Updated on December 9, 2024
Customers have been demanding faster and more convenient banking solutions for decades. And with the rise of digitally-native neobanks that boast technologically advanced solutions, the pressure for technological reform has fallen on the incumbents.
Major banks like JP Morgan and Chase have responded by increasing their use of chatbots. Each of the top 10 commercial banks in the U.S. uses a banking chatbot, and it is estimated that about 37% of the US population interacted with a chatbot in 2022.
Part of this is driven by the recent boom in LLMs in chatbots, but the core benefit is to service customers better. Using an ROI calculator, banks can measure the financial impact and improved customer service efficiency provided by these banking chatbots. Let us start by explaining the capabilities of these banking chatbots.
What are Banking Chatbots?
Banking institutions use chatbots as self-service channels to cater to customer needs. Traditionally, these chatbots were rule-based and provided different options that people could click to act.
With the launch of ChatGPT and other LLM, banks have been moving towards NLP-focused chatbots. These new chatbots use rule-based screens and Generative AI to create a more human agent-like experience for customers.
These new chatbots come with capabilities like:
- Contextual Conversations: Generative AI chatbots can hold longer conversations and remember the information from previous discussions. This allows them to have more natural human-like interactions with customers.
- On-Brand: Since these chatbots are trained on your brand’s documents and websites, they always maintain brand tonality in their messages.
- Transaction Capability: Generative AI chatbots can manage repetitive transactions with APIs. This includes bill payments, investments, deposits, and transfers.
- Secure: Enterprise chatbots have been trained to handle PII data securely. They keep data on the bank’s secure server and prevent leakages proactively.
- Integrations: Most recent chatbots can integrate across multiple platforms. This empowers banks with the ability to communicate across channels.
- Analytics: Chatbots can automatically collect data about words used, CSAT scores, and resolution times.
- Continuous Learning: These chatbots can learn from previous interactions and leverage this data to improve over time.
These capabilities allow chatbots to facilitate transactions, manage basic inquiries, and provide credit and investment services.
What can these banking chatbots do? Let’s talk about the benefits of these chatbots.
Benefits of Banking Chatbots
In a recent interview with Business Insider, JP Morgan CEO Jamie Dimon said that AI is huge, and they’re embedding it in all of their businesses.
JP Morgan has been one of the biggest advocates of AI in the banking sector. And a large reason for their conviction is the benefits of chatbots, which can:
1. Be Available 24/7/365
International banks have to deal with customer complaints at every hour. Chatbots can reduce this workload by providing customer support 24/7 at a marginal cost compared to human agents.
These chatbots can also handle most repetitive queries and help reduce the workload of existing human resources. This allows a company to scale its customer support function effectively without significant investments.
2. Provide Personalization at Scale
AI-based chatbots can learn as they speak with customers. This allows them to provide custom personalized services to customers. For example, they can suggest new investment ideas to a customer researching mutual funds on the banking platform or recommend a new credit card to an existing customer with a checking account based on their credit scores.
3. Prevent Fraud
Chatbots can automate the verification process initiated when customers perform a suspicious transaction. Traditionally, this has been done through phone calls from a human agent, and AI can run this at scale with little intervention.
AI chatbots are also better at identifying fraud. For example, it can locate an IP address from another country and identify inconsistencies in customer answers much better than a human can.
4. Handle Basic Transactions
Many transactions in the banking industry are repetitive and can be handled through chatbots. Credit card bill payments, regular investments, and deposits can be facilitated through chatbots without human intervention. Chatbots can also remind people of upcoming due dates and help them make transactions at the right time.
5. Provide Education
AI chatbots can answer basic questions about banking and help customers make better financial decisions. Chatbots can provide new customers with information on how to open an account, manage investments, and build a credit score to boost their financial literacy.
6. Cross-Sell and Up-Sell
Since these chatbots can learn continuously, they can also identify services that a customer might need. This enables these chatbots to cross-sell and upsell various services easily. For example, a chatbot can recommend a new credit card to a customer with a good credit history.
A chatbot’s ability to gain and access information on the fly enables it to drive multiple benefits for any banking institution. Modern chatbots can also be armed to perform core banking services, becoming an end-to-end interface for the end customer.
These benefits have also led to some interesting use cases across the industry. Let’s dive in and understand these use cases with examples.
Banking Chatbots – Case Studies & Applications
As we said up top, the top 10 commercial banks in the U.S. are already using chatbots in their business. This has revealed some exciting use cases for these chatbots:
Handling Basic Banking Services
The JP Morgan chatbot can help you run essential buy and sell transactions on securities. It can also help you open your account, check the latest offers and privileges, and access market guides for investment. Similarly, Citi Singapore allows you to chat with it on Facebook Messenger to get access to information about account balance, due dates, and other critical banking details.
Customer Support
We’ve already pointed out that most customer support queries are repetitive. These queries can be handled at scale with chatbots that answer FAQs. In our experience, this can automate up to 70-90% of the queries your customer support agents receive.
Resolving Suspicious Transactions
Most suspicious transactions are resolved through authentication. Chatbots can manage this authentication process through automated messages to the user where they approve the transaction. Chatbots can also pull out real-time data about their conversations and determine if there is irregular communication (has the user logged in from a new location, is the user ultimately following new patterns, etc.).
Increasing Product Form Fill-Ups
One of our BFSI clients, Taxbuddy, understood that collecting data through a form was difficult. Taxbuddy is a tax compliance startup that requires many documents to enable individual tax filing. However, most customers left the forms midway.
The chatbot solution that Kommunicate facilitated helped them 13x their productivity while increasing the number of form fill-ups they received each cycle.
These chatbots have helped banking and financial institutions worldwide in increasing their productivity. However, banks are also adopting chatbots because they provide cost savings at scale.
The Result: $21 Million Saved
In a recent Forrester study, they took in the client data for several BFSI businesses that use the IBM Watson Assistant chatbot for their business. They composited the performance of chatbots across these companies to reveal the average savings each company experiences. It was revealed that these BFSI companies were saving around $23 million in three years through their chatbots. They were saving:
- $13 million with customer complaints that were contained within the chatbot.
- $6.7 million through automated call routing through chatbots.
- $2.4 million with chatbot services that helped sales agents.
Any banking institution can replicate these savings by connecting an AI chatbot with Kommunicate and integrating it into different channels.
Now that you know the prospective results of implementing a chatbot, let’s talk about the best AI providers for banks.
7 Top AI Banking Chatbot Providers
1. Kommunicate
We’re biased about this selection, but Kommunicate has been making waves in the BFSI industry. It stands out because of its stellar no-code AI trainer and plug-and-play integrations.
Additionally, Kommunicate offers fully transparent pricing and customizable features as the perfect wrap-around for your workflows.
2. Kasisto
A major US banking chatbot industry player, Kasisto, offers state-of-the-art security features like Kommunicate. It provides deep multi-channel integrations and has a chatbot fine-tuned for the banking industry.
3. Kore.AI
A newer player in the AI chatbot scene, Kore.AI is known for its efficient features. It features a fully customizable dashboard for analytics. You can also track and analyze customer questions using the app.
4. Haptik
Haptik is a feature-rich integrated platform that offers multiple analytics for your customer service team. Additionally, their extensive team offers ready backend customer support throughout the day.
5. Intercom
Intercom is one of the biggest ticketing platforms in the world, and their AI chatbot, Fin, is very capable, too. This app features a best-in-class integration ecosystem, but some customers complain about significant overages.
6. Freshchat by Freshworks
Freshworks was founded to address some core problems with customer service platforms. Their new Freshchat chatbot offers omnichannel integrations and is feature-rich.
7. TARS
Known for their conversion funnel options and customizability, TARS is a good choice for banks that want to use chatbots as lead funnels. The brand already serves multiple enterprise players across the globe.
You can use any of these AI providers to start with an AI banking chatbot. However, there are some steps you must take before you integrate AI into your systems.
5 Steps to Take Before Using a Banking Chatbot
Planning before investing in a chatbot is essential. The things we tell our clients to prioritize are:
1. Understand Customer Needs
The business impact of banking chatbots is limited by how customers perceive it. So, aligning chatbot functionality with customer needs and wants is vital.
In practical terms, it translates to creating chatbots that can handle the most common use cases that customers want. It also involves training chatbots to answer FAQs and common complaints.
2. Choose Materials with Brand Voice
The chatbot will often be a customer’s first interaction with your business. So, it’s important to train it on specific documents in your brand voice. It’s also important to set boilerplate messages that the chatbot can use when conversing with a customer. You can find a guide about setting up your chatbot with our platform here.
3. Identify Gaps in Documentation
Chatbots can’t answer what they don’t know. So, review your knowledge base, website, and documents for any missing information. Provide important information about your FAQs and services and keep re-training with new documents whenever you find a knowledge gap.
4. Prioritize Bot-to-Human Handoff
Chatbots tend to trap customers in conversation loops, especially if it doesn’t know the correct answer. To boost customer experience, it’s essential to use a chatbot with a robust bot-to-human handoff system.
This ensures that whenever a critical problem arises, a human agent is always available to take care of the problem.
5. Look for a No-Code Conversation Building
Multi-functional teams will lead much of the training your chatbot undergoes. To avoid overloading the tech and IT departments with requests for re-training, it’s better to provide a no-code training interface to this team.
Not only are no-code chatbot trainers intuitive and easy to learn, but they also provide a way to test and re-test your chatbot before it launches constantly.
6. Check the Security Certifications of Your Provider
Your chatbots will be dealing with PII information every day. So, the security behind your chatbot must be robust.
Our chatbot platform, for example, is SOC2, HIPAA compliance chatbot, and GDPR-compliant and provides the most state-of-the-art cybersecurity possible.
While choosing the chatbot your business will be using, look for the above security certifications and try to find companies that standardize their practices according to the ISO standards.
In our experience with thousands of clients, we’ve found that following the above five steps helps companies decide on their chatbot provider. If you’ve chosen a provider, let’s arm you with some free chatbot templates to plug in to get started.
Free Banking Chatbot Templates
At Kommunicate, we strive to be the most plug-and-play chatbot solution provider on the planet. That’s why we’ve built several templates that you can directly plug into your website and start using today:
The Banking Chatbot Template
We created this as a generic banking chatbot. This includes basic information about banking services. The chatbot can redirect customers to your credit card and loan availability pages and handle bill payments through custom API integrations.
The Customer Support Template
This template was designed for a primary customer support use case. Most banking institutions use live chatbots as a customer support gateway; this bot can answer basic FAQs and provide information about services.
Meeting Booking Chatbot Template
A generic appointment booking template can facilitate meeting booking for sales agents at a bank. This bot is designed to capture lead information, their purpose for booking a meeting, and then directly scheduling a meeting with a concerned agent.
This is especially valuable for sales agents who might not be available to book meetings personally due to their busy schedules.
Lead Collection Chatbot Template
Our most popular template automates the collection of information from your prospects. This collects information about a lead in a simple conversational way and can be directly integrated with your CRM. We’ve used this template for a BFSI client and increased their lead acquisition significantly.
Insurance Chatbot Template
This generic insurance chatbot template covers home, auto, and life insurance. It can provide basic product information alongside information about claims. You can also easily modify this chatbot to inform customers about policies and intake requests for claims.
These templates can reduce the time you take to train a chatbot by several days. We use them in our internal processes and would recommend them to any executive who wants to build their chatbot.
If you still need help, we also have a complete guide on how to build a chatbot.
However, before you go ahead and launch, let’s talk about the latest trends that are defining this technology.
Chatbots in Banking: Trends & Innovations
A veritable rush for Generative AI defined 2022 and 2023. However, the latest news shows that the market has switched to a more cautious approach. The trends that are going to define this technology going forward are:
- Rush Towards Cheaper Implementation: Most enterprises realize that building AI from scratch is difficult and costly. While most businesses will implement AI, they will look at third-party vendors with expertise in AI as extensions of their tech teams during the process.
- Data Security will be Key: As AI reaches more conservative industries like finance and healthcare, security compliance is becoming a pressing issue. Robust cybersecurity measures and updated security clarifications will become necessary for any vendor in the space to ensure that they stay safe online.
- Data Accuracy and Contextuality will be the Golden Standard: As LLMs evolve, more businesses understand that hallucinations and small context windows are the main blockers for businesses. Models that can have data-accurate and contextual conversations will be preferred.
- Decision Transparency and Bias will be Important: AI can amplify existing biases within data and standards in an industry. Given that thousands of dollars are going into solving this, we can safely predict that this will be important in shaping the future of this industry.
Executive Summary
All recent consumer banking trends show an increased adoption of chatbots in the sector. Central banks in the U.S. have been using these bots to drive everything from customer support to basic transactions. Since these generative AI chatbots have capabilities that allow them to have more extended conversations and continue learning, they’ve been leveraged to drive massive savings for multiple enterprises.
However, it’s prudent to choose the right chatbot. Choosing a chatbot that maintains a robust security system and can manage multiple customer needs while providing a bot-to-human handoff system is the best choice for anyone looking to launch a chatbot service in banking today.
But before you integrate banking chatbots, it’s essential to understand the future trends that will define the business. Data security and accuracy are primary risks in adopting chatbots; most vendors are focused on mitigating this. Additionally, enterprises are moving towards cheaper implementation solutions since building AI from scratch is expensive. Most importantly, many technological companies are investing heavily to eliminate AI biases, and several grants have been announced for research around this.
Interested in using this tech? We’ve built several free templates to help busy banking executives.
And if you want to start using these templates for your business, you can head to our website for a free trial or book a demo to get started!
As the Head of Growth, Marketing & Sales, Yogesh is a dynamic and results-driven leader with over 10+ years of experience in strategic marketing, sales, and business development.
