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Sweet talking: how chatbots help banks become smarter

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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TIPS FOR BUSINESS EXPANSION

Alan Sutherland, CEO of Kind Consumer

 

Every successful business had a beginning.  Its founders usually looked for ways to gradually expand, attract new customers and increase monthly revenue.  From the outside looking in that type of success often feels as though it requires some form of magic or hidden formula.

So how do you drive success?  There are two which are fundamental to success.  On first glance they may seem obvious, but they are often neglected.

 

Do you have a strong team?

No matter how great your business or idea you will not drive it to its full potential without a strong team behind you.

The process of recruiting and finding the best talent is never easy.  You must over-invest time in the process as it is a fundamental investment and future growth driver.  Two principles I have learned over the years when looking at recruitment are, to surround yourself with people who are better than you and do not be afraid to recruit someone who could make you redundant.

If you can achieve these, the benefits are clear.  Better business results, stronger talent pool, and with capability future fit plus built-in succession planning.

 

Have you created a road map?

Strategy should not be complicated, as it is the set of choices you make to help you deliver your goals.  It is your roadmap.

In thirty plus years of corporate life I have reviewed many.  Countless textbooks have also been written on the subject, but there are some basic principles that I firmly believe work best.  Namely, the vision should be clear, motivating, and understood by all in the organisation.  In addition, it’s important to remember ‘less is more’.  Too often strategy papers can be voluminous and complex.  The best strategy work I have seen is on one piece of paper with clear, simple articulation of the choices you will do and equally what you will not do.  It is very empowering to tell a team what you are not going to do.

 

Alan Sutherland

Have you established a core market?

In any business, the “core” needs to be healthy before you divert any significant level of resource to expansion, there are thousands of examples where enthusiasm to grow has caused companies to fail.

As you evaluate expansion, having an array of ideas and opinions needs to be balanced with a clear brand that consumers feel they relate to.  Whilst adding new products or services is an organic part of company growth it needs to be tempered, so you do not drift too far from your core market.

Therefore, before ploughing resources into new markets, you do need to ensure that new product and services will be of value to existing (or new) customers.  You may need to ask some critical and challenging questions such as, is there a clear need for this?  Is it marketable?  Does it sit within the brand equity?  How much will consumers pay for it?

If you conclude that the demand is there, only then should you move onto executing that new idea because it will require a significant amount of investment of time, resources, and money.  If the market entry cost is potentially high, you should also evaluate a test & learn approach by launching in a limited way and, if early traction is good, then expand.

Once you have revised your existing offering, you need to engage with these new consumers to increase brand recognition.  If your business is not online, add this to your to-do-list because in today’s era, convenience is key.

A website is the shop window to your brand and, done well, can allow you to build up a direct one-on-one relationship with your customers.  If it was already an important criterion before, the impact of Covid-19 will make it indispensable.

With social media and the abundance of mobile technology, it is not difficult nor expensive to drive traffic to your site, so you need to ensure the site is engaging, easy to navigate, informative with a call to action to purchase.  Loyal customers who return to your site are worth their weight in gold!

 

Do you have a healthy working capital?

Finally, a healthy working capital is essential not just for growth but for the day-to-day operations of running a business.  Even as you start to see your business develop, you must keep a scarcity mindset with cash and make sure you have some reserves for when something goes wrong. This has caused thousands of start-ups to fail as they hit unexpected turbulence and had no contingency in place.

In today’s global economy, there is a lot of uncertainty so there has never been a more important time to maximise liquidity to meet short term obligations and avoid going bust.  Not to mention, flexibility is key when a business is looking to expand and without enough working capital a business can lose this flexibility.

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BITCOIN COMES OF AGE

Katharine Wooller, Managing Director, UK and Eire, Dacxi

 

The Bitcoin halving event, which occurred on the 11th May, has been a watershed moment for the industry.   It has been a deafening theme for crypto narrative in recent months, and more recently has caught the eye of professional investors and conventional media alike, with some predicting it will be the catalyst for a substantial boom.   It appears bitcoin, finally, has a hard-won place in the mainstream.

 

Halving: In a nutshell

Bitcoin has a key feature; there are a fixed amount available, and, crucially it has a pre-programmed supply reduction built in.  The miners, who maintain the bitcoin network, validate transactions and add them to the blockchain when they are verified.  They do this at considerable electrical and computing cost and thus are paid in bitcoin. Periodically, the reward for doing so halves.  In the past this supply reduction, which previously occurred in 2012 and 2016, has coincided with a strong run-up in its price.

 

All grown-up

Bitcoin has now been in existence more than ten years and has survived the doubters, the scammers, the hackers, government attempts to quash it, and along the way it has given rise to new innovations using the blockchain technology that underpins it.  To overstate this amazing “survive and thrive feat” as well as the innovation it represents would be difficult.  Bitcoin, conceptually, has exceeded expectations.  Alas the 5,000+ crypto currencies that have sprung up alongside it include the good, the bad, and so very ugly.  Nearly all of these should fall away as Bitcoin dominates; at time of writing it is 67% of daily traded volumes.  Understandably, there is a very short list of 3 what we call blue-chip coins (LTC, BTC, ETH) that the institutional investors have shown interest in.

 

Solving some our largest problems

There is a clear appeal of digital currencies to the cashless internet economy based, including 24/7 price transparency that is available, cross border usage, divisibility to many decimal places, as well as third party oversight and controls. Bitcoin has been on a roller coaster ride over the last two years and has held its value throughout the current dramas and even increased in value as governments have stimulated their economies on a massive scale via printing cash endlessly to avert a market meltdown.  This is likely to create a massive inflationary environment into the future and sets the stage for Bitcoin to make its next move upwards after stocks and real estate prepare to reset valuations and attractiveness.

 

A new gold?

A lot of the dialogue around bitcoin talks about an improved version of gold, as a medium to convey value.  Improved by virtue of the technology being quicker, and cheaper to both store and move. Indeed, a recent transaction of $1.1bn worth of bitcoin, by bitfinex, cost $84.  Unsurprisingly this has caught the imagination of the financial infrastructure industry.  Some market commentators postulate a 10x increase in prices in the next 12 months, based on a few % of the global appetite for gold switching to crypto, with bitcoin being the heir apparent.

 

Diversification: Now

For the industry as a whole, it is great news that bitcoin is now demonstrably decoupled from traditional markets.    It is apparent that the price of Bitcoin is outside the traditional assets’ ecosystem, and the market is determined by a new set of criteria.  Bitcoin now has the crucial “social proof” that it cannot be altered by external forces, no matter how powerful, bringing much joy to the libertarians and retail investors alike.  Indeed, google searches for ‘bitcoin halving’ hit an all-time high in the late April, suggesting firm interest from newbies.  Further, the quality of exchanges available to both retail and institutional investors has improved substantially in recent years, providing a much-needed ease of entry into the market.

 

Professional Investors

Indeed, leviathan investors, such as Paul Tudor Jones, coming out in praise of bitcoin, as a viable hedge against inflation, saw bitcoin enter – unexpectedly – stage left to a much broader financial audience.  Bitcoin is viewed as what gold was in the 1970s, thus driving increasing interest from his fellow baby boomer cohort. Indeed, Dacxi, a digital exchange focusing on educating retail investors, saw some of its busiest weeks in the run up to halving.  The addition of global pandemic and imminent worldwide recession has been the perfect storm for the world to crave safe new assets.  Crypto is firmly out of the niche and into the zeitgeist.

 

What’s next

In my opinion, crypto has reached critical mass in terms of adoption. There’s no going back.  I was delighted to wake up in London on the 12th May and see the BBC reporting on halving – it doesn’t get much more mainstream than that!

As digital currencies become the increasingly dominant technology, anyone with an interest in markets and investing would be well placed to educate themselves on this seemingly unstoppable asset class.  With the recent momentum gained from the halving, crypto is likely to be a broader theme of daily life for decades to come.

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