Conversational banking is a form of digital banking technology that aims to replicate the personalized human connection on digital platforms. It manifests in various ways, such as text messages, visual and voice communication tools, and platforms like mobile apps, websites, messaging apps, and more. The noteworthy advantage is the ability to automate repetitive inquiries using artificial intelligence (AI), enabling customers to interact with banks through voice-activated or text-based chat interfaces.

Through AI software, customers can conveniently engage with banking systems for routine financial services and transactions using devices like smartphones, tablets, PCs, smartwatches, television remotes, and other digital technologies.

Integrating conversational AI into the banking and financial sectors enhances customer interaction and communication with their respective institutions. By employing virtual AI assistants, voice assistants, live human agents, mobile applications, and other access points, customers can enjoy a personalized experience, receive relevant advice, and more. Conversational AI serves as a link between technology, communication, and the customer’s desire for tailored experiences across various channels.

How is Conversational AI implemented in the Banking Industry?

Customer Support and Query Resolution

Conversational AI understands and processes natural language, allowing it to interpret customer queries, search for relevant information, and provide accurate answers in a human-like manner. It can handle a wide range of questions, from simple customer inquiries about account balances to more complex requests related to loans and mortgages.

Personalized Financial Advice

Conversational AI can act as a financial advisor by helping users set budgets, track spending, and make informed decisions. It can analyze customer data to provide personalized advice, such as suggesting ways to reduce expenses or identifying appropriate investment opportunities based on risk tolerance and financial goals.

Fraud Detection and Security

Conversational AI can analyze transaction data and patterns, identifying suspicious activities or anomalies that may indicate fraud. It can then notify customers and financial institutions to take necessary action, such as locking accounts or flagging transactions for further investigation.

Loan and Mortgage Applications

The process of applying for loans and mortgages often involves complex paperwork and lengthy approval periods. Conversational AI simplifies this process by guiding customers through the application process, collecting required information, and assessing eligibility in real time. This leads to faster loan approvals and a more seamless customer experience, enhancing customer satisfaction and loyalty.

Account Management and Payments

Conversational AI can access customer account data and interact with backend systems, enabling users to perform tasks through simple text or voice commands, such as: 

• Checking balances
• Transferring funds
• Managing credit cards

For example, a customer could ask a virtual assistant to transfer a specific amount to another account or pay a utility bill.

Trading and Investment Assistance

For investors and traders, conversational AI-powered platforms offer real-time market insights, stock updates, and investment recommendations based on their preferences and risk profiles. These AI-powered advisors enable users to stay informed about market trends and make data-driven investment decisions, leading to potentially better investment outcomes.

Compliance and Regulatory Support

In the heavily regulated financial services industry, adherence to compliance and regulatory guidelines is of utmost importance. Conversational AI platforms can assist in ensuring compliance by tracking and documenting customer interactions, keeping a record of transactions, and implementing data privacy measures, thereby helping financial institutions stay compliant with industry standards and regulations.

Finding the nearest ATMs and branches

Conversational AI can help users find the nearest ATMs and bank branches. By accessing the user’s location data and integrating it with geolocation APIs, the conversational AI system can determine the closest bank branches and ATM locations based on the user’s current position. It can then provide the user with relevant information such as: 

• Addresses
• Distance
• Directions
• Operational hours

Market updates and investment information

Conversational AI can gather real-time market data and provide users with information about stock prices, market trends, and relevant news. Customers can simply ask for specific information, like the current price of a particular stock or the latest news about a company, and conversational AI will provide the requested details.

Enhanced Security

With conversational AI, security measures are heightened during the onboarding process. AI systems can detect and flag suspicious activities or discrepancies in customer information, helping prevent fraudulent account openings. By integrating with fraud detection systems and risk assessment tools, conversational AI adds an extra layer of security to the onboarding process, safeguarding both customers and financial institutions.

Payment reminders and collections

Conversational AI transforms collections by sending personalized payment reminders, facilitating payment arrangements, and automating processes. It improves customer engagement, streamlines operations, and enhances efficiency. With AI-powered chatbots, manual intervention is reduced, and customers receive timely reminders and assistance. Data-driven insights inform decision-making, while compliance is ensured through documentation and secure storage of conversations. Conversational AI optimizes the collections process, benefiting both financial institutions and customers.

Product recommendations

Conversational AI analyzes customer data, such as spending habits and credit history, to provide personalized suggestions for financial products and services. By leveraging real-time insights, it delivers tailored recommendations for credit cards, investment plans, and more. Continuous learning improves accuracy, while compliance ensures suitability. Conversational AI enhances customer engagement and fosters informed decision-making, benefiting both customers and financial institutions.

Benefits

Conversational AI holds immense potential benefits for both customers and banks across various use cases in the banking industry. Let’s explore some of these advantages:

For Customers

• 24/7 Availability:  In the past, customers had to wait for live agents to respond to their queries, leading to delays and frustration. However, with intelligent bots, customers now have round-the-clock access to prompt support and assistance. These bots are readily accessible and capable of addressing common financial inquiries, providing convenience and efficiency.
• High-Quality Service: These tools facilitate the quick identification of potential errors and the seamless provision of practical solutions. By reducing touchpoints and streamlining the resolution process, first-contact resolution rates are significantly enhanced. Additionally, conversational AI agents can be trained to efficiently provide answers to frequently asked questions, ensuring consistent and accurate information is readily available to customers.
• Dynamic Engagement: Dynamic engagement is yet another benefit of Conversational AI in banking. Proactively reaching out to customers in real-time not only demonstrates attentiveness but also offers instant support and timely solutions. This proactive approach leads to higher customer satisfaction rates and strengthens brand loyalty. By promptly addressing customer needs and providing personalized assistance, banks can cultivate stronger relationships with their customer base.

For Banks

• Cost Efficiency: By leveraging AI-powered bots, banks can effectively handle a wide range of customer inquiries, resulting in reduced operational costs. Traditional methods of managing customer inquiries can be expensive, with companies spending substantial amounts, sometimes up to $1.3 trillion. However, intelligent bots can help save up to 30% of these expenses by efficiently addressing customer needs and automating repetitive tasks
• Minimized Errors:  Human involvement in complex processes carries the risk of mistakes, which can potentially lead to larger issues. Conversational AI ensures error-free services by leveraging advanced algorithms and machine learning capabilities, eliminating complications, and enhancing the overall accuracy and reliability of banking operations.
• Scalability: Bots possess the flexibility to scale their operations based on business needs, peak hours, seasonal demands, and other factors. They can efficiently handle large volumes of incoming messages and inquiries without significantly impacting business costs. This scalability allows banks to maintain a high level of service even during periods of increased customer activity, ensuring a smooth and uninterrupted customer experience.

The utilization and popularity of conversational AI in the banking, financial services, and insurance (BFSI) sectors are expected to witness significant growth in the future. It is imperative for banks to embrace this cutting-edge technology and employ appropriate implementation strategies to ensure customer satisfaction, engagement, and success. The adoption of conversational AI presents a remarkable and distinctive opportunity to gain deeper insights into customers, cater to their requirements effectively, and provide support to your team.

The future outlook of conversational AI in the BFSI industries is promising, as it enables banks to stay ahead of the curve by leveraging modern technological advancements. By embracing conversational AI, banks can create seamless and personalized experiences for customers, allowing them to feel valued and engaged. This technology also offers valuable insights into customer behavior and preferences, enabling banks to tailor their services and products accordingly.

It empowers banks to streamline operations and enhance efficiency by automating routine tasks and inquiries. This not only frees up resources but also enables human employees to focus on more complex and value-added tasks. By leveraging the capabilities of conversational AI, banks can unlock new opportunities, improve customer service, and drive business growth.

The future of conversational AI in the BFSI industries holds great potential. By adopting this innovative technology and implementing it effectively, banks can gain a deeper understanding of customers, fulfill their needs, and provide support to their teams, ultimately leading to increased customer satisfaction and business success.