Banking chatbots: Pain points, benefits & best practices

The banking industry arguably offers the highest potential for automated communication out of any active sector today. With such a high ratio of routine inquiries compared to complex issues, this is a space where chatbots and virtual assistants can fully showcase their abilities. It’s estimated that 90% of banking interactions can already be handled by automation.

Common support requests such as checking balances, transferring funds, or reviewing account history can easily be deflected by artificial intelligence (AI), freeing up time for human representatives to focus on more nuanced queries. Even more, its 24/7 availability and capacity to handle multiple interactions at one time serve to reduce wait times for end-users, ultimately boosting customer satisfaction.

What are chatbots in banking?

Banking chatbots are AI-powered digital assistants designed to engage with customers through various digital channels such as websites, mobile apps, and messaging platforms. They leverage natural language processing (NLP) and machine learning to understand customer queries and perform various banking tasks autonomously. They can further act as virtual representatives for financial institutions, assisting with account inquiries, conducting transactions, and addressing customer concerns in real time.

Moreover, banking bots serve as always-accessible channels for users to access financial services anytime, anywhere. Competent software will integrate seamlessly with existing systems to easily retrieve account details, provide updates, and much more with minimal human intervention.

What should a banking chatbot look like?

As banking chatbots become increasingly commonplace in financial institutions’ technological infrastructures, clearer expectations of its capacity have been established. Institutions desire their bots to be personable, competent, versatile, and secure to provide knowledgeable, human-like interactions across as many channels as possible.

1. Conversational

Personalization plays a crucial role in enhancing chatbot interactions. By integrating user-specific data, bots can tailor conversations to each user's preferences and history. This might involve referencing recent transactions, account balances, or previous interactions to make conversations more relevant. Furthermore, incorporating elements of humor and empathy adds a human touch to communications, leading customers to feel more connected.

2. Transactional

These capabilities typically include essential functions such as balance inquiries, fund transfers, bill payments, and transaction reviews. Users should be able to initiate these interactions seamlessly through natural language commands or guided prompts within the chat interface. Advanced bots can facilitate more complex transactions, such as setting up recurring payments, initiating wire transfers, or applying for loans and credit cards. 

3. On-brand

Upon implementation, you’ll want to establish clear guidelines for the chatbot's language, tone, and visual presentation. Whether conveying professionalism, trustworthiness, or friendliness, the bot should reflect the institution's desired personality traits. Regular audits can help monitor adherence to these standards, ensuring consistency across all channels.

4. Secure

It’s critical that financial institutions implement robust security measures within their chatbot technology, as these establishments are frequent targets of cyberattacks. Extensive authentication mechanisms should be implemented to verify users' identities before granting access to account information. The bot should also follow industry-standard encryption protocols to protect customer data transmitted between the user's device and the banking system.

5. Multichannel

To meet your customers where they’re at, you’ll want to examine gathered insights to determine exactly where they are. Popular channels for deployment include messaging platforms like Facebook Messenger, WhatsApp, and Slack, as well as voice assistants like Amazon Alexa and Google Assistant. Maintain consistency across all platforms to ensure a cohesive user experience (UX) and reinforce the institution's brand identity. A Customer Relationship Management (CRM) system, with CRM abbreviation commonly used, can help consolidate all communication into a single, centralized location.

6. Informative

Make sure to dynamically train your bot to respond to various user queries related to banking services, policies, and procedures. This may include equipping it with access to an up-to-date knowledge base containing frequently asked questions (FAQs) and relevant financial regulations. Individually, empower the chatbot with real-time access to account information to promote personalized responses to more user-specific inquiries.

7. Connected to different departments

Begin by identifying the key departments that your bot needs to interact with, such as customer service, account management, loan processing, or fraud detection. Work closely with IT to establish robust application programming interface (API) connections that allow it to retrieve relevant information from all areas. This integration enables the chatbot to respond accurately to inquiries, regardless of the department involved.

8. Integrated with existing software

Collaborate with IT teams and software providers to understand the compatibility requirements and technical specifications of your existing systems. Utilizing their suggestions, choose integration methods that align with your current infrastructure and security protocols. This can ensure that the chatbot can pull data from current systems and send useful analytics back to them. Remember to consider scalability to accommodate future software updates and expansions

9. Gather analytic data

Information collected from chatbot interactions provides valuable insights into user preferences, FAQs, and customer pain points, allowing banks to tailor their services to better meet customer needs. By analyzing these communications, institutions can better identify trends, enabling them to anticipate user inquiries and proactively address potential issues. Furthermore, this data can be leveraged to measure the bot’s effectiveness, assessing if it’s succeeding in reducing support costs, increasing customer engagement, or driving sales.

10. Learn from each interaction

By employing techniques such as NLP and sentiment analysis, chatbots can understand user context more accurately over time. Through each interaction, bots gather valuable information on customer preferences, inquiries, and conversational patterns, which can be used to refine their algorithms and decision-making processes. Reinforcement learning can further help chatbots adapt and improve based on customer feedback.

Pain points of banking chatbots

The first step in deploying nearly any new system is to identify the challenges you aim to alleviate with its implementation. With chatbots, their applications will vary depending on the specific difficulties your organization faces. Still, most banking institutions can minimize resolution times, deflect routine inquiries, and provide general updates.

Long hold times

When faced with lengthy wait times, users can turn to chatbots for instant solutions to their financial issues. Bots also offer round-the-clock availability, eliminating the constraints of traditional banking hours while reducing the likelihood of encountering peak call volumes during busy times. Clients can interact with chatbots at their convenience, whether it's during evenings, weekends, or holidays, without needing to endure prolonged delays. 

Common questions

Assisting with routine problems and handling FAQs is where digital banking chatbots currently excel. They’re trained on vast datasets containing frequently referenced banking terms and transactional processes, enabling them to respond to a wide range of queries accurately. 

Additionally, these bots are equipped with contextual awareness to maintain continuity in conversations and understand follow-up questions. This dynamic conversational AI capability enables them to provide personalized assistance tailored to each user's needs.

Looking for updates

Through proactive notifications, banking chatbots can inform customers about important updates like deposit confirmations, transaction alerts, or payment reminders. By analyzing transaction patterns, bots can customize these updates to specific user needs, ensuring timely and relevant alerts.

These types of inquiries are exceedingly common in the financial sector; thus, chatbots’ ability to deflect them can result in substantial time savings for real-world agents.

What are the benefits of a banking chatbot?

As mentioned before, the deployment of chatbots may be more beneficial in the financial industry than in any other space. Its advantages include 24/7 service, reduced support costs, improved personalization, and much more.

Automated, round-the-clock support

Providing 24/7 support, financial chatbots enhance customer satisfaction and loyalty by offering assistance whenever needed. Users appreciate this flexibility, as it allows them to quickly resolve issues, make transactions, and access information without waiting for regular business hours. This can be particularly important in banking, where fraud-related issues often require accounts to be disabled immediately.

Self-service

Banking bots can offer proactive self-service capabilities by providing relevant information before customers ask for it. By analyzing user data and transaction patterns, chatbots can anticipate common user needs, offering personalized recommendations and proactive alerts accordingly. For example, if a consumer regularly makes international transactions, the bot can preemptively inform them about currency exchange rates or provide tips for reducing transaction fees.

Reduced costs

Chatbots can automate routine support tasks, which traditionally require human agents. By resolving these issues autonomously, bots alleviate the workload on customer service teams, allowing them to focus on more high-value tasks. This reduces staffing requirements and minimizes the need for onboarding of additional personnel, leading to substantial cost savings.

A better understanding of customer's

Sentiment analysis techniques allows bots to gauge user satisfaction and sentiment in real time. 

Chatbots can identify instances of frustration, satisfaction, or dissatisfaction by analyzing the tone used in conversations. This enables institutions to proactively address customer concerns and deliver personalized solutions to enhance the overall CX. Additionally, bots can segment consumers based on their indicated preferences, allowing establishments to target specific groups with relevant recommendations, promotions, and campaigns.

Best practices for banking chatbots:

What your banking establishment can gain from chatbot deployment largely depends on how you plan to utilize it.

Common bot strategies among successful financial institutions often includes:

• Seamless integration: Integrate the chatbot seamlessly into existing financial software such as your core banking system, finance CRM, and risk management technology. Proper implementation can ensure unobstructed data-sharing across platforms and enable real-time alerts for end-users.

• Multi-channel accessibility: Make your bot accessible across various communication channels, including web chat, messaging apps, and voice assistance. Financial services are often of extreme importance to customers, and they’ll appreciate the ability to reach out to you on their preferred platform.

• Transaction support: Deflecting routine banking inquiries is where your chatbot can excel – train it to assist with fund transfers, bill payments, account inquiries, and loan applications. Ensure robust authentication mechanisms to secure these transactions.

• Security and compliance: Security considerations are always paramount, but even more so for financial institutions. Prioritize authentication and compliance measures to safeguard sensitive user information and adhere to regulatory requirements.

Use cases of banking chatbots:

That’s all good and fine, but how do chatbots perform in real-world financial scenarios? Let’s take a look at some common examples of banking bots in action.

1. Assist with essential banking activities

Customers routinely look for assistance in checking their account balances or seeking details about recent transactions. The chatbot, equipped with NLP capabilities, understands the user's query and retrieves the relevant information from the bank's systems in real time.

For instance, a customer might type, "What is my current account balance?" The chatbot responds promptly, "Your current account balance is $11,542." If users wish to delve deeper into their transaction history, they can ask, "Can you show me my recent transactions?" The bot will retrieve the requested information, summarizing recent deposits, withdrawals, and transfers. 

2. Answer FAQs

Imagine that a client is concerned with the security of their online account and wants to know how the bank protects their personal information. The customer initiates a conversation with the chatbot and asks, "How secure is my online banking account?"

The bot may explain that the institution employs multi-factor authentication, encryption technologies, and real-time transaction monitoring to safeguard user accounts. It may also provide tips for enhancing account security, such as regularly updating passwords, enabling account alerts, and avoiding sharing sensitive data.

As a business owner, you can include this information in the bot’s knowledge base to ensure it possesses sufficient resources to pull from.

3. Provide proactive support

A useful instance where a chatbot could preemptively provide support is in potential fraud situations. 

If a customer's card is used for a suspicious transaction, such as a large purchase in a foreign location, the chatbot can send an immediate alert to the user's mobile device, saying, "We've detected potentially fraudulent activity on your credit card. Did you authorize a purchase of $876 in Toronto?" The bot would then provide options for the customer to confirm or deny the transaction and take appropriate action, such as temporarily freezing the card or contacting customer support for further assistance.

4. Help customers apply for financial products

An individual interested in applying for a mortgage loan may begin a conversation with a chatbot by asking, "How can I apply for a mortgage?" The bot could respond by asking the user a series of questions to gather relevant information, such as their income, employment history, and desired loan amount.

Based on the responses provided by the client, the chatbot can then recommend suitable options and provide details on terms, interest rates, and eligibility requirements. It may also offer advice to help the user improve their chances of approval. Once the customer has provided all necessary information, the bot can guide them through the submission process, assisting with document uploads, e-signatures, and any other required steps.

The future of chatbots in banking

Through continuous learning, chatbots should evolve to offer even more personalized communication, providing tailored financial advice, service recommendations, and more thorough guidance with transactions. They’ll likely grow to serve as full-service banking assistants, requiring no human intervention throughout most customer interactions. After all, only 10% of current financial communication is outside chatbots’ scope – just imagine what that percentage will be reduced to in another ten years!

However, the most currently untapped potential for banking bots likely lies in the cryptocurrency and blockchain arena. Future chatbots may offer real-time crypto analysis, enabling users to make informed trading decisions within the same interface they use for traditional services. Blockchain-based identity verification could also increase security protocols by providing users with decentralized and tamper-proof identity credentials.

Why Freshchat?

Freshchat is a full-feature, AI-powered omni-channel solution with robust chatbot capabilities. 

CSS’s chatbots are deployable across many platforms including your website, mobile app, Facebook Messenger, Apple Business Chat, and many more. Additionally, their machine learning algorithms ensure that they’re constantly expanding their capacity to handle increasingly complex financial inquiries as time goes on. Further aptitude in personalization, ready-to-use templates, and seamless live-agent handover places our chatbots among the most capable virtual assistants currently available to your institution.