Can AI powered digital assistants enable a smarter banking experience?

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Can AI powered digital assistants enable a smarter banking experience?

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As per the recent “2018 Retail Banking Trends and Predictions” report, which surveyed over 100 leading global financial institutions asking for top 3 predictions for 2018, the highest ranking prediction (61%) was that the industry will remove friction from the customer journey. The next two most mentioned trends were the improved use of data and advanced analytics, and refinements in multichannel delivery (mentioned by 57% and 42% respectively). Deloitte has also identified “Customer Centricity” as the top theme in its 2018 banking outlook.


All these trends point to the overarching theme of delivering seamless and insightful customer experience to banks’ customers across the channels of their choice. While this isn’t new the fact that customer experience continues to remain the top trend only goes to show that it’s a moving target and the bar keeps on getting higher with consumers coming to expect the type of seamless experience delivered by the likes of Amazon, Uber and Airbnb.


If that was not enough, the rapid consumer adoption of voice assistants such as Siri, Alexa or Google Assistant is now taking the customer experience to a different level and the idea of conversational banking, where customers transact directly with their banks via digital assistants, is rapidly gathering pace. Chatbots or Digital Assistants are suddenly emerging as a potent weapon for banks in their battle for customer experience. Infact, Gartner has predicted that by 2019, 20 percent of user interactions with smartphones will take place via virtual assistants.


So what’s driving the sudden rise of chatbots and digital assistants?


Chatbots are not a new invention, some banks have used it in various forms in the past, but they used to be limited to basic banking interactions and transactions. More recently,  a convergence of factors — including high consumer adoption of messaging platforms and advancements in AI — has increased the viability of using chatbots as an interaction layer between companies and consumers. The significant advances in combining Natural Language Processing with other forms of AI, primarily machine learning and deep learning, have made enterprise digital assistants more intelligent and more useful.  They now seem to be poised to help banks create a more “human-like” customer experience in the rapidly digitizing “human-less” ecosystem.


In fact, as per a report from Accenture, Artificial Intelligence will be the main way that banks interact with their customers by the year 2020. AI powered chatbots can take customer relationships to a new level as the chatbot will have access to all of the customers’ data along with thousands of other machine learning inputs and they will be able to process the data in nanoseconds using the results to tailor the interaction to each individual customer. As the number and variety of transactions grow, the chatbot could build further intelligence from those transactions and be able to offer insights and advice to customers. In fact, the virtual assistants are rapidly evolving to the point where they will be able to do the banking for the customers rather than just provide instructions on how to do it.


If you combine chatbots with other emerging technologies, the possibilities seem endless. Imagine looking at an item in a shop, and your augmented reality glasses display a loan offer for it. You can apply for the loan just by talking to a digital assistant, which already knows all your financial information. This scenario could be a reality in near future. You will speak with these AI-driven machines to manage your finances and as the technology improves, your requests for mortgages, loans, or credit cards will be handled in real time primarily by machines. And we could expect the interaction to be secure, personalized and equally as private as doing it offline in any bank.


It not a surprise then that some banks have already taken a leap of faith by investing in chatbots to deliver contextual insights to the right person at the right time. They are viewing chatbots as new age contact centre executives, but ones that never sleep, never make mistakes and operate at machine speed, delivering instant answers and responses. According to  a recent report from Bain, 5% to 6% of respondents in the US, the UK and Australia already use voice assistants for their banking, and between one-fifth and one-quarter are open to trying the technology for banking in the future. Many banks have put the technology in their innovation pipeline, but to date only a few banks, such as Santander UK, Capital One and USAA, actually use it in market.


Very recently Commonwealth Bank of Australia launched Ceba , an AI powered chatbot that’s available 24/7 and can recognise approximately 60,000 different ways customers ask for the 200 banking tasks and will eventually be able to tell users what they are spending their money on.


With their capability to enable intelligent and ‘human like’ customer experience while driving down costs, the digital assistant seem to be a very attractive proposition for banks. So should all the banks hop on to the bandwagon to adopt chatbots? Possibly, but they need to tread cautiously and weigh in various considerations related to their business before they make a rush.


For instance, Banks need to consider regulatory aspects, given that machine intelligence is not designed with any moral understanding of nuanced expressions such as “fair treatment”. Banks may need to train the chatbots on what it can say and what statements may be problematic due to their legally binding nature. Banks need to look at their customer profile and assess if their customers would actually want to talk to chatbots? Furthermore, despite all its intelligence, banks need to be cognizant that a bot can’t empathise or understand emotions, thus ignoring a customer’s frustration when an error occurs, which could create the risk of eroding goodwill and trust in the brand. Since the interaction involve customers and banks data, banks would need to look at the data security aspects. There could be many other unexplored questions that need to be dealt with like what happens when the chatbots start talking to each other? And in a language not understood by humans?  Also, banks may need to be realistic that chatbots can’t be successful overnight – AI won’t work miracles or generate magical experiences for customers on its own – their intelligence and accuracy would need to be built over time aided by thousands of iterations to drive learning. Given the different levels of maturity of various vendor solutions, they will almost exclusively rely on heavy training with banks’ data. What’s also seldom mentioned is that AI solutions are far from finished products, with a long path to readiness for integration and deployment in a large enterprise context.



Finally, for the banks which intend to transform themselves digitally, chatbots should not end up as being just front-end solutions as that could mean severely limiting their capabilities.  A lot of the functions designed into the digital assistant may need to be deeply integrated with bank’s existing back-end systems to extract the real value – which would mean that banks would do well to upgrade the back-end systems as well.

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About the Author

Rajat Shrimal

Rajat Shrimal is the Senior Manager and Head of Marketing Operations at Nucleus Software. He has 15 years of experience majority of it being in IT industry. Prior to joining Nucleus, he has held global roles in Marketing and business development with leading companies including HCL Technologies and Infosys.

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About Nucleus

At Nucleus Software we are committed to providing efficient, modern yet proven software solutions for the global Banking and Financial Service industry. We have been pioneers in developing Retail Banking Software, Corporate Banking Solutions, Transaction Banking, Cash Management and Internet Banking Software since 1986. Our success spreads across more than 50 countries, and we serve our customers globally through our direct and partner operations across US, Europe, Asia-Pacific, Africa and the Middle East. We are known for our world-class expertise and innovation in lending and transaction banking technology. Our two flagship products, built on the latest technology are: FinnOne™ and FinnAxia™.