In this fast-paced world, people utilize mobile technologies and AI assistants to address virtually any business or personal issue, hold meetings, or communicate with their financial managers on the go.
Prominent tech market leaders – Google, Apple, Facebook, Amazon, and Microsoft (GAFAM) – have set the bar so high that consumers now expect a myriad of services and products to be available around the clock. All that plus exclusive user experiences and immediate omnichannel support. Sounds like Mission Impossible, right?
Financial service providers and banks often have too many customers to offer an individual approach to each client at scale. That’s not just challenging. It’s genuinely impossible in most cases, unless BFSI institutions have thousands of human agents working for them. Meanwhile, when it comes to AI agents and chatbots in banking, cognitive technologies and automation are the tools that make it possible to meet those demanding standards and secure your leading market positions.
So, how does the combination of artificial intelligence and banking work? Let’s dive into it!
The state of conversational AI for banking and the importance of NLP chatbot services
Although the practices of utilizing natural language processing (NLP) technology in the banking industry and applying chatbots in financial services are still maturing, they have already demonstrated their relevance. As the more tech-savvy and demanding generations evolve, so do the applications and opportunities for chatbots in banking.
Currently, banking virtual assistants, combined with artificial intelligence, NLP, and machine learning technologies, can mimic human conversations to help financial companies bridge the communication gaps between the business and its audience, as well as establish additional communication channels. Today, financial institutions can automate around 90 percent of client relations and reduce industry costs by up to 20 percent by using conversational bank bots and other best AI tools for enhancing digital banking.
The use of conversational AI for banking and financial services is already embraced by the Bank of America, HSBC, MasterCard, HDFC, and JPMorgan, among others. Consequently, the increasing demand for top-notch customer service and broader adoption of virtual banking are set to drive the global banking chatbot market to hit $6.17 billion by 2030, at a CAGR of 27.4 percent (Next Move Strategy Consulting). And to give you some benchmarks, just imagine that in 2022, this very same market was valued at just $890 million. Can you believe the growth rate?
Types of chatbots in banking and investment sectors
Depending on how software engineers program bots for financial services, we have two main categories of a chatbot in banking: simple (rule-based) and advanced (AI-driven).
#1 Rule-based bots
This category of virtual banking assistants is very simplistic and also called ‘scripted,’ as they rely on particular pre-established keywords and commands. Developers build a decision tree hierarchy with a list of queries and relevant answers that the system utilizes while communicating with your customers. However, if a user asks a question without a single trigger, it will respond, “Sorry, I don’t understand,” which can negatively affect the user experience.
#2 AI-based bots
Here comes progress, and one of the most prominent cases where we emphasize the use of AI in banking. By interacting with users like a real human agent and resolving their issues in seconds instead of hours, an AI chatbot for banks and wealth management organizations serves as an intelligent digital assistant. It mainly depends on the maturity of your artificial intelligence models, but it can also leverage machine learning or NLP applications.
Conversational ML and AI bank bots learn autonomously and continuously, based on the data you feed to them and previous interactions with users. When it comes to banking and technology collaboration, industry providers increasingly embrace NLP in chatbot development. This approach enables their systems to analyze, comprehend, and prioritize customer queries based on their complexity and intent, without involving human experts until later stages that absolutely require their supervision.
Conversational AI for banking: How chatbots contribute to the financial business growth
There’s no doubt that intelligent assistants have come a long way since their initial launch in 1966, and they have proven successful in various industries, including healthcare, e-commerce, travel, and education. Meanwhile, opportunities for bank bots in financial and investment services are nearly endless, and we believe that chatbots examples existing today are just the beginning of a long-lasting and rewarding engagement.
Based on TEAM International’s hands-on experience with software development projects in the financial services sector, we’ve identified the following chatbot use cases as the most efficient ones:
24/7/365 Customer Support
Communication with clients is the original and still the major area of application for chatbots in banking. Individuals no longer have to wait for strict business hours to visit a brick-and-mortar branch and speak with a banker. Virtual assistants that utilize conversational AI for banking operations are always available and effectively handle a diverse range of inquiries, which are often repetitive in nature.
Today, market leaders such as N26, Wells Fargo, Capital One, USAA, HSBC, SEB, and others actively implement customer service bank bots.
Lead Generation and Sales
With a thriving collaboration between machine learning, artificial intelligence, and banking, advanced bots can now not only answer generic queries but also identify potential prospects, personalize and pitch banking services and products, make cross-selling, and even manage subscriptions.
These bank bots can act as AI agents employed by your sales team, passing qualified leads to human employees for further analysis. Mastercard and American Express widely adopt this strategy.
Proactive Advising
The application of intelligent virtual banking personal assistants is booming. They can track users’ spending habits and identify patterns, draw up and manage budgets, share exclusive budget planning tips, and even provide trading or investment advice. Moreover, a properly set up banking chatbot also sends bill reminders and balance alerts. Such financial advisor bots have already proved their efficiency for the Bank of America, Ally Bank, Commonwealth Bank, Bybit, OKX, Binance, and others.
Fraud Prevention
Money laundering and fraudulent activities remain among the most significant problems in the financial services sector, particularly with the increasing use of AI in banking. However, in turn, well-trained bots can help banks mitigate risks by designing behavioral patterns and analyzing all online transactions based on a set of pre-established criteria. If any atypical behavior or fraudulent action is detected, the AI agent flags this transaction and blocks the process, notifying clients and/or human employees, and thus initiating a further investigation.
One of the functions of the fintech chatbot at Santander UK is to de-risk clients’ funds and data. VISA leverages similar capabilities as well, applying AI to analyze more than 500 attributes for each transaction in milliseconds to identify and prevent fraud in real time.
Back-office Optimization
The automation of tedious, low-value procedures within financial institutions is one of the most beneficial projects so far, if we’re talking about the best AI tools for enhancing digital banking. JPMorgan Chase is among the pioneers, and it currently employs intelligent assistants to resolve corporate IT inquiries, including but not limited to password resets for employees. A single modern banking chatbot can process around 1.7 million requests per annum.
These are just a few of the most promising chatbot examples in the BFSI sector. You can also meet AI in customer onboarding, feedback management, authentication, and several other areas. What we’re sure of 100 percent, though, is that banks with chatbots are the ones on the frontlines of innovation that will redefine the future of banking for good.
How to create a bot for your financial business and make it thrive
What is a bank bot? In simple terms, chatbots are software applications built to facilitate communication and decision-making. Hence, you can make them as smart as your business needs them to be. It can be a simple rule-based tool or an intelligent assistant, depending on the desired use cases and strategic objectives.
So, how to build a bot for your financial business? Regardless of the selected type, you should consider the following elements of the chatbot development process:
Purposes and Channels. Keep in mind that you can add virtual banking assistants to one or multiple platforms simultaneously. Although your mobile banking apps and websites are the primary options, you can also integrate them within instant messaging solutions, depending on your customers’ preferences, behavior, and the outlined business strategy. Still, it’d be better not to target textual communication only, as with the rise of deep learning, voice-based AI bank bots are gaining momentum.
User Interface and Experience. Ease of use is one of the key features that consumers expect to have by default these days. Inherently, chatting is more convenient than calling, which is the main reason why messengers have become so pervasive over the last two decades. Consequently, when you decide to build a banking chatbot, keep its interface and user experience journey similar to popular messaging applications. This approach will enable you to facilitate a seamless onboarding process and help clients establish a connection quickly. You’ll mimic human-to-human interaction while providing a feeling of personalized service.
Data Security. Safety is paramount when it comes to financial assets. Moreover, people will be more confident and comfortable in using conversational AI for banking needs if they trust you as their provider. At the same time, trust is a result of sophisticated information security protocols and reliable authentication processes that you should embed in all the areas of your banking system, including chatbot NLP architecture.
NLP Integration. Undoubtedly, not all chatbots require the Natural Language Processing technology, and the decision mainly depends on the use cases and your business goals. However, if you want to ensure the next-gen customer experience, NLP is a must-have, as it enables banking virtual assistants to understand and respond to customer queries in a better way. It also allows them to utilize relevant data for training and improve the quality of services provided.
Development Approach. There are two options for chatbot software development that allow companies like yours to shorten their time-to-market, reduce costs, and facilitate further scalability. You can either create a banking chatbot from scratch, tailoring it to your business capabilities, or use end-to-end conversational services.
What are the most recommended AI solutions for digital banking? As a professional provider of advanced digital transformation solutions, we believe that a custom AI chatbot for banks ensures better flexibility and full compliance with your specific needs. Yet, we also acknowledge that its development requires top-notch engineers with specific AI domain knowledge and advanced coding skills. Meanwhile, SaaS solutions provide all the essential integrations and services, yes, but they also have drawbacks, mainly associated with narrow configuration and your full dependence on the service vendor.
Afterword
AI chatbots in banking vary in approach, complexity, and use cases, offering BFSI business owners a wider range of options to choose from. What we know for sure is that these intelligent assistants are here to stay, and they will only get smarter over time. They possess all the essential capabilities to navigate operational teams through enormous volumes of data smoothly, help them make informed decisions faster, and achieve better predictability.
Are you ready to augment your in-house teams with secure and reliable virtual banking AI agents?
TEAM International is at the forefront of the conversational software evolution, driving the innovation for world-leading banks and other financial institutions. Our extensive domain knowledge, large AI development talent pool, and in-depth industry experience guarantee your project’s seamless launch and on-time delivery of fully-fledged AI solutions that will improve your bottom line. Contact us today to discover how TEAM’s IT services for banks can help you achieve your determined digitalization goals faster, more cost-effectively, and more efficiently.