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Rise of the chatbots: Simplifying banking interactions

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Messaging platforms are the talk of fintech, helping banks to engage with customers more effectively than ever

Swiping through a mobile application to check your bank balance is pretty much second nature today. Even so, it’s hard to believe that versions of this technology have existed since 1999. That’s when European banks started offering contextualized data to their customers via SMS, including banking balances, revised interest rates and other information.

Although this was a revolutionary development at the time, it lacked a high level of user interaction between bank and customer. Customers could input only a limited, set amount of questions via SMS. It was however successful in one important area – simplicity.

Mobile apps were then created to further simplify complex tasks. So a user, for example, could check their bank balance without having to access a browser and then navigate a webpage that displayed their balance.

Fast forward almost two decades from the advent of mobile banking. Today, each bank has multiple apps for functions such as payment transfers and trading, to name a few. Yet ironically, simplicity and function have diverged. Users now need to access multiple apps to carry out daily financial activities. This results in a fragmented User Experience (UX). Research indicates that 90% of apps are only used once. This is because it’s tedious to download, set up, manage and switch between so many apps on our mobile devices. The remaining 10% of more regularly used apps are dominated by social media and messaging.

Messaging apps have de facto become the new platform, subsuming the role played by the mobile operating system (OS). There are similarities here with the trend in the mid 90s that saw the browser replacing the desktop OS as the new platform. This shift towards messaging platforms has given rise to the “chatbot”, which is essentially a text-based service that lets users complete tasks by sending messages (this is not to be confused with robo-advisors).

These bots can read and write messages just as a human would and can run across multiple platforms delivering several services. Imagine a banking bot that you can message just as you would a friend, with naturally phrased questions. “What is my balance?” “How much did I spend on food last month?” “Which fund should I invest in?” This simplicity would de-clutter our mobile experience and simplify banking interactions. The bots simply send us a message as and when we need to know or respond to something specific. Otherwise, they remain invisible. Furthermore, bots reside in the cloud and upgrade themselves with new functionality without any user action. Tedious manual app management tasks are therefore eliminated.

In short, bots, are no longer fiction. They are very much a reality and financial bots, such as “Digit” and “Trim”, already exist. Digit simplifies saving for the everyday user. Once your checking account is linked, Digit notes your balance and cash flow via its built-in algorithms. Then it sets money aside as savings in incremental amounts. The user can message the Digit Bot to alter saving patterns (see image below). Peace of mind is built in, as all digit accounts are FDIC insured and personal information is anonymized and encrypted.

 

 

To summarise, the main attraction of chatbot banking is pure simplicity - clearly displayed above. Banks including RBS, with its Luvo customer service bot, have already integrated such services into their live operations. It’s surely now just a matter of time before this new wave of customer-facing technology enters the mainstream. Get ready, the bots are coming, chatting to you on a mobile device very soon!

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About the Author

abbas taqi

Abbas Taqi is a Consultant at Capco with digital experience in wealth management and retail banking. He is passionate about technologies that are disrupting and revolutionizing the financial services industry.

The content and opinions posted on this blog and any corresponding comments are the personal opinions of the original authors, not those of Capco or FIS.