Long before ChatGPT put AI at the center of many conversations, financial institutions were using AI to automate and streamline customer interactions, sometimes with disastrous effects on the customer experience. Never achieving what some would call “conversational banking”. But these technologies have dramatically improved in recent years and pundits have declared 2023 the year of the chatbot. 

The use of bank chatbots is indeed on the rise – projected to be used by more than 40% of the population by 2025. It’s no surprise that the use of chatbots in banking is estimated to generate operational cost savings of $7.3 billion globally, but the real opportunity goes well beyond the basic chatbot and simply trimming business expenses.

Now financial institutions can use various artificial intelligence (AI) tools – such as machine learning, generative AI and natural language processing (NLP) to name a few – to deliver a uniquely branded customer experience that is consistently as good as, or better than, what humans can deliver. And all this can be done while simultaneously demonstrating compliance with a myriad of regulations.

Let’s look at how financial leaders driving digital transformation can become more connected to their customers through technology that engages and delights with a personalized experience at every stage of their journey, across any digital channel.

To get there, they must ditch legacy chatbots and embrace true connected, conversational AI. 

Listen to this article instead:

Unlocking the New Banking Experience with Conversational AI

The Galileo Financial Technologies Podcast

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What’s wrong with legacy chatbots?

FI and fintech leaders undergoing digital transformation must balance competing demands to deliver a differentiated experience that builds value, but do so in the most efficient and reliable way possible. Margins are getting tighter and customers expert more. Regulators require consistent, demonstrable compliance. Being able to anticipate customers’ needs and provide tailored solutions to solve problems quickly is where today’s financial leaders will win. 

But too many organizations are trying to enhance the UX with outdated strategies. While the recently released ChatGPT has been hailed as the ‘best chatbot ever,’ yesterday’s chatbots simply aren’t enough for today’s customers. In many instances, they’re hurting the customer experience they were designed to help. Take, for example, this research:

There are countless stories about the failed chatbot experience. Why? Because legacy chatbots are built with set-it-and-forget-it technology that relies on unstructured and untrained data. 

What’s missing is the ability to create contextual conversations that make sense of all that data in real-time—and with empathy. 

FIs need tech that does more than just saves money; they need it to enable interactions that drive loyalty and growth. On the other side of the coin, winning the customer experience requires a stellar UX that leaves customers happy and wanting to engage again. But technology cannot achieve this without understanding the context of when, why and how customers engage with your brand.

Boosting customer engagement is also key to gaining and maintaining market share. FIs and fintechs must show they care about their consumers' long-term financial happiness by tailoring interactions based on individual needs.

Related: How to Fight Payments Fraud while Preserving a Positive UX

It’s clear most chatbot solutions have not done much to elevate the customer experience, leaving banks and their customers feeling burned. But conversational AI and intelligent digital assistants (IDAs) are not your grandmother’s chatbot.

FI’s Digital Transformation: Moving past legacy chatbots to:

1. Improve efficiencies and lower costs (this is table stakes). 

2. Go beyond small incremental fixes in broken customer service models to truly transform the customer experience.

3. Uncover new revenue streams and expand market reach.

The ultimate goal of any FI or fintech is to attract and retain customers, get them to engage in more services, and grow revenue. However, to achieve these goals, FIs must understand what true conversational AI is, how it differs from outdated chatbots, and what they can do to deliver the user experience that customers demand today. 

What is conversational AI, and why are Intelligent Digital Assistants (IDAs) better?

The new market standard – conversational AI – uses machine learning (ML) and natural language processing (NLP), to “learn” from data patterns and then respond to and simulate human conversation – all without human direction. 

The latest breakthroughs in this space are reinventing how we approach customer engagement. Now we can enable an intelligent digital assistant (or IDA) that can recognize voice and text and understand intent, decipher different languages and know when to provide AI or human-based support for every customer engagement. And do it all with empathy. This is the foundation of conversational banking.

How conversational AI and IDAs improve upon broken chatbot experiences.

• Traditional chatbots are rule-based systems that can perform routine tasks and answer general FAQs. In comparison, IDAs are fully equipped with natural language understanding and can use data to support a wider range of use cases more effectively with greater ease of deployment and onboarding, and a higher quality, more sophisticated conversation capability.  

• Using digital assistants, financial institutions can achieve a differentiated experience by offering meaningful recommendations that are tailor-made to every customer in real time.

• Conversational AI technology responds to the need for a higher caliber of digital service and engagement at financial institutions: Enabling memorable experiences that happen because customers are free to speak naturally - customers are not only heard, but also understood. 

Conversational AI and IDAs can be added on a standalone solution, so the current tech integration — and the correlating legacy systems/tech platforms — can quickly and easily onboard the new technology. They play a pivotal role in elevating the financial services customer experience by: 

1. Personalized and Proactive Support: IDAs anticipate needs better and faster. They offer real-time, tailored recommendations and solutions based on customer preferences and history, leading to higher satisfaction and loyalty.

2. Up-sell and Cross-sell Opportunities: IDAs extend an FI’s reach through integrated systems. IDAs analyze customer data and then recommend relevant products/services that align with the customer’s financial goals - opening opportunities to support new revenue streams.

3. Account Management: IDAs can provide more tailored interactions and provide solutions that are more accurate and faster than chatbots. This includes automating tasks, such as managing payments or canceling a card, in moments when customers need it most. 

4. Fraud Detection: IDAs use real-time monitoring and multi-factor authentication to detect potential fraudulent activities, protecting customers and the business's reputation.

5. Secure and Compliant Experience: IDAs ensure a secure and compliant experience by leveraging multi-factor authentication and fraud detection, enhancing trust between customers and the business.

6. Efficient FAQ Management: IDAs effectively address FAQs with context and accuracy, freeing up customer service reps to handle more complex needs and strategic initiatives. IDAs can support 80% or more of customer inquiries. This reduces operational costs and helps organizations scale. 

Implementing conversational AI: How to maintain compliance? 

Despite the attention this technology is getting, we can’t overlook the hesitation in the mainstream financial services world. For instance, major banks have banned its employees from using ChatGPT, a move that is driven by compliance concerns. 

The hesitation of FI leaders to make the AI leap is well documented. According to Cornerstone Advisors’ 2022 What’s Going On in Banking study, just one in five banks and credit unions currently have a chatbot deployed—and just a handful of those institutions are offering an intelligent digital assistant. 

So how can FIs and fintechs embrace conversational AI to enhance the user experience and stay compliant? FIs must ensure integration is possible with their existing systems, including the ability to ensure accuracy and reliability, compliance and security requirements. FIs must ensure data privacy and security standards are upheld when integrating conversational AI solutions.

The willingness to integrate this technology varies by financial services type. While traditional FIs are more risk adverse to these technologies, fintechs are more tech-forward and learning into the conversational AI trend. 

Implementing conversational AI while maintaining compliance requires careful consideration of several steps. This is where having a compliance expert by your side to keep your organization on the right side of regulatory compliance can save you time, money and headaches. Especially one that knows how to navigate regulations in different states and countries. An expert will be able to help you navigate data privacy, security and regulatory requirements as you integrate AI-powered technology into your customer service experiences. 

To stay ahead of regulatory and compliance concerns, FIs and fintechs must:

• Understand regulation in each specific market: Know how data privacy protection varies by market and ensure your systems align. Enlist experts who can help you navigate ever-changing requirements. 

• Embrace data transparency: Customers must know who they are interacting with. Be up front about how data is being used and give the option to connect with a person. 

• Protect customer data: Implement robust data security policies. Your systems must be built with leading data encryption standards and access controls.

• Keep detailed records of customer interactions: Conduct regular audits and have records of when and why customers are interacting with your systems so you can demonstrate compliance.

• Keep humans involved: AI models need algorithm adjusting and continual training. A third-party partner can act as your guide and keep your systems in check.

• Have experts ready to jump in: Address issues before they escalate with real-time support. Train your team on how to navigate compliance and security issues.

Looking ahead: How do you embrace conversational AI to reinvent the customer experience at scale?

Conversational AI is creating a seismic shift in the financial industry—and the launch of chatGPT to the public put this potential on the map for everyone. 

In 2023, “the year of the chatbot,” FIs must carefully evaluate smart AI technologies. This means focusing on tailored and connected experiences, but without sacrificing security and compliance. It’s a bit of a chicken-and-egg scenario. You can’t have one without the other—but you also must start with the basics to get the desired outcome. 

Above all else, FIs and fintechs need a solid infrastructure that allows them to integrate technologies like conversational AI to help elevate the digital customer experience in ways that drive loyalty and create new revenue streams. Deep learning technology, like sentiment analysis, allows organizations to understand if, how and when a customer is getting frustrated. It flags how they are feeling and adapts based on each interaction. 

Augmenting human intelligence is allowing financial services organizations to look beyond how conversational AI tech helps drive operational costs and efficiencies, but also how it moves the needle in the areas of risk management, opportunity finding and forecasting, and regulatory compliance.

Instead of just focusing on uncovering patterns and trends, true conversational AI and sentiment analysis allows financial organizations to take action on real-time interactions in a granular way, putting information into the hands of the people who need it most, when they need it most, so the right action can be taken in the moment. These are the micro moments that matter for delivering an elevated UX.

Differentiating yourself in today’s digital-first world requires connecting with customers during micro moments. Conversational AI achieves that goal as it can adapt with the speed and context customers demand today. Financial leaders have listened. 

When evaluating conversational banking providers, FIs must focus on how the technology can help them achieve amazing customer experience that drives retention and new revenue streams. In short, they must become more digital and more empathetic.

It’s worth noting that IDAs aren’t just about delivering new value that the customer might not have been looking for. It’s about addressing pain points quickly and accurately, minimizing the time and resources spent addressing an issue and delivering an elevated customer experience. IDAs also open up cost savings that create room for revenue streams by repurposing human resources and other assets to better uses. 

Of course, customer experience must align with key values of any FI: cost-savings, customer experience, operational efficiencies, security and compliance. This is where financial leaders must look toward industry-trusted experts to help them navigate their regulatory concerns to address security and compliance head on. 

What are the security and compliance implications of using conversational AI?  

When conducting due diligence and finding a partner to help you navigate the conversational AI ecosystem, it’s important to account for three key elements: Tech capabilities, compliance and security. Ask yourself and your potential provider the following questions: 

1. Where is the customer’s data hosted? Since Galileo’s on-premise AI engine is hosted on client servers, no data leaves the infrastructure, keeping customers safe and compliant.

2. Do you have a team of data security experts to help? Galileo’s data security team is continually staying ahead of data privacy and regulatory headwinds, to help keep customers protected and in compliance. 

3. Does my current infrastructure have the technical stability to integrate new technology? Know your risk appetite and ensure you have the technical capabilities to embrace new technology. Or, enlist a proven partner to guide you through the technical integration and help you integrate a conversational AI solution into your banking experience.

Why Galileo? Inside Cyberbank Konecta, our AI-Driven Customer Experience Engine

Many FIs are using a legacy chatbot that comes with limited benefits and notable drawbacks as we’ve outlined. To be sure, the ability to answer simple questions, 24/7 support and real-time responses for basic inquiries does add value. 

But FIs and their customers are ready for the benefits of AI-driven customer experiences that understands and can interpret each customer’s natural language and their intention (with context), and then deliver meaningful recommendations on the spot.

Achieving this in financial services requires a proven AI engine with an IDA that draws on each customer’s financial history and behavior patterns as a comprehensive foundation to address specific customer needs.

Galileo's Cyberbank Konecta-as-a-Service enables FIs, fintechs, and non-financial brands to use a custom-made AI engine to increase customer engagement and loyalty, while reducing operational costs.

CUSTOMER BENEFITS 

• Connects customer to a live agent in real time, when appropriate 

• Eliminates frustrating menu trees

• Enables customers to communicate in their own words

• Reliable customer support, 24/7 

FI BENEFITS 

• Increases customer engagement

• Reduces call center overload

• Integrates into all service channels

• Handles transactional or data-driven tasks  

• Informs decision-making in real time 

• Expands reach via integrated ecosystems

• Learns and improves with every customer interaction

Cyberbank Konecta is more than a chatbot. Our conversational banking engine humanizes the digital banking experience with an empathetic approach. Our empathy engine uses a combination of machine learning, natural language processing and AI to:

• Analyze human behavior in real-time to collect vital information that can be applied to future customer support analytics. 

• Continually learn to enable FIs to design, train and deploy efficiently and effectively. 

• Apply deep learning models to learn from online customer interactions in real-time to support empathetic, meaningful customer experiences. 

• Use the power of both sentiment analysis and emotion detection to extract valuable insights at each customer touchpoint. 

With Cyberbank Konecta, FIs can implement and launch quickly, easily integrate and scale, and access the latest digital innovations. Cyberbank Konecta can integrate with any existing technology platform, or use Galileo's service offerings to operate and run this technology on an FI’s behalf.

How? Cyberbank Konecta provides an empathetic approach to meeting customers in their time of need to provide them with micro moments that improve interactions with their FI, connect them deeper into their FI ecosystems and create more valuable relationships. But customer experience must go hand-in-hand with key values of any FI: cost-savings, operational efficiencies and security/compliance.

By using deep learning models, this empathy engine enables FIs to gain control over their data and customer journey. The end result? An elevated digital banking experience that improves engagement and loyalty and reduces operational costs. Most importantly—it’s done in context while aligning with the latest regulatory and compliance requirements.

Are you ready to increase customer engagement and loyalty, while reducing operational costs? Connect with our team to learn how you embrace a conversational banking engine to deliver an empathetic customer experience.