How Chat Banking is Transforming Financial Services Customer Experience

dhita yudha

The banking industry has seen a number of key technology advancements over the last several decades, as it has moved away from a brick-and-mortar strategy toward a more self-service-driven model. • In the 1970s the rise of personal computers provided an alternative to traditional banking, though technology was still in […]

The banking industry has seen a number of key technology advancements over the last several decades, as it has moved away from a brick-and-mortar strategy toward a more self-service-driven model.

• In the 1970s the rise of personal computers provided an alternative to traditional banking, though technology was still in its infancy
• In the 1980s, technology started to evolve, and ATMs were introduced – in addition to computer banking – as high-tech solutions to meet the needs of customers on the go
• The introduction of mobile phones in the 2000s brought consumers the ability to conduct mobile banking, accessing their account information and completing transactions on the go

So, the question we ask ourselves now is what’s the next step in the evolution of the banking customer experience?

The introduction of chat apps

The rapid evolution of smartphone technology and the rise of connected devices has led to a lot of new buzzwords that could potentially become the next wave of banking services: voice banking, watch banking, even refrigerator banking.

Although these are all relevant developments they might not be revolutionary. Why? Because if we look back at the technology that transformed banking over the years there has been one common denominator: data connectivity.

It has never been easier to stay connected in every corner of the world than it is now, and in most cases, that connectivity is provided free of charge. You can be in an aluminum box 30,000 feet above the ground and still communicate with your friends and family. It is this ability to easily transfer data that has enabled us to communicate instantly over chat apps, such as WhatsApp, Viber, WeChat, and Facebook Messenger, all over the world.

What is chat banking?

Chat banking provides the ability to perform core banking services over chat apps, such as:

• Checking account balances
• Transferring funds
• Obtaining additional information about mortgage rates, student loan accounts, and other financial products
• Quickly receiving in-depth account information (e.g. loan pre-approval notifications, credit card limits, etc.)

So, why use chat apps in addition to mobile banking apps?

The goal of chat banking is to save customers time and to provide detailed information in the most convenient way possible. For some consumers, downloading an additional app isn’t an option due to low mobile phone storage space – while for others, additional assistance helps reassure that they are on the right track to completing big purchases or planning for many of life’s milestones.

Since chat apps offer instant, contextual, and personalized communication, clients can contact agents or chatbots over one platform, where the conversation history is saved and can be referred to later. This saves them from tediously scanning through websites and apps, or waiting on hold to speak to a live agent, for an inquiry they’ve looked into previously.

A number of banks have already adopted chat banking but many still can’t deliver personal banking information over these apps due to lack of authentication. So, the future of chat banking lies in services that can help banks authenticate their chat contacts – in the same way that PINs are used to authenticate mobile banking app users.

Nonetheless, the benefit of banking using chat apps is based on letting your customers reach you whenever and wherever they may be. This will help build the trust that is required for successful long-term client-bank relationships.

Chat banking around the world

Penetration of chat banking varies widely by geography. It has become a very quick and simple solution in regions such as Africa, but more recently major US banks are also introducing chat functionality. In an interview with The Motley Fool, Harit Talwar, global head of consumer banking at Goldman Sachs said:

I think we have gone a step further […] continuously learning as to why people need to call, and can we eliminate the reason to call by empowering them to use self-service tools on our digital platform? And then with [the launch of] Apple Card, we’ve also introduced chat facilities, which we are now expanding into other products.

In a new PYMNTS.com report, How 35 Execs Are Powering The Great Digital Shift Of 2020 (And Beyond), Doug Brown, senior vice president and general manager at NCR says:

With little time to prepare, [financial institutions] are quickly bridging the gap between physical and digital channels. They are servicing users remotely through voice, video and chat — maximizing interactive teller machine (ITM) capabilities and live digital chat for everything from conducting complex transactions to scheduling in-branch appointments and pickup.

In Europe the focus has been on using chat banking for in-depth support – such as receiving loan pre-approval notifications – in addition to using mobile banking apps for fund transfers and account balance inquiries.

It’s clear that chat banking is here to stay, and will drive efficiencies for banks and their customers. A 2019 report by Juniper Research estimated that banks would save $7.3 billion in costs globally by 2023 by increasing their use of chatbots, up from $209 million in 2019. Juniper predicted that chatbot integration in mobile banking apps would account for 79 percent of successful integrations by 2023.

The number of Mobile Banking users in The U.S. is about 57M and an interesting fact is that 70% of U.S. Millennials use mobile banking, making clear that banks should be read to that to reach the new generations.

Not If, But When

We live in an era where the delivery of fast, convenient, and simple financial services is expected. Chat banking is one way that banks can deliver on this promise. As the technology continues to advance, tools and best practices will emerge, customer expectations will change, and banks will need to continue to adapt. Though it has yet to achieve widespread adoption globally, chat banking is another key milestone in bank technology. The question isn’t whether banks will adopt chat banking, but how quickly it will happen.

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