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Sweet talking: how chatbots help banks become smarter

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Cathal McGloin, CEO of ServisBOT

 

Traditional banks are under pressure from increasing regulation and challenger banks. This has led to a sharper focus on unit economics and the increasing application of artificial intelligence and automation technologies that lower service costs while still meeting customers’ needs.

Chatbots: The new voice of banking has arrived

 

To maintain customer service levels while reducing service costs, an army of chatbots are offering game-changing opportunities for financial institutions to transform how they engage with customers across all touch points in their financial interactions. Whether it’s a request to provide a customer with the balance on their account or activate a newly-issued credit card; acquiring new customers by bringing them through a smooth application and approval process, or promoting new banking products and loyalty programs, chatbots can handle a multitude of customer interactions.

New channels of communication, enabled by social messaging platforms, voice-activated assistants, and mobile devices, have created new and exciting possibilities that are increasingly centered on conversations.  Powered by Natural Language Processing (NLP) and artificial intelligence (AI) technology, automated customer interactions now enable human-like chat and fluid conversations.

For the consumer, smart chatbots bring greater convenience, lower friction, and increased accessibility for their banking needs. For banks and other financial service providers, it brings a new wave of innovation centered around customer conversations.  Now, financial institutions can literally have a voice and deliver their services to customers in more convenient and automated ways, across multiple touchpoints and communication channels.

Chatbots: evolving toward conversational AI

Intelligent banking chatbots can interpret customer intent, understand exactly what they want, elicit any additional information needed, and execute the necessary tasks, all in a single seamless chat. Rather than limiting customers to pre-defined banking processes, departmental siloes, structured forms and menus, cluttered websites, and contact centre availability, a single automated conversation can trigger the tasks that are needed to fulfill the customer’s need. This is what is commonly termed as Conversational AI.

Banking bots help streamline and automate customer-facing processes, lowering the cost of service delivery. Take, for example the simple task of authorising and activating a customer’s newly-issued credit card. A chatbot could be used to replace the call to the contact centre, getting the card activated quickly and easily and without the need for human agent intervention.

In addition to using bots simply to further automate specific tasks and make them available 24/7, there are far-reaching opportunities to use conversational AI to transform customer engagement across the banking organisation. By allowing the automated conversation flow to call on different business processes, the customer can move across various service channels to fulfill their financial service needs.

For example, a customer may request their bank balance by voice over Siri, or Amazon Alexa. The account bot can move the conversation to the customer’s preferred messaging channel, sending them their statement balance. This chat could then call on other bots to send a reminder on the upcoming credit card payment, promote a new product or offer, or to ask the customer if they have any other banking need.

Since conversations are more fluid and less structured they lend themselves to more versatile engagement. They also remove a lot of the friction that frustrates customers when they are trying to complete multiple tasks by enabling this in a single conversational session.

A new way of working

Speaking in a recent television interview, Monzo CEO, Tom Blomfield, reported that, while traditional banks are investing £150 per customer per year to maintain each customer account, his challenger bank can service an account for a tenth of that.

Using a range of customer interaction channels has been key to this cost reduction. Monzo uses a combination of in-app chat, social media, browser-based FAQs and traditional call centre agents, to help customers to find answers in the most customer-friendly and cost-efficient way.

Writing in Monzo’s annual report, Blomfield wrote, “We’ve also been able to make savings by helping our customer support team become more efficient. Together, this has helped us lower the cost per account to around £15.

About £10 of this cost goes towards providing fast, friendly support: the team who speak to our customers and solve their problems every day, in-app, over the phone and on social media. We see that £10 as an investment that lets us provide an effective, delightful service that’s reflected in a Net Promoter Score of almost +80.”

With banks under increasing pressure from new and agile competitors and a more demanding and tech-savvy generation of banking customers, creating superior experiences is a must. Chat, combined with the power of AI, is the key.

Chatbots: go beyond the contact centre

There are multiple ways in which chatbots can transform customer-facing interactions in the banking industry. They can be used to automate tasks to assist with most customers’ financial service interactions. However, chatbots can be extended beyond contact centres to encompass any other operational area involving customer interaction.

Within financial operations, any process that is customer-facing, whether approving a customer for a credit card, fraud prevention, or credit management, are all potential use cases for bots. JPMorgan Chase uses chatbots to streamline back-office operations. Its contract intelligence software, COIN, scans commercial agreements and has saved more than 360,000 hours of employee time. The chatbot also assists employees with regular IT requests such as resetting passwords.

For credit card providers, collections management is an important operational issue to reduce the number of delinquent accounts and bad debts that impact cash flow. However, connecting with customers often proves difficult when arranging collections. This situation is exacerbated by reduced engagement levels via phone.

A collections bot can proactively contact late payers at convenient times via messaging, which has measurably higher engagement rates. The bot can make it easy for customers to make a payment within a single chat session and can guide the customer to enrol in payment programmes, such as autopay or prepaid cards. A collections bot can also take the necessary actions to reduce a credit limit or suspend the card and can send multiple reminders to ensure that payment is made, without increasing service costs to the credit card provider.

Banking chatbot use cases, both inbound and outbound, can be tailored to customer segments, by geography, and by operational department. Conversational AI can transform how banks engage with customers, not just in single siloed transactions but in more fluid and flexible ways that can make banks more competitive and build their brand identity.

Chatbots: a banking ambassador for customer loyalty

From the early days of print and telephone to the emergence of the internet and online banking, financial institutions have engaged with their customers using a range of communication channels. Conversational AI represents one of the biggest shifts in user interfaces since the introduction of the ATM forty years ago.

To meet the needs of millennial customers, banks need to up the ante on convenience, trust, and personalization, applying the latest technology to attract and retain this growing customer segment. Wells Fargo uses a chatbot to allow customers to check their latest transactions over Facebook Messenger. Using technology to pre-empt questions, Monzo reduced the number of customers that needed to get in touch with its contact centre by 33 per centin three months.

Voice-activated interfaces including Siri, Echo, Cortana and Google Home and message-based interfaces such as SMS, Facebook Messenger and WhatsApp, are increasingly shaping how banks engage with these customers and create brand loyalty through smart conversations. By keeping the conversation flowing, AI can help banks maintain the vital balance of keeping customers happy while managing costs.”

 

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Top 10

2022: A FUTURE FOR SIMPLE AND FRICTIONLESS CROSS-BORDER PAYMENTS

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Dima Kats, CEO, Clear Junction

Dima Kats, CEO, Clear Junction

 

Even after 18 months of stuttered lockdowns, businesses are still learning how to navigate the effects of the pandemic. However, in 2022 there is a lot more certainty surrounding how events in the future might unfold compared to the start of the series of lockdowns in 2020-2021 – when businesses had to accommodate ever-changing rules.

Ironically, the coronavirus pandemic may be a catalyst for a more globalised world in the near future, which will directly and quickly affect the world of finance and payments.

 

Activity in the fintech sector.

Fintech development flourished over the course of the pandemic. Reducing the need for face-to-face interactions was essential for maintaining economic activity during lockdowns. Many of the trends that are driving the increased economic activity in the fintech sector are a direct result of social distancing: the rise of digital payments, increased work-from-home arrangements, retailers diversifying their payment channels, and an increased use of autonomous finance. As a result of these trends, there has been a large number of fintech start-ups emerging.

Due to the growth of the fintech sector in the past year, there has been a significant increase in demand for industry professionals, and the effects of that demand will be playing out into 2022. This is mainly due to employees being re-trained during the pandemic for new roles, creating a more skilled and mobile workforce.

 

Cross-border payments.

There are currently three trends that are reshaping cross-border payments, and in a sector that is predicted to reach over $156 trillion in 2022, staying ahead of those trends may prove to be a lucrative decision.

The first trend is the changing consumer demands. Customers are less inclined to pay for banking services while still expecting them to be fast and intuitive. Alternative service providers that can offer the customer more of what they want while being faster, cheaper and more transparent will gain a competitive advantage over banks.

The second trend is the increase in trade with emerging markets. As the share of international transactions involving emerging markets grows, cross-border payment solution providers are focusing on these markets. Growth in these emerging markets is bolstered by free trade initiatives, while some countries have established protectionist policies that slow them down. Growth in emerging markets is expected to be at around 11% per year, while the overall growth of cross-border trade is estimated at just 5% per year.

The third trend is that the accessibility of mobile phones has increased. As people gain a larger online presence, there is more opportunity for people to make online payments. The percentage of mobile phones ownership among adults in emerging countries is at 83%, compared with just 62% in 2014. This figure is expected to increase even further, and subsequently increase the number of e-payments being completed.

 

Cryptocurrency in 2022.

We expect to see cryptocurrency develop even more mainstream appeal as it becomes less speculative and more widely accepted. This will cause banks to increase their investment in fintech, in conjunction with governments introducing new regulations to ensure that transactions that involve both traditional currency and cryptocurrency are safer. One of the most tangible effects of the pandemic was the need to use online payment solutions. In the same way, people are beginning to trust and realise that cryptocurrencies may be a feasible payment solution even in the post-pandemic world.

Consumers are increasingly dependent on digital devices, but over half of them prefer to make online purchases over a computer than a mobile device. Mobile screens on smartphones or tablets are smaller than desktop monitors, which leaves users feeling discouraged and less secure while shopping compared to completing transactions over a desktop.

Mobile shopping or M-commerce has benefitted from several innovations that encourage users to finish payments on their phones: instant checkout solutions like Apple Pay, the use of augmented reality to show consumers the products they are buying, and sites building mobile-friendly user interfaces. Due to these innovations, Insider Intelligence predicts that shoppers will inch closer to using their mobile devices as a preferred channel in the next few years.

 

Open banking and the need for collaboration.

As the industry grows and becomes more diverse, there will be an increasing need for partnerships and collaboration to take advantage of the emerging opportunities.

One direction we’ll be seeing them in will be in the form of open banking. Traditional firms are beginning to see open banking as something more appealing due to the opportunity for partnerships. The rise of alliances within the finance industry began to take place long before the ongoing pandemic. Currently, over 30 partner banks represent hundreds of fintech  relationships and financial services. We think firms who adopt open banking early and secure partnerships will reap the rewards compared to their competitors.  firms who adopt open banking early and secure partnerships will see themselves reaping the rewards compared to their competitors.

2022 will likely be the year that open finance starts reshaping financial services and the year that banks savvy up to the opportunities that open finance represents. With regulators in the EU and UK proposing measures to heighten data sharing principles across a broader set of financial products, 2022 will see many banks experimenting and evolving their business models toward a more open, collaborative platform approach.

The multiple challenges to the finance industry over the last year have highlighted the need for fresh thinking, to face the future with strength and confidence. Fintech partnerships can create a significant opportunity for levelling the playing field, streamlining internal processes, adding technological capabilities, and improving the end customer experience.

Companies like Clear Junction offer businesses a mix of these benefits and opportunities at one time. Continued and original collaboration and partnerships between fintech companies and banks are essential for the future of the financial services industry and the finance sector. The digital marketplace is indeed growing, and the future belongs to the financial institutions that can stay ahead of the curve.

I think we need to add some context about the Fintech industry over the last 12 months, and how the pandemic has actually affected the industry. Need for innovation etc etc how much money has been put into it etc. And then lead on the predictions around talents and retraining. Otherwise this byline reads as just a list of predictions, without adding the relevant context.

 

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CHRISTMAS IS COMING: WHAT MAKES A GREAT ECOMMERCE STRATEGY FOR THE FESTIVE SEASON?

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Christmas Gifts

By Laura Lough, Director of Ecommerce Operations at Digital River

 

There is no doubt the year 2020 presented an array of economic and personal challenges worldwide. But, there was a silver lining for the world of ecommerce. By necessity, the pandemic encouraged people to shop online, which grew the ecommerce industry rapidly. The outlook for 2021 is cautiously optimistic. While consumers may react to lifted social distancing restrictions with exuberant spending, they could also continue to hang on to their money over fear COVID variants might cause more economic upheaval during the winter of 2021-22. Experts are predicting another year of growth, but not at the breath-taking rates seen in 2020.

Whether the growth rate surges or stabilises, one thing is certain: new shopping behaviours learned by consumers because of COVID are here to stay. Contactless payments, mobile wallets and social spending all saw new consumer use in 2020, and consumers who appreciate their convenience aren’t likely to abandon those new habits.

There are some fundamentals that eCommerce providers must take onboard now if they want to have a successful holiday season.

 

Meet your customers’ high expectations

Gone are the days when fulfilment and supply chain were little-known ecommerce topics. Shipping delays due to a surge in ecommerce demand in 2020 as well as the Suez Canal blockage in March of 2021 brought fulfilment issues to the front page, literally.

Adding to the challenges are current lorry driver shortages and supply chain disruptions. The upshot is supply chain issues will continue to challenge ecommerce brands. Those ramping up closer to the holidays are likely to face some headwinds. However, whether you’re ahead of the game or playing catch-up, you can develop fulfilment strategies that will serve you well in the years to come, as supply chain issues are not going away anytime soon.

Laura Lough

Businesses can use their data to intelligently predict consumer behaviour, allowing them to be ready for surges in demand for different products and locations. Avoid costly returns by giving the shopper an overload of information such as product images, comparison charts and reviews. To simplify reverse logistics and appeal to your customers, consider partnering with third-party drop-off sites for brands that don’t have physical stores.

Most critically, brands must communicate clearly, effectively and transparently with customers. They cannot expect sympathy from customers if fulfilment issues outside of their control delay delivery. Customers have come to expect shipping that fulfils their needs and desires—not the needs of retailers.

 

Accessibility for all

Many ecommerce marketing best practices that were true pre-COVID will continue to hold true this season. Retailers must develop unique customer acquisition strategies and marketing collateral for each market they enter — translated content isn’t enough. They should also use local channels, and messaging should remain cohesive across channels.

It’s critical to incorporate social buying into your marketing strategy as more customers are engaging with brands on their preferred platforms, which are increasingly social. Mobile commerce is another critical component to your marketing strategy, and it’s important to develop an optimised and responsive mobile experience for your customers.

Another important consideration is making sure your D2C platform is accessible to those with disabilities. In addition, brands need to pay attention to how COVID has affected various areas of the world, so tailoring your messaging to local realities is critical.

 

Payment strategies as a tool for business success

Payment systems are so important for brands that they should constitute a strategy in and of themselves, rather than just a back-office tactic. Over the pandemic several payment systems have become business-critical:

  • Digital Wallets: Consumer use of digital wallets surged during the pandemic. Chinese shoppers made the bulk of digital wallet purchases. In the US, digital wallet usage was up nearly 24% over 2019 numbers.
  • BNPL: Buy now, pay later (BNPL) is another payment method that is quickly rising in popularity. Brands offering BNPL have reported a 45% increase in average order value when customers pay in four instalments.
  • Mobile: Consumers will continue to rely more heavily on their smartphones to make purchases in 2021 and beyond. It’s critical for brands to optimise the mobile experience with payment methods that allow shoppers to pay with one touch of a button rather than entering a credit card number.
  • Direct Debit: Direct debit is another payment method that brands should consider adding to their online store. In this scenario, which is most popular in Europe, the retailer withdraws money directly from a consumer’s bank account.

 

Lean on tech

Underpinning every aspect of an eCommerce strategy is data. Businesses must leverage their data by developing a comprehensive customer-centric system that includes the entire customer lifecycle, including search, payment methods, and sales and shopper support data.

eCommerce providers can boost conversion rates, improve customer experience and reduce false declines by using a local payments processor that understands each market you’re in. Ensure that your payments partners are using retry logic to automatically route payments in a way that maximises the likelihood of authorisation.

Retailers simply must prepare well in advance for a surge in traffic to their platforms. If 2020 is any indication, the number of shoppers transacting through your platforms at any given time can vary wildly. That’s why it’s critical to test your system well ahead of time to ensure it can handle the load and make the adjustments early. More than any time of year, a failure to prepare spells trouble.

Finally, companies should select their partners carefully. They should look to work with back-office experts with specific tech and market experience. Appropriate partners can facilitate your brand to deliver tangible results this holiday season, ensuring you finish the year with a bang.

 

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