Why Conversational AI Will Revolutionize Banking as We Know It

Conversational AI is rapidly evolving to take center stage in the next wave of transformation in banking. No longer are banks using this technology solely as a means of cost reduction as we saw with the first generation of self-service chatbots. Conversational AI is now a critical instrument for interacting with—and delivering services to—customers along many complex touchpoints with your bank. If you haven’t already, the time is now to unite senior leaders across your business to make it a fundamental part of your transformation strategy. In this two-part series, we will explain why you need to start preparing now—and how to do it.

Firstly, What Is Conversational AI?

The term conversational AI refers to the underlying set of intelligent technologies that enable software systems to interact with humans using natural language processing. Over the last decade or so, these technologies have evolved so rapidly that we have seen a deluge of terms circulate and find use in the industry—chatbot, virtual agent, voice assistant and conversational UI to name a few. That—combined with their new and complex nature—has made them hard to keep up with, invariably resulting in confusion for businesses and consumers alike. To fully realize the promise of conversational AI, let’s first define upon some key terms and a structured way of thinking about this exciting new technology. 

There are two types of conversational AI solutions:

• Virtual assistant: These personal assistants are designed to carry out common tasks for individuals, such as setting an alarm, turning devices on or off or finding information from the internet. Examples include Amazon Alexa, Google Assistant or Siri.
• Virtual agent: These are representatives of groups or businesses, commonly used in a commerce or a customer service context, designed to engage with customers to serve business goals (think Capital One’s Eno).

Why Is Now the Time to Adopt and Invest in Conversational AI Strategies?

We have reached an intersection that makes the role of conversational AI—and what it can achieve—impossible for any bank to ignore. Customer behaviors and expectations are changing—fast. Whether we’re tracking the shipment of our latest online purchase, accessing our bank balance via WhatsApp or asking Alexa for the weather report, virtual assistants have become increasingly integrated into our daily lives. For voice technology alone, forecasts suggest that we will reach 8.4 billion units by 2024—a number higher than the world’s population.

In addition, COVID-19 has accelerated the move to digital-only services, with a number of organizations launching their own virtual agents—both voice-activated and chat-based—with many of these starting to replace traditional telephony, app and web experiences as brands shift from mobile-first to AI-first strategies. In banking, early adopters like Bank of America are leading the field with more holistic, assistive experiences for their customers. It’s only a matter of time before customers start to demand and expect similar services from every bank.

Furthermore, as the economics of the industry force branch closures and teams face constant pressure to reduce costs, conversational AI offers banks a way to not only innovate but improve their quality of service while also satisfying the competing demands of shareholders. Banks will require investment to ensure that all processes and systems can support the automated experiences that conversational AI can deliver today and meet the changing expectations of customers over the next five to 10 years.

How Conversational AI Is Reshaping Our Digital Ecosystems

The way we interact with businesses today is still relatively manual and involves quite a bit of self service. We log in to websites to book flights, hold to speak to a customer service agent and constantly wonder when our online shopping purchases will arrive.

As you can see from Sarah’s journey in the diagram below, this is changing. We have reached a point in time where businesses can connect devices, services, data and technology to create a new type of digital experience—one that can serve and assist customers at every step of the journey. Conversational AI solutions play a fundamental role in this, evolving from simple self-service support into an interconnected assistive layer. They are able to distill previously long-winded interactions down to a single voice command, becoming omnipresent across all our devices and a variety of channels. 

For banking, this shift toward ubiquitous, assistive experiences will enable the industry to become even more present in our lives at moments when we truly need them. Conversational AI solutions will give customers the flexibility to choose how and when they engage with their bank. For some, this could be done directly via new channels such as WhatsApp, while others may use a third-party aggregator to manage multiple accounts and credit cards in one place. This evolution will undoubtedly make banking experiences more inclusive and accessible to all.

People Need Banking, Not Banks: Welcome to a Ubiquitous Banking Future

Bill Gates famously said, “Banking is necessary, banks are not.” Over two decades ago, he predicted the influence that FinTechs and advances in payments would have on the industry, but not the full extent of just how much conversational AI could change the game. In the future, these intelligent innovations will reshape our personal digital ecosystems—and banking as we know it.

Yes, there are still many challenges to overcome as we redefine customer experiences in these untested waters and align hardware, software and services to become fully capable, interconnected and seamless. But, as the industry solves these challenges, it paves the way for truly frictionless and revolutionary experiences that will allow a conversation with a virtual agent to easily drift from voice to chat to wearable, finding a natural flow no matter the context—just like any human interaction.

In the near future, this will ultimately mean a hybrid model of digital service engagement submerged into our broader consumer and lifestyle interactions. Some services will be managed by us directly and others via our virtual agents and assistants. However, in time, our virtual assistants will be able to handle more and more requests. In the below graphic, we imagine a future where assistants can handle everything on our behalf. From a banking perspective, this could include making payments, switching service providers or even taking out point-of-sale loans—all of which will be appropriately controlled and transparently communicated with customers.

As technology becomes increasingly integrated into consumers’ lives, conversational AI will be a key component of a fundamental shift in customer engagement strategy. Rethinking your end-to-end customer experience and embedding conversational AI strategy will present incredible opportunities to both reduce costs and intuitively serve and assist customers like never before.

Read our white paper to learn the seven essential lessons we’ve learned from working in the field, which will help you identify the quick wins to unlock early value and help lay the foundations for future developments.