Would you be happy to bank with a bot? Part 1

As digital banking becomes increasingly pervasive, consumers will expect their queries to be resolved without having to visit a bank.

Would you be happy to bank with a bot? Part 1

Technology continues to revolutionise the way people communicate, work, travel and manage their money, all at breath-taking pace. AI (Artificial Intelligence) is at the leading edge of this trend, as evidenced by its rapid wide scale adoption across many industries. Of particular interest is the breadth of innovations in the banking sector, using AI to transform the way consumers interact with banks and how they manage their finances.

AI, once a fictional concept imagined by authors and filmmakers, evolved to become a mathematical concept developed by scientists and philosophers, before finally being established as a fully functioning and useable technology. Today, the bots are well and truly integrated into our everyday lives; and not all in a good way. The Times newspaper recently estimated that advertisers are being cheated out of £5bn a year by “bot fraud”, where criminals mimic humans browsing to “watch” billions of online adverts per day.

Chat and instant messaging is incredibly popular – about 2.5 billion of us have at least one messaging app, such as WhatsApp, installed on our smartphones. Instant messaging is also the perfect format for companies testing the waters with bots and Artificial Intelligence because conversations are relatively simple and quite structured. In China, consumers talk to chatbots on WeChat, a messaging platform which handles a myriad of tasks, from booking a doctor’s appointment to paying a water bill. It now counts 650 million active users, as well as millions of companies including some of China’s largest banks which have integrated their services. Meanwhile, Facebook has opened up its platform to third-party chatbot services and has partnered with Mastercard to create the ability to shop and transact in Facebook Messenger, and pay using MasterPass.

What’s the reason for the quick growth and investment of this technology?

Quite simply, there are many benefits of AI technology. A number of financial institutions already use AI to improve their security measures: detecting fraud by employing systems (of bots), that are taught to recognise transactions that are out of the ordinary, taking steps to mitigate the threat, and automatically alerting both the bank and the customer to the issue.

The customer experience is significantly improved by intuitively providing quick and simple solutions, offering instant access to information and empowering customers to make informed financial decisions. RBS has implemented an AI system with a human-like personality, making it approachable, creative and using a combination of intuition and reasoning when answering questions from staff who handle small business customers. KPMG predict that by 2030 virtual assistants will largely have taken over from a bank’s customer service.

The cost and time savings are also significant – AI technology enables banks to focus human resources on more complex issues, whilst reducing expenditure on call centres as these more basic functions can be handled by virtual assistants.

As digital and mobile banking becomes increasingly pervasive, consumers will expect their queries to be resolved without having to visit a bank and in some cases, without a phone call. Later this year, Bank of America is expected to release Erica, a smart chatbot that uses AI, predictive analysis and cognitive messaging that allows customers to make payments, check balances and receive advice on debt and saving money. Many other banks will follow suit as they race to keep up with the pace of change and customer expectation.

The challenge for banks is to work out how to strike the right balance – utilising the technology to drive business efficiencies whilst enhancing the customer experience. As this technology evolves, one of the key questions is whether bots should try to mimic humans or form their own unique identity? My next blog will explore this further.


Click here to read part 2 of this blog