Chatbots are here to stay, and their value to banks has moved from exploratory to proven. Chatbots represent a more accessible insertion point for digital banking across every stage of the customer journey, from lead generation to basic and advanced features to customer support. Here are the five biggest reasons chatbots trump all when it comes to digital banking.
1. Ease of deployment
Unlike traditional web or mobile apps, chatbots are comparatively inexpensive to deploy. Chatbots’ integration into the omni-channel strategy requires less complicated code and less coding overall. Plus, the proliferation of platforms – Messenger, Slack, and others – means banks do not need to develop their own channels if they do not want to. And, thanks to the cloud-based infrastructure of most chatbots, banks do not need to dedicate server space and storage dollars. The ease of deployment versus the potential for growth has never been more favorable.
For banks, the flexibility of chatbots is a double win. Like personal finance upstarts Cleo, Stripe, and Wealthfront, banks can tap into the low upfront costs of chatbots. Unlike upstarts, however, banks have long-time experience with regulation and compliance and can bring a suite of banking products under the umbrella of chatbots, for example, mortgages and other loans, that upstarts would have more difficulty offering. Chatbots bring an unlimited level of flexibility to the resources that banking establishments already have under their wing.
2. Ease of adoption
With the recent explosion of fintech, change in the banking industry is accelerating fast, and no product line or segment will remain untouched. The pressure is on for banks to digitize fast. Luckily, banks have options. They can build out their own solution, buy an existing product, or partner with a fintech company to deliver the goods. Usually, the suite of services banks end up offering will be a mix of in-house, vendor, and partner services, making integration and compatibility a keystone for success.
According to a recent PwC report, “Many lenders are partnering with start-up technology firms or vendors offering solutions that are built to be integrated with their digital suite to enhance their offerings or gain a competitive edge. Marketplace lenders have excelled at the partnership angle, and financial technology firms are looking for lender partners to strategically combine forces with a unique go-to-market solution.” By their very nature, compatibility is baked into chatbots, making them an ideal partner for digitizing services.
3. The market is there
Chatbots feel new, but they have been around for a long time by today’s technology standards, and they are now poised for mass adoption following a lengthy early adopter phase. There’s a reason why Facebook bought Whatsapp in 2014 and why they introduced Messenger as a standalone app in 2015. With both services boasting over 1 billion users, messaging apps have become reliable, inexpensive, and trustworthy hosts for chatbots. This is especially true for the millennials that banks are targeting.
4. Your competitors are ALMOST there
Digital lending has become the ultimate test of banks’ commitment to digital banking overall. It is not just about the difficulty of bringing such a complex transaction online; it is also because loan officers are still an indispensable part of the mortgage process. Still, banks are not walking towards digital banking; they are running. In an interview with The Financial Brand, Michelle Moore, Bank of America’s Head of Digital, said, “We are going after making anything that customers want to do available in any channel that they want” – and that includes a platform for mobile mortgages planned for 2018.
Chatbots, for all the fuss, are still in the early adopter phase, meaning that banks that make them part of their larger digital banking strategy will still be ahead of the curve as adoption ramps up – and will benefit the most. While U.S. banks are ramping up efforts, to date there is one Canadian bank, Canadian Imperial Bank of Commerce, that offers a mobile mortgage on their own app, Hello Home. Launched in May 2016, Hello Home lets users snap pictures of important documents, guides them through the mortgage process, and makes chat available with mortgage specialists if needed. Hello Home is feature light, but it is a solid start, and it points the banking industry as a whole in the right direction.
5. Chatbots reduce friction
The goal of digital banking is not just to digitize the application process, but to make the process as a whole simpler. Bank of America’s online mortgage fulfillment center, launched in June 2016, lets clients upload documents, receive disclosures, and review their application status. The mobile version is still in the works, and Bank of America is planning to expand the list of features available there. Their concept is not just to replicate the offline experience online, but to create a whole new lending experience.
Take a typical form that applicants must fill out. The average mortgage application has more than 250 fields. Imagine a chatbot that can auto-populate data based on information stored on the bank’s servers. Further, imagine if the chatbot could give people answers to typical questions mortgage seekers have as they fill out the application. Lenders do not have the time to walk each applicant through the process, but a chatbot could give them the individual attention they deserve while improving overall customer satisfaction. Imagine a mortgage application process that, thanks to chatbots, is a breeze – what could be better?