AI-powered chatbot – A strategic gateway to digital banking


Chatbots represent the next step in the customer-facing evolution of the banking industry. Chatbots are computer programs that use AI (artificial intelligence) and imitate conversations with people. They can transform how a customer interacts with the bank from a series of self-initiated tasks to a quasi-conversation. For example, Google’s Allo, powered by AI, learns how the user replies and then offers relevant suggestions. In addition, it has its own search assistant bot that extracts knowledge from Google’s knowledge graph and existing Google services.

Bank of America, Master Card, and several financial start-ups have now introduced chatbots that enable customers to ask questions about their accounts, initiate transactions, and get financial advice through text messages or services such as Facebook Messenger and Amazon’s Echo Tower.

Chatbots are still at a nascent stage in banking. Yet, bots will quickly gain sophistication to the point that they will perform all tasks previously owned by customer service representatives. Bots are set to change the entire tenor of the conversation between the bank and its customer. They will also free up time for representatives to perform more complex tasks for their customers.

When bots and messaging apps are combined with conversational user interfaces and machine learning, the virtual assistant is born! The fundamental element used in conversational user interfaces is natural language. The direct correlation between the evolution of bot platforms and Natural Language Processing platforms signals a shift to ‘conversational commerce’ where virtual assistants have the potential to impact customer experience and loyalty. Using the power of natural conversation, these technologies facilitate two-way interactions that allow banks to establish genuine relationships with their customers and provide a more seamless experience across multiple digital touchpoints.

However, it is impossible to provide flowing natural language conversations with software, though efforts are channeled towards that. For conversational AI to truly transform customer-facing bots, event-driven programming models, sophisticated algorithms, and machine learning have to converge on one platform. These platforms will provide the shift from request-driven activities to automated activities that push information and choices to the users according to their need, in real-time, adjusting the conversation flow with the users as preferences are learned.

Banks that leverage this technology can benefit in several ways.

  • Personalized service: Conversational AI makes it possible to provide personalized services in real-time at lower costs. By tracking users’ habits, interests, and activities, financial products can be tailor-made to meet and anticipate each user’s unique and changing needs. Thus, it makes it possible to have one’s own digital personal financial assistant.
  • Improved customer experience: Conversational AI provides a seamless digital banking experience. It allows for easy authentication and easy access, which generally translates into higher customer engagement and retention.
  • Informed decision making: It also allows the management to make data-driven decisions. Management can ask questions to machines rather than humans that will analyze the data and provide recommendations.
  • Reduced fraudulent transactions: AI tools monitor users’ behavioral patterns and identify anomalies, and fraud attempts, thus helping reduce frauds.
  • Increased operational excellence: Conversational AI can be used to automate customer support through digital conversation. This will reduce the number of calls the agent has to attend, and they will be able to deal with other complex issues. By automating tasks, cutting down inbound calls and resources in branch offices, transaction costs can be saved up to 90%.

There is no doubt that banks need to embrace Conversational AI to cope with today’s digital demands. However, this requires investment and a deep understanding of the technology and the security risks involved in implementing the same. Nevertheless, conversational AI is making a difference now, and it is time for banks to embrace this technology.