3 ways conversational banking can create long-term value

Dave Hitchins

In just about every industry, the move to more personalized customer interactions delivered on mobile devices has been a megatrend of the 2020s. Customers demand it, and companies have been more than willing to embrace it, thanks to innovations in AI and chatbots. Financial services, while a bit slower to transform than its eCommerce and healthcare counterparts, is gaining rapid ground, thanks in part to the proliferation of fintechs, or digitally native banking apps.

Customers expect conversational experiences in retail, and this carries over to interactions with their financial institutions as well. Fintechs are especially poised to strengthen these customer relationships over time and draw more revenue from personalized messages as a result.

What is conversational banking?

Like conversational commerce, which is essentially a way of using AI to sell products and services over chat apps, conversational banking applies the same principles to deliver a personalized experience to banking customers. Banks can lead customers through their entire financial journey over their favorite channels and create personalized interactions to enhance the conversational experience. McKinsey estimates that the percentage of revenue by personalization for digitally native companies is 25%, significantly higher than companies with no or limited access to first-party data.

How does conversational banking work?

The key to all customer experiences today is omnichannel communications, meaning, reaching them where and when they want, on their preferred channels. One of the keys of conversational banking is to seamlessly enable the shift to a live chat operator should the customer have any questions that cannot be answered by the chatbot.

Chatbot building solutions such as Infobip’s Answers create and deploy a smart virtual assistant to a bank’s marketing channels that brings a new level of automation, speed, and availability to communications. This is done using a drag and drop technology (no coding required!) that makes use of Artificial Intelligence (AI) to instantly provide information on any channel, including WhatsApp Business, Messenger, Apple Messages for Business, Viber, Instagram Messages, Twitter Direct Messages, Telegram, LINE, Live Chat, SMS, RCS Business Messaging, and Google’s Business Messages.

Engage them with a welcoming experience on their preferred channel and let them know they can reach a live agent at any time.

What are the benefits of conversational banking?

Conversational banking using AI brings many benefits to banks, fintechs, payment processors, and other financial institutions through:

  • Increased revenue
    Up-sell, cross-sell, and lead generation efforts can all be personalized through the use of conversational banking. The AI component works to understand what customers are looking for and then direct them to the products that can meet their needs. Even if the transaction will eventually require a sales agent to close the deal, much of the preliminary research a customer does before making a decision to purchase a product can be enabled through chatbot technology.

    Accenture research based on experience with global banks found that:

    “Conversational banking can accelerate revenue growth by 25 percent.”
  • Customer lifetime value
    Customers who have a positive experience with your brand from the start are more likely to remain loyal. The conversational banking experience should start from the moment a person becomes a customer with your bank or fintech solution.

    By using a customer data platform to track and store customer behavior patterns as they start to interact with your brand, you can learn their interests and send targeted communications in a way that is personalized to their needs. Once you understand your customers and their needs, you can send the right messages and improve the chances of completing the sale throughout every stage of their journey. 
  • Lower costs
    Using conversational banking with AI-supported chatbots significantly reduces the time your agents spend on real-time support calls. Customers prefer to seek out their own answers to common queries before calling a customer service number to avoid long wait times, therefore you can support more customers with the same number of agents using chat apps. This reduces the pressure on customer service reps and frees them  up to handle more complex customer transactions.

    Accenture research based on experience with global banks found that: “Conversational banking can reduce costs by up to 30 percent.”
  • Accelerating innovative experiences
    Let’s face it. The banking industry hasn’t seen too much innovation since the introduction of the ATM machine. AI innovations for ATMs alone may include predictive maintenance, cybersecurity, facial recognition for security, and forecasting ATM cash demand. 

    In addition, as a supplier of payment processing, fintechs have the advantage of partnering with a chatbot vendor to enable them to accept and process payments through their API, bringing further innovation to the customer experience, as they can actually complete financial transactions through a chat app. 

The role of AI chatbots in conversational banking

Thanks to Artificial Intelligence (AI), chatbots are not only able to understand customer voice or text communications, but they are also actually able to reply, simulating actual conversations. AI uses Natural Language Processing (NLP) to allow chatbots to actually determine meaning from language through common data elements. This article in Global Banking Finance Review explains how AI is evolving the banking industry beyond the ATM:

With conversational AI, banks can bring chat back into the banking relationship and really understand what their customers want. Rather than second-guessing them, they can allow the customer to quickly find what they are looking for themselves, or bring them through a series of pre-configured menus or forms.”

Conversational banking use cases

There are several ways banks and fintechs are using conversational banking to improve the customer experience and drive revenue.

Improving customer experience

  • Open a new account
  • Check balances
  • Transfer money
  • Make a payment (may require a third-party integration)
  • Review account statement
  • Change loan terms
  • Account administration (change password, add an account user, etc.)
  • Close or block an account 
  • Flag potential fraud 
  • And so much more! 

Drive revenue

  • Track data to identify up-sell and cross-sell opportunities
  • Send personalized offers and messages 
  • Share investment opportunities 
  • Research credit card options
  • Explore mortgages
  • Request a loan

Remember, the option to switch to a live operator at all times is essential to a successful conversational banking experience!

Create long-term customer value with conversational banking

Conversational banking can support customers throughout their entire journey with your bank or fintech solution. Here are three ways to create satisfying relationships based on personalization that lead to long-term customer value.

  1. Understand customers’ wants and needs
    Customers today expect brands will connect with them in a personalized way, and this is true for their banking experiences as well. A report by Merkle on the Customer Experience Impact found that consumers expect brands to offer personalized and seamless experiences. To achieve this, brands must develop experiences that place customers squarely at the center. This begins with a comprehensive understanding of the entire customer journey, which allows marketers to learn and respond to the interests and needs of their customers. This ultimately results in more valuable, lasting relationships that lead to competitive advantage.
  2. Orchestrate meaningful customer journeys 
    Banks, financial institutions, and fintechs have a unique opportunity to meet customers where they are throughout the life journey. From opening a first bank account or credit card to paying off student loans to securing a mortgage to saving for retirement, each stage requires a different conversation, and a different set of products and solutions to meet them where they are. Conversational banking can be used to orchestrate meaningful customer journeys that keep them coming back to your brand because you’ve established trust. 
  3. Use AI to power customer support and engagement
    Thanks to new strides in AI, chatbots have become an effective form of interacting with customers at every stage of their life journey. Support needs that historically could only be handled by a live service rep can now be handled digitally. Younger generations have grown up on these kinds of experiences and will seek out answers digitally before they contact a customer service rep. Delivering answers that are quick, convenient and contextual will ensure engagement and return visits. 

To design conversational customer experiences in banking, fintech should consider an omnichannel solution that enables seamless customer conversations and authentic interactions with your brand from anywhere at any time.

Want to learn more about how AI-powered chatbots can enable authentic conversations? Try having a chat with Omnia, Infobip’s own conversational chatbot in the lower right corner of our website or contact a solutions expert to learn more.

Nov 17th, 2022
6 min read

Dave Hitchins

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