How Chatbots Can Deliver Value in Financial Services

It’s a challenging time for banks. Particularly traditional ones — those who have made their business about “being a bank” — committing themselves to keeping fees down, services secure and branches on every corner, filled with friendly staff. Increasing pressure from various angles — the customer, the industry, the wider economic climate and regulatory bodies — is making this simple view of the world less and less realistic. In this day and age — banks need to be better.


For a traditional bank or financial organisation, there are 4 key challenges they are currently facing:

  • Consumer expectations — customers are asking a lot from their banks. They expect flawless, personalised customer service and consistent availability.
  • Increasing competition from financial technology (FinTech) companies — these innovators are disrupting the industry, using software to provide financial services and generally making life difficult for the traditional banks, who in order to compete need a complete technical, operational and cultural overhaul.
  • Regulatory pressure — financial regulation requirements are increasing, meaning banks are forced to spend a lot of budget on building systems and processes around compliance.
  • Not enough return on investment — most probably as a result of the above challenges, banks are just not profitable enough to keep their shareholders happy.

And when you throw factors external to the industry — like Brexit — into the mix, the time for cost-saving, efficiency-driving, and digital transformation is now.

Enter chatbots

A lot of the FinTech startups are already there — and it’s time for the traditional banks to catch up. Bot technology and artificial intelligence (AI) give financial services organisations the tools they need to deliver a better customer experience, streamline their compliance process and save money while they’re doing it.

Customer onboarding

According to survey last year by Thomson Reuters, the average bank spends £40m a year on Know Your Customer (KYC) Compliance. Costs have increased due to having more regulatory hoops to jump through, and it’s also affecting lead times — 30% of the respondents said it could take up to 2 months to onboard a B2B client. A potential client can have on average eight different interactions with the bank during the onboarding process. The main problem here is that many banks aren’t equipped to handle this kind of due diligence at scale — with many still using a paper-based system for the compliance process.

Automated processes based on bot technology have the potential to cut the onboarding process to a matter of minutes. Clients could provide the necessary information via a chatbot interface, which then verifies directly against the bank’s back-end and a third-party data tool via API. The client could then be set up on the system within seconds. This frees up internal staff to deal with the exceptions — those that can’t be verified, rather than having to deal with every single applicant. This would lead to massive gains in productivity and efficiency in both consumer and particularly in business banking, where the bank will often have to process numerous employees, subsidiaries and ID documents.

Ticks the compliance box

Not only could chatbots and AI help with the regulatory requirements related to customer on-boarding as mentioned above, they also aid in ensuring compliance with other upcoming regulation changes — including GDPR. The General Data Protection Regulation comes into force in May 2018, and it will impose stricter terms on how and why organisations can use and store customer data. Among these terms, GDPR will require clear understanding and consent from the customer that their data can be used in a specific way — for example, being contacted via email. The capability of a chatbot makes the transaction of getting this consent much simpler — and allows more transparency for the customer at each stage. They can see exactly what they consented to and when, and they are able to recall and adjust this information at any point.

It’s not just value for the customer either. GDPR requires a specific time and date stamp of when an individual gave their consent for the processing of their personal information. Chatbots can make a transformational difference for banks and financial organisations by giving a really simple interface into the various systems and databases within the organisation. Asking a chatbot “When did customer X consent to receiving email communications from us?” is much simpler than asking an internal systems or compliance team to manually search out the record at the database level. This kind of distributed computing empowers employees to better meet the GDPR challenge all while lowering the cost of compliance.

Better customer engagement

A survey by CGI — Understanding Financial Customers in the Digital Era — found that customers are increasingly demanding exceptional service from their bank. 58% wanted a highly personalised service, with banks remembering their preferences. 52% would like their banks to monitor what they’re spending and advise on how to save. How can banks deliver on this kind of functionality? While an app can remember your preferences to a certain extent, for the most part, you aren’t able to get full access to things like your existing payees and standing orders. You also couldn’t expect a customer service rep dealing with hundreds of callers a day to remember customer preferences over the phone — they’ll need to look the customer up on the system and familiarise. And the next time the customers calls up, that knowledge has gone, and the new rep must look them up and refamiliarise.

A dedicated banking chatbot — which can be delivered across a range of platforms including messenger services and the company website — would provide 24/7 service to a customer, giving them access to the full range of services which can be called up and executed with a few simple queries. Integration with and verification against the bank’s back-end infrastructure means the customer can perform a number of tasks like checking their balance, paying bills or setting up an direct debit as easily as if they were having a conversation with a friend over text. Chatbots can deliver everything a human can in terms of value to the customer — cross selling, personalised advice, and remembering preferences, at a fraction of the cost, and pretty much instantly.

Omni-channel banking

Businesses — including banks — have so many opportunities to get in front of and engage with their customers nowadays. With so many communication channels available — including Facebook Messenger, SMS, email, websites, apps — how do you make sure you’re getting value out of each and every one? Previously, a bank may have had to invest a significant amount of time and money in developing solutions for each endpoint — a website, an app, an SMS messaging service, automated emails. A bot can sit across all of these platforms without having to be redeveloped or retooled for each. Banks need not spend budget on updating apps for the latest mobile OS, or slavishly redesigning their website to deliver seamless user experience. A chatbot can offer a holistic communication channel across all platforms, giving the customer the opportunity to engage with the bank in the way that suits them and fits in with their life. Whatsmore, a bank can be up and running with a bot in as little as 8 weeks.

Endless possibilities

We’ve only just touched on some of the benefits of bots and AI technology in banking. There are numerous back-end efficiency and productivity improvements that automating processes and relying on AI to carry out repetitive tasks can bring. And as more and more FinTech companies arrive to shake up the industry, it’s vital that the more traditional organisations turn to disruptive technology to compete. We’re excited to see how bots can — and will — transform the industry and deliver more value to customers.

Leading provider of banking bots Avenir Digital is offering Chatbots Journal readers a free 2 hour consultation to discover how bots and AI could help you improve productivity by up to 40%.