May 17, 2024

The 2024 Guide To Chatbots In Banking

Explore the new possibilities by adopting banking AI chatbots. Learn about the latest use cases, benefits, and real-life examples of investing in chatbot banking solutions and their impact on the financial sector.

Written by
Serhii Uspenskyi
CEO

Table of Contents

The banking industry is gradually transforming under the influence of artificial intelligence and machine learning solutions. These tools can drastically change the daily operations of banks, giving them competitive advantages in such areas of marketing, customer experience, and process automation.

Driven by the success of advanced chatbots like Bard and ChatGPT, these financial organizations see AI products as their top priority. And it’s not to simply follow a trend. Successful chatbot integration lets banks enjoy lower expenses, higher customer retention rates, and increased automation. How do these solutions influence so many areas of banking? Find out all about it in our comprehensive guide for using AI chatbots in banking and the future of these AI products in the industry.

How Chatbots Are Changing The Banking Industry

Modern financial institutions require massive resources to manage their operations and engage vast client bases successfully, often internationally. Raiffeisen Bank, Bank of America, HSBC, and others must keep up with customer demand and successfully beat their competitors. Chatbots with the power of AI help deal with these issues and more.

These solutions are a FAQ section, a financial advisor, and an accountant, all rolled into one. Modern banking AI chatbots answer customer questions and handle financial matters without sounding like HALL 9000 from 2001: A Space Odyssey. They’re compelling enough to run 80-90% of bank client requests without human intervention. The solutions understand if a customer is stressed, anxious, or angry based on their text and speech tone.

Their life-like conversations and reactions, as well as access to banking information, are made possible thanks to two technologies: machine learning and natural language processing. Whenever a client is due on the next bill or payment or wants to know if now is a good time to buy Disney stock, these tools provide financially sound advice and information. AI chatbots are on everybody’s radar, and banks are expected to spend $9.4 billion on them in 2024.

Chatbots In Banking: Potential Use Cases And Benefits

Despite the versatile applications of modern AI chatbots, many financial institutions hesitate to work with them. In this section, we’ve decided to show the remarkable opportunities these software products offer and how implementing them improves various areas of running banks. Hopefully, it will wash away any doubts about the merits of AI chatbots.

Use Cases

In the past, bank chatbots were limited in scope and applications. They could only give pre-programmed answers and worked within strict scenarios. E.g., a chatbot couldn’t tell customers about the latest bank policies because an engineer didn’t provide this information to the database in time. The rise of AI has breathed new life into these solutions, making them more life-like and proficient in several areas of running banks.

  1. Customer support

Of course, many banks see chatbots primarily as client support agent replacements. While there’s some truth to this argument, even the capacity of AI solutions can’t fully replicate the intricacies of knowledge possessed by human experts. However, they show great capacity in delivering account balances, transaction history, and the latest bank offers. Even today, 34% of banking clients prefer talking to AI chatbots instead of human agents (PwC).

  1. Financial advice

In addition to answering customer questions, modern solutions serve as their financial advisors. Chatbots constantly evaluate buying habits and investments, showing areas where customers can save funds or put them to good use. These tools also keep the financial health of bank clients in good shape by reminding them about pending payments and bills or finding subscriptions they no longer use.

  1. Employee assistance

Bank customers aren’t the only individuals who can use advanced AI chatbots. These solutions help employees of financial institutions by handling mundane tasks and answering common user requests. Bank workers who handle support and provide financial advice can spend their free time assisting customers with the most challenging situations.

  1. Lead generation

Financial institutions use AI assistants to impress first-time visitors of banking websites effectively. They initiate real-time conversations and gather information later transferred to the marketing teams. Advertisement specialists use this data to make targeted campaigns. Chatbots also analyze these conversations and predict if the user will become a bank client.

  1. Payment processing

Bank clients often need help with their bills, payments, and subscriptions. Modern AI chatbots help them maintain better control over these expenses and keep up with deadlines. Clients of financial institutions use them to automate all types of regular payments, reducing the risk of missed loans, mortgages, and other financial obligations.

  1. Product recommendations

With the help of AI chatbots, financial institutions no longer need to bombard their clients with the exact offers. Instead of spending hours on tailored marketing campaigns, banks can use AI chatbots to recommend products and services based on client preferences and history. For example, students and people looking to buy their first house have different financial goals. Chatbots understand this and provide adequate products and services for different demographics.

  1. Sending regular notifications

Financial institutions can keep their customers updated on the latest offers by sending timely notifications and reminders. This feature minimizes the chances of clients missing terms of use updates, product offers, and pending bills. AI solutions can also notify bank employees about upcoming meetings or tasks.

  1. Security measures

Modern AI chatbots don’t just provide information. They work with and analyze it in volumes and at speeds far beyond the capacity of the human brain. Their capabilities make these products find any indicators of fraudulent activity and notify banks about them. Currently, only 38% of the world’s banks use these tools for security, but by 2025, 95% are expected to use AI chatbots to notify clients about potential fraud.

Benefits

And what about the banks themselves? Why should they spend time and resources on products that can be replaced by hiring a couple more security and support experts? It turns out that there are many benefits financial institutions fail to see, and we’re here to shed some light on them.

  1. Better customer engagement

AI chatbots never tire of talking to clients, whether they’re first-time or have been with the bank for years. This regular engagement helps financial institutions remind people about their services and update them on their financial health. The life-like interactions and fast response rates also play a vital role in this process.

  1. Cost reduction

Implementing a chatbot may seem like a significant investment, but it quickly pays off through staff optimizations and reduced operational costs. According to Autonomous Research, chatbots will let financial institutions cut their daily expenses by 22% in 2030. These solutions can also reduce customer service expenses by up to 30%. Considering the size of some international banks, these percentages can mean millions, if not billions, of dollars saved annually.

  1. Data collection

Another area where chatbots are indispensable is data gathering and analysis. There’s no need to install additional software to transcribe voice conversations or have bank employees add logs from different communication channels. AI chatbots handle all these tasks, helping banks assess client behavior, trends, and preferences. Currently, 50% of banks use AI chatbots to adjust credit scores and predict customer behavior.

  1. Increased efficiency

Banks can drastically improve their response time and resolve issues faster thanks to the integration of AI-based chatbots. A study published at Bain & Company shows that AI solutions allow banks to reduce downtime by 99%. By 2026, the success rate of bot interactions in this industry could exceed 90%. This will save banks millions of work hours yearly as chatbots process and respond to requests faster than customer support specialists.

  1. Higher accessibility

One of the main benefits of modern chatbots is that they never tire and are always ready to help clients. An employer's dream, these solutions provide access to financial services outside of bank work hours. They can also learn how to interact with customers in different languages and use text and voice input methods. This versatility is one of the reasons why experts predict that by 2030, AI chatbots will handle 60% of all personal financial operations of bank clients.

  1. Personalized customer experience

Modern conversational products offer a tailored experience to all bank clients. Just like a hairdresser they’ve been seeing since being 15 years old, a chatbot understands the needs and preferences of each customer and remembers past interactions. This personalization goes far beyond knowing the client’s name, as the AI products have access to their financial history and actions.

  1. Scalability

Another selling point of modern chatbots is their capacity to handle more significant volumes of requests and users. They can be trained to produce more accurate responses based on new knowledge or gain access to new features, such as learning another language. These upgrades are relatively easy and won’t make a black hole in the bank’s budget.

Have a question?

Chatbots In Banking: Real Examples 

The adoption of AI-based chatbots is still in its early stages among financial institutions. But, even the examples of tools used at several banks show the promising future of this technology in the banking sector. Check out these seven examples of conversational tools in some of the world’s largest banks.

  1. Amy - HSBC (England)

HSBC offers its clients a virtual assistant called Amy. This chatbot handles most daily financial needs of HSBC customers, such as showing transaction history, getting account information, and answering common questions. The solution also helps customers apply for loans or open new accounts.

  1. Ally Assist - Ally Bank (The US)

Ally Bank customers work with its chatbot to make deposits, view account history, and perform other tasks. The solution works 24/7 through the institution’s website and mobile app. In addition to text commands, Ally Assist supports using voice for tracking transfers. The chatbot offers financial advice and information, allowing Ally Bank customers to make more informed decisions.

  1. Ceba - Commonwealth Bank (Australia)

Clients of this multinational bank use the Ceba chatbot to perform all kinds of operations. With this tool, it’s possible to transfer funds, pay bills, and get advice on savings and investments. Commonwealth Bank developed Ceba using ML algorithms, allowing the solution to make personalized recommendations based on the customer’s spending habits. This helps them achieve financial goals and better use their funds.

  1. Eno - Capital One (The US)

Capital One’s chatbot provides around-the-clock support for its clients in the form of a web and mobile application. The bank’s customers use Eno to check on bills, track spending, and pay for expenses like loans and mortgages. This chatbot has a state-of-the-art detection system to spot fraud in real time and analyzes customer spending habits to provide more efficient financial management tips.

  1. Erica - Bank Of America (The US)

This AI-based assistant helps Bank of America clients organize their finances. It supports card management, payment scheduling, and access to account balances. Erica also redirects customers to support agents when they cannot solve their issues or need help understanding requests. For now, the chatbot only supports English, but Bank Of America plans to make it compatible with Spanish. Currently, the chatbot enjoys over 25 million users.

  1. JPM Bot - JPMorgan Chase (The US)

One of the most prominent American banks offers an AI-powered chatbot that supports conversations in Chinese and English. The financial institution developed this solution to help its clients make more informed investments. JMP Bot also answers questions about the bank’s different services and market topics customers are interested in.

  1. Nomi - Royal Bank Of Canada (Canada)

Canada’s largest bank offers its clients the Nomi chatbot. The solution provides Royal Bank Of Canada clients with information about their daily spending habits, budget recommendations, alerts, and reminders. Customers also use this application to save funds, manage accounts, and improve their everyday financial experience. 

Chatbots In Banking: Latest Trends

Many financial institutions rely on AI chatbots to handle daily customer support operations. It’s not a bad case to adopt them since managing a staff of employees for this sector can be tricky. In addition to keeping employees updated on the latest bank policies, the institutions must ensure they’re available 24/7. While beneficial, automated customer support isn’t the only thing that will bring more banks to embrace AI this year. Several trends will shape the progress in the application of these tools among financial institutions:

Easier adoption

Banks will have an easier time finding the right developers, and no-code platforms will make chatbot creation even more accessible. Many globally available developer firms specialize in AI and ML solutions for a fair price, and they have proven experience in building advanced chatbots. Our company is one of the leading experts in AI solutions development and has extensive experience building chatbots for different industries.

Further automation

In the future, chatbots will also work as a self-service for clients. Bank customers will use them to upload documents like loan and mortgage applications. Chatbots will compare provided information and available data, notifying customers of inconsistencies or errors.

Growing acceptance

As chatbots with AI capabilities develop, they will become more accepted by the banking community as indispensable tools. The success stories of HSBC, Bank Of America, Capital One, and others will pave the way for broader adoption by other global and national banks.

Personalized fine-tuning

Large language models used in AI solutions can be adjusted to mimic the language used by specific financial institutions. This way, chatbots will become more personalized and better at following bank procedures. The tools will be able to understand and resolve complex issues, providing timely and easy-to-follow help to bank clients.

Wider adoption of voice-based chatbots

In 2024, financial institutions will diversify how their customers engage with chatbots. Thus, voice-activated solutions will become more common among banks. In addition to advanced customer interactions, these products will be used for internal processes, such as automatic information gathering and conversation transcription.

Why Now Is The Perfect Time To Adopt AI Chatbots In Banking

The latest developments show the undeniable reality that the future lies with automation. Industries like retail, e-commerce, healthcare, and real estate have already picked up on this trend, and the banking sector is no exception. Customers are now more than ever relying on AI assistants to deal with most of their daily needs, and why wouldn’t they? 

With some training and programming, these products handle most requests, take payments, and help users resolve banking-related issues. Additionally, the voice input features of advanced chatbots are rapidly spreading beyond the likes of Amazon Alexa and Siri. Customers like using voice input and expect to find this feature whenever they shop or search for things on the web.

Even in the banking industry, voice bots and assistants are becoming more of a necessity than a trendy gimmick. Investing in banking AI chatbots helps financial institutions prepare for the future and increases their chances of finding clients among the Gen Z population. It’s expected that 64% of these individuals will use voice assistants monthly in 2027. 

Conclusion

The many benefits and use cases show the future of using chatbots in the banking sector has far-reaching implications. It can fully automate daily operations, open new income opportunities, and build client trust. Early adopters of these products will have the advantage over other firms and will more likely thrive in the ever-changing financial sector.

FAQ

  • What is the future of banking AI chatbots?

In 2024 and beyond, chatbots will continue to automate various aspects of the banking sector significantly. These solutions will provide customers with new and convenient ways of interacting with financial institutions. As major enterprises show the versatility of these products, other banks will adopt them more eagerly.

  • Are bank chatbots secure?

Modern AI-based assistants are equipped with encryption, authentication protocols, and fraud detection to protect customer data and transactions. But, a lot of work must be done to establish secure connections between the chatbots and legacy systems banks use for information storage and management.

  • Can banking chatbots handle complex tasks?

Chatbots handle most tasks related to banking services. They provide answers to common queries, give access to all kinds of client information, and provide them with the latest data to make weighted financial decisions. Their ability to handle complex tasks in each domain depends on the quality of training data used for AI chatbots.

  • How do AI chatbots in banking institutions improve customer service?

In simple terms, advanced chatbots can almost entirely replace the need for customer support teams. These solutions are available 24/7, can access bank information, and respond instantly to customer requests. This approach reduces the chance of human error and lets client relations experts focus on the most pressing tasks.

Customer retention is the key

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What are the most relevant factors to consider?

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Don’t overspend on growth marketing without good retention rates

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What’s the ideal customer retention rate?

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Next steps to increase your customer retention

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