seamlessly. It minimizes the number of touchpoints and enhances first-contact resolution. Companies can train their conversational AI agents to easily provide the answers to common questions.
• Dynamic Engagement – Proactively reaching out to customers helps them get instant support and solutions right when needed. This enhances your company's customer satisfaction rates and maximizes brand loyalty.

Benefits for Banks

For financial institutions themselves, there are some significant benefits of integrating conversational AI within your company as well, including:

• Cost Efficiency– Utilizing conversational AI-powered bots can sufficiently handle various customer inquiries to minimize operational costs. Companies can spend upwards of $1.3 trillion to handle customer inquiries. These intelligent bots can help save up to 30%.
• Minimize Errors – Conducting work manually always has a potential for errors that can eventually create even bigger issues. Integrating conversational AI in banking can guarantee error-free services and eliminate complications.
• Scale Easily – Bots can scale up or down depending on your business, peak hours, peak season, etc. They can handle substantial volumes of incoming messages without ever affecting the business costs. 

The future of conversational AI in banking, financial services, and insurance (BFSI) industries is expected to grow in use and popularity. It's crucial that banks adopt this modern technology and utilize the right implementation strategies so customers can be satisfied, engaged, and successful. This modern technology provides a great and unique opportunity to better and further understand customers, fulfill their needs, and even support your team!

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