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The Trend of Banks Banking on Chatbots

Kiran Kumar K V, Faculty, ISME,
Famously called Chatbots, the Artificial Intelligence based computer programmed platforms, are seen as new-age personal financial relationship managers. In an industry, that generally perceived to be complex service, yet inevitable to consume, financial service providers are increasingly attempting a host of alternatives to make the service as much automated as possible. A trade-off between the cost of implementing versus benefit of customer delight, financial service providers, even-to-date, are yet to break the code. While, ATMs, online portals and mobile apps have been radical in changing the way banks and financial services address customer needs, the new age Chatbots are going one step further in creating a conversational banking experience.


Imagine that there are robots, who can process and analyse information, like humans, and are placed in those customer care desks, and when a banking customer has some query, issue or requirement, all he has to do is just call or text this robot. And in an unimaginable speed and efficiency the issue is addressed. Essentially, these Chatbots are computer programs designed to have an interaction with a human seamlessly. Nowadays, these Chatbots are equipped with machine learning and artificial intelligence, that enable these information processing programs, to learn and be smarter with each time it interacts with a human. 

It was during World War II, an inventor of those times in the field of computer science, explored the possibility of a text-based interaction by a human-imitating machine. Google recently introduced GOOGLE DUPLEX, that can have a flawless natural conversation with humans, such that it can execute certain commands. Sundar Pichai, when launching this, demonstrated how a restaurant table can be booked by this app, based on a conversation it had with him.
Chatbots in banking are not very new in the real sense. When the banks started using SMS services of account related standardised information, when the banks mechanised certain simple queries (like knowing the balance) of customers being provided by computer programs, without a human executive talking to them, and also when banks introduced OTP based transactions, they were actually using Chatbots, that had certain rule based programming. This goes back almost two decades history.

Chatbots in Indian Banking Today
Standing today, Chatbots are gaining prominence due to their ability to alter the customer experience. Banking has come a long way in moving away from being human centric service, to a transactional platform. In this process of continually innovating through introduction of ATMs, Phone Banking, Online Banking, App Banking, Virtual Banking and multiple other FinTech innovations, one thing that had gone missing is that banking experience for the customer, which would satisfy his emotional need. The feeling of some responsible executive is attending to my unique situation (studies suggest, that majority of the banking customers approaching banks, perceive their issue is unique and bigger – that is an emotional need) and the issue will be solved to my satisfaction, and that too at the most optimum time, cost and efficiency. Chatbots today are being used in banking services to create such customer experiences.
Axis Bank has its Axis Aha! – an excellent example of use of Chatbots by Indian banking for creating customer experience. Based on the concept of Conversational Banking(not an innovation really, as banks in USA and UK have pioneered long back into these). Axis encourages its customers to Simply Ask Axis Aha! and promises a convenient, fast and intelligent way for a seamless banking experience. Axis Bank uses the power of AI and ML ex
tensively, to make this service, as predictive and intelligent as possible. Through this channel, customer can transfer funds, order cheque books, clear credit card and pay utility bills, recharge mobile phones, enhance debit card limits, close debit cards, block cards and not just it, Axis Aha! also aims to lead the customer towards executing his investment transactions also through this platform (Robo-investing).

The finesse of this service is enhanced to a level, where not just the customer needs to chat using normal English sentences, there is a navigational prompts as well, to make it further easier. The platform, rightfully navigates the customer based on his needs to the right web page and assists in even opening a digital bank account, place a fixed deposit, apply for a home loan or open a wealth management account.

While Axis Aha! was an example taken here to give an insight into the kind of customer experience it creates, most of the technologically savvy banks have introduced their own Conversational Banking AI-Powered Platform. Kotak Bank was the first to introduce such platform named KEYA. HDFC Bank’s EVA is equally famous and HDFC claims it to be the largest AI powered Chatbot. EVA is also upgrading itself to offer services in regional languages too. ICICI Bank introduced iPal claims its accuracy of handling customer queries is 90%. ICICI Bank aims to divert at least 50% of its mundane services to iPal.

What the future holds?

According to Rahul Dabke of Yodlee (a company into development of Fintech products like the Chatbots, above-discussed), more advancements are expected in the times to come and a banking moves towards CUI (Conversational User Interface). Banks would heavily need to invest in human talent with AI skill set, to be cutting edge CUI developments. Add to this the digital security issues to be given utmost prominence (which may include investments in Voice Biometrics to authenticate the voice of instructions).

Can the Chatbots fail?

The automating and scaling of one-to-one conversations using AI and ML technologies does look like exciting appeal and may add brand value too. But, the risks that the introducing company is exposed to is the role of designers and programmers, who script the initial conversation set. And also the risk of unique conversations that Chatbots have not been introduced earlier. These risks exist because, (a) there is still dearth of AI tools that enable linguistic and natural language learning; (b) in the initial stages of introduction of these Chatbots, there may be too much time and learning power getting spent on irrelevant and unreal cases; (c) the ability to create trust among customers is still limited in case of bots, as they have to disclaim that the customer is talking to a machine and not another human; (d) Chatbots cannot engage in humanly conversation for long, as they do not possess the ability to understand the contextual statements of the humans. Having said that, it is also true that, these lacunae tends to not exist with more information that the Chatbots process in the times to come.

It is one thing to discuss if Chatbots can fail, while it is another thing to discuss can an industry like Banking afford a failure in one of its channels. Unlike, any other industry using Chatbots, say an e-retail firm or a telecom service provider, the stakes are high in the case of banking. One, due to the high priority need of banks for customer retention in the cut-throat competition; Two, the regulatory restrictions, that may put the bank under huge risk, on any service deficiency, especially relating to transaction execution; Three, the cost of correcting a mistake is too high in the case of banking services. Therefore, banks, especially, in India, need to realise the risks involved, and be extremely comprehensive in their Chatbots offerings.
Disclaimer – The views, opinions and content on this blog are solely those of the authors. ISME does not take responsibility of content, which are plagiarised or not quoted.