FinTech firms present a credible threat to incumbent banks. Leveraging a combination of technology, consumer-centric service, and flexible business practices, fintech firms reduce the cost of doing business, extending their customer base, and taking market share from established traditional banks.
Despite this threat has been present for some years now, many banks believe they are still unprepared to compete properly. However, to respond to the challenge, banks should adopt Conversational AI technology that can help them to compete with the fintech firms that threaten them.
According to a survey, 53% of banks and 69% of credit unions view technology giants like Apple and Google as their top competitors in 2020 and believe they will become the hallmark of well-managed credit unions.
As a result of the COVID-19 crisis, banks saw a rise in online banking activity and a decline in trips to brick-and-mortar branches. Europe is the prime epicenter of the COVID-19 crisis, with nearly 75 percent of new cases reported globally on March 18th. The impact of the crisis was huge on the banking system and on the bank-customer relationship in the European region. In fact, the pandemic has made the banks believe that the Conversational AI transformation is not only beneficial but it’s also crucial for their survival in the competitive market.
How will traditional banks stay ahead of fintech?
Conversational AI is the only means by which banks can stay competitive in the market, retain their customers, and find and pursue new leads. For example, Gen Y, Gen Z, and many who find the traditional way of banking monotonous and tedious need only one real solution — AI. Nowadays, people don’t want to be visiting branches to make deposits and transfers — and very few people are mailing paper checks anymore.
What is needed from modern-day banking?
Quickly get up to speed with conversational banking, including adding a payee, bill payments and Peer-to-Peer (p2p) transfers. Many options can be added across multiple channels and in the language of customers.
Now let’s break down why banks need to embrace a technology like Conversational AI to sustain, including everything from creating new revenue sources to adapting to changes in consumer demand.
What do customers really what?
1. Customers Want Quick Contactless Payment Methods
One of the top drivers of Conversational AI adoption in banking is customer preferences. The increased health concerns and a need to avoid physical contact because of the COVID-19 pandemic have caused customers to drift toward digital payment options.
A recent Mastercard poll found that contactless payments grew twice as fast as traditional payment types in-between February and March of 2020.
The same poll revealed that 79% of respondents typically use contactless payment methods. In response, tech companies like Google Pay, Amazon Pay, Apple Pay, and Samsung Pay have started offering contactless payment apps.
Leveraging AI assistants that are available 24/7, through multiple channels like Telegram, Facebook Messenger, or email and more will be a win-win situation for both customers and the bank. From a millennial’s perspective, simple requests such as password reset or adding a payee, or making an international transfer can be done instantaneously. There’s no need to visit the bank or spend an hour in the IVR puzzle menu to speak to a human agent. Banks adopting AI are, in fact seeing increased customer satisfaction rates and sales.
2. Legacy Systems Costs Banks Huge Chunks of Money
Banks’ legacy systems deserve special attention as they are costing banks a lot of money and have led to expensive failures in getting new leads and customer retention. They’re simply not capable of supporting the market’s changing expectations and may soon expose banks to additional risk and liability.
Also, the operation and maintenance of these legacy systems are becoming more difficult. Imagine the bank’s data records are all in papers, but with Conversational AI, every record will be saved in Cloud. Cloud technology has the potential to transform a bank’s operational efficiency because it obviates investment in infrastructure – what’s needed is ready and available in the cloud.
3. Offering Omnichannel Banking Services
The Omnichannel approach came to the forefront in retail in the early 2010s. Since then, it’s been making its way into industries like telecommunications and media, and banking. Traditional banks allow digital banking but not omnichannel banking. For example, Sara wants to perform her transactions via mobile and web channels.
She wants to send money, apply for personal loans, add payees, pay her bills, and more, all through channels like Whatsapp, Facebook messenger, or Telegram. And this cornerstone feature can only a bank with Conversational AI adoption avail her.
4. Conversational AI is a Key to Increase Revenue
Another reason banks should embrace Conversational AI is that it offers new outlets for following leads and increasing revenue. As customers increase to interact with the AI-powered assistants, it becomes easier for banks to track their behavior patterns.
They can see what resources customers look up frequently, and they can send pop-up survey alerts to find out more details about users’ financial needs and reasons for using the assistant. Banks can then make personalized product recommendations based on that gathered data.
By 2021, more than 50% of enterprises will spend more per year on bots and chatbot creation than traditional mobile app development – Gartner
5. Conversational AI Adoption is a Survival Imperative for the Banks
Leveraging Conversational AI-powered assistants like the ones powered by the Kore.ai platform that is fully functional, omnichannel, and domain trained assistants can handle more than 80% of the queries asked by your customers through Mobile/ Web channels. The AI assistants can also be customized to add more use cases based on what your customers frequently ask for, unlike the live agents who need to be hired and trained for each scenario.
6. Banks can Avail Enterprise-Grade Security
Leveraging enterprise-grade Conversational AI-platform builds security into your banking operations to boost banking confidence and growth.
For example, when you chat with a bot or a live agent, they get to know your bank details and can track all your personal details. Just imagine they can father all your confidential information. But here’s the catch. Virtual Assistants built on Enterprise-grade Conversational AI platforms like Kore.ai focus a great deal on ensuring the most critical aspect of any business security.
7. Conversational AI Helps Banks Adapt Quickly
It is crucial for the banking industry to remain not only agile but also be able to adapt to changing economic circumstances quickly. Having a robust technological setup means a bank can rapidly respond to crises like the COVID-19 pandemic. Banks need to unexpectedly shut down their branches, operate with fewer staff members, or limit in-person services.
Conversational AI adoption in banking also enables the banks to respond rapidly to changes in demand. Conversational AI-powered assistants come with cognitive intelligence that helps businesses roll out new offers and respond to customer requests or market changes.
Not only does Conversational AI better help banks respond to economic crises, but it also helps them react to industry changes and stay competitive.
Competition in the banking sector will likely intensify the post-pandemic, requiring the banks to transform themselves into an innovation unit to not only survive but thrive in the future banking landscape.