Conversational Banking: The Future of Finance

Introduction

With the advancement of technology, customer preferences increasingly change. Gone are the days of standing in a queue or waiting on hold to talk with a representative. To evolve the customer experience, conversational banking emerges as a powerful tool for financial institutions to connect with them, enhance satisfaction, and drive business growth.

This modern approach leverages Conversational AI chatbots and messaging platforms, providing a more personalized and accessible experience than traditional banking methods. As customer expectations shift towards tailored solutions, over half of financial institutions are projected to leverage AI-powered chatbots by 2025, reports Worldmetrics.

From simple questions to complex transactions, conversational banking platforms provide convenience and efficiency. Banks can now elevate their customer service to a new level, empowering users to proactively take control of their finances. How, you wonder?

Let’s talk about the new wave of banking- conversational banking!

Conversational Banking – How does it work?

At the core of conversational banking are chatbots and virtual assistants. These AI-powered tools can understand and respond to customer queries in a human-like manner. Whenever a customer initiates a conversation, these virtual assistants analyze the input and also provide an instant response, which could range from simple inquiries about account balances to more complex transactions like transferring funds or paying bills.

To truly benefit from it, your bank can adopt an omnichannel approach. This means offering a consistent experience across all channels- the physical banking branch, a mobile app, or a widely-used conversational interface like Facebook Messenger or WhatsApp API. The more you can provide your customers with multiple options to interact with your bank, the more you can meet their diverse needs and preferences.

Additionally, Integrating Conversational AI chatbots with WhatsApp can open many more doors to reach your customers. These chatbots can provide instant responses to queries, offer personalized recommendations, and even facilitate transactions, all within a platform they already love. Not only does this improve customer satisfaction, but it also streamlines operations and drives sales. Get to know more about the benefits below!

Benefits of Conversational Banking

Till now, you’ve been constantly told how conversational banking brings solutions to all your tech-savvy customers and enhances their banking experience. Powered by Conversational AI, it offers numerous advantages for both the banks and their customers. Here’s how:

Increasing Customer Lifetime Value:

Conversational banking, with its advanced analytics, can go deep into customer data, uncovering valuable insights about their preferences, behaviors, and financial goals. For example, if a customer frequently inquires about investment products and has a significant savings balance, Conversational AI chatbots might recommend a suitable investment option.

By analyzing this information, these systems can accurately identify opportunities for cross-selling and upselling. Because customers can easily access their accounts, obtain answers to their questions, and also receive personalized advice, they are more likely to be satisfied with their banking experience. This can lead to higher customer lifetime value as customers are more likely to remain loyal to the financial institution and continue using its services.

Bringing All Transactions Under one Platform:

The integration of conversational banking with WhatsApp eliminates the need for customers to switch between multiple apps or websites. All transactions can be managed within the familiar WhatsApp API interface, making it easy and convenient for users. 

From applying for loans to making payments, customers can complete their financial tasks with just a few taps. Additionally, the chatbot interface provides a simple and intuitive way to navigate different options, making it accessible to users of all ages and technical backgrounds. 

While security is paramount, WhatsApp’s end-to-end encryption ensures that only the sender and recipient can read the messages exchanged, safeguarding sensitive financial information. It also allows customers to complete their financial needs quickly and easily without the hassle of long wait times or complex processes.

Reducing Costs:

One primary way Conversational AI chatbots reduce costs is by eliminating the need for human agents to handle mundane tasks. When chatbots can provide instant answers to common inquiries, customers are less likely to require assistance from human representatives. 

Moreover, Conversational AI chatbots can automate various transactional processes, such as account balance inquiries, fund transfers, and bill payments. This way, conversational banking can eliminate manual errors, reduce processing time, and ensure consistent service delivery. This increased efficiency can also lead to cost savings in IT infrastructure, training, and customer support.

Look at this success story shared by WhatsApp. Banorte, a leading Mexican financial institution, leveraged WhatsApp to create a secure and convenient channel for less digitally savvy customers to access pension information. This innovative approach resulted in a 55% increase in customers served, and also reduced the operational costs by 35%, leading to an 18% decrease in the cost of serving each customer.

Allocating Resources Where Needed:

Analyzing customer interactions can help your bank gain valuable insights into customer behavior and preferences. Conversational banking, with its conversational marketing chatbots, proactively reaches out to customers with relevant information or assistance, reducing the likelihood of customer complaints and churn. 

This data can be used to identify trends, anticipate customer needs, and make data-driven decisions. For example, if the chatbot detects a surge in inquiries about a particular product or service, the bank can allocate additional resources to support that area.

Better Security to Prevent Fraud:

Security is the priority for every banking customer when it comes to trusting with their hard-earned money. The round-the-clock accessibility of conversational banking allows customers to monitor their accounts and identify suspicious activity promptly. 

On top of that, Conversational AI chatbots can easily detect unusual patterns with their analytical intelligence, such as sudden large transactions or attempts to access accounts from unfamiliar locations. In a report by CNBC, Mastercard claims that Gen AI can help improve fraud detection rates by as much as 300% in some cases.

Lastly, integrating advanced security measures in your messaging platform, such as WhatsApp, can strengthen fraud prevention. Biometric authentication, such as fingerprint or facial recognition, can verify customers’ identities before they access their accounts. Encryption can also protect sensitive customer data and prevent unauthorized access.

Accelerating Innovation:

Conversational banking is a powerful tool for innovation within banks and other financial institutions. It generates valuable data that can inform product development, customer preferences, behaviors, and pain points, just by analyzing customer interactions. 

Conversational banking systems can be continuously improved based on customer feedback and performance metrics to keep the solutions relevant and effective in meeting customers’ evolving needs. They read into the data on customer satisfaction, usage patterns, and also transaction success rates to identify areas for improvement and make necessary adjustments.

The best part is that Conversational AI chatbots can be rapidly developed and deployed, allowing banks to experiment with new features and services without significant upfront investment. This agility enables organizations to quickly test new ideas, gather customer feedback, and iterate on their offerings.

How Conversational Banking Helps

In today’s fast-paced world, banking is no longer just about transactions but building relationships. Now that we know about the benefits, let’s talk about how conversational finance can help with building an improved and loyal customer base:

Building First-Party Databases:

One of the key benefits of conversational banking is its ability to build first-party databases. By engaging with customers through messaging platforms like WhatsApp Business Solution, and its Click-to-WhatsApp button, your bank can collect valuable customer data, including preferences, demographics, and purchase history. 

You can further use this data to create targeted marketing campaigns, personalize customer experiences, and develop new products and services.

KYC & Onboarding Through WhatsApp:

Conversational AI chatbots can streamline the Know Your Customer (KYC) and onboarding processes. Automating the collection of necessary documents and verifying customer identities reduces paperwork and long waiting times improves efficiency, and enhances the overall customer experience. 

WhatsApp Business, on the other hand, provides a secure and convenient platform for collecting and verifying KYC documents, making it an ideal tool for onboarding new customers.

Notifications and Intimations:

Conversational banking can be used to send timely notifications and intimations to customers. Whether it’s informing them about upcoming due dates, transaction updates, or account balances, chatbots can deliver these messages directly to customers’ WhatsApp accounts, ensuring they stay informed and engaged. 

This ensures that customers are always informed about their accounts and can take prompt action if necessary.

Guaranteed Message Delivery:

WhatsApp offers a high rate of message delivery, making it an ideal platform for conversational banking. According to the company, more than 175 million users use WhatsApp Business to send messages daily.

It offers guaranteed message delivery, ensuring that messages are delivered to customers even if they are offline. This is particularly important for time-sensitive notifications, such as transaction alerts or password reset reminders.

OTP Services:

To provide secure and convenient authentication, Conversational AI chatbots need to be integrated with One-Time Password (OTP) services. When customers need to verify their identity for transactions or account access, these chatbots can send OTPs directly to their WhatsApp accounts, eliminating the need for separate authentication apps or SMS messages.

Multilingual Support:

Conversational marketing can never be done without reaching your customers on a personal level. To reach a wider audience in diverse countries, your system has to be available in multiple languages, making it accessible to a wider range of customers. Support your customers in different languages and cater to their diverse needs to enhance your global reach.

Here, you might better understand the success story of Mukuru, a leading African financial services provider. They successfully implemented the WhatsApp Business Platform to offer a faster, more secure, and more convenient service channel to their customers. The move to WhatsApp resulted in a 12% reduction in USSD usage and saved over $1 million in reduced USSD and SMS costs. WhatsApp became a popular choice for Mukuru customers for its multilingual support, with 42% of them using it to initiate money transfers.

Opportunities for Sale/Resale:

Conversational AI chatbots can promote products and services, drive sales, and also facilitate resale opportunities. By understanding customer preferences and providing personalized recommendations, chatbots can increase the likelihood of cross-selling and upselling. Besides, chatbots can automate the resale process, making it easier for customers to buy and sell products within the conversational banking platform.

Agent Handoff:

In cases where a customer’s query or issue is too complex to be handled by a chatbot, conversational banking can facilitate a seamless transition to a human agent. It can connect, identify, and also understands the center solutions, when a customer’s needs exceed their capabilities and transfer the conversation to a human agent. This ensures a smooth and efficient customer experience, even for more complex inquiries.

Let’s have a look at the Gupshup’s case study:

Conclusion

Conversational banking is all about putting the customer first. It’s quick, easy, and puts them in control. As Accenture rightly points out, your bank can boost revenue from primary customers by up to 20% by establishing a perfect CRM with Conversational AI in Banking. 

At Gupshup, we understand that happy customers are loyal customers. That’s why we’re dedicated to building innovative tools that enable banks to have meaningful, human-like conversations with their customers. By deeply understanding your needs and simplifying the financial experience with AI-powered chatbots and conversational marketing, we’re helping banks foster stronger relationships and build lasting loyalty.

Ready to transform your banking experience? Contact Gupshup today to learn how our conversational banking solutions can help your bank build stronger customer relationships and drive business growth.

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Frequently Asked Questions (FAQs)

Q: Can conversational banking replace traditional banking methods entirely?

While conversational banking offers many benefits, it’s unlikely to completely replace traditional methods. It’s more about providing a complementary channel for customers to access their accounts and services.

Q: Is conversational banking secure?

Yes, conversational banking can be highly secure. Financial institutions can implement robust security measures, such as encryption and multi-factor authentication, to protect customer data and prevent fraud.

Q: How can conversational banking be integrated with existing banking systems?

Conversational banking platforms not only integrate with existing banking systems through APIs but also allow customers to access their accounts and perform transactions seamlessly.