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Up close and personal: how banks plan to recalibrate customer engagements through intelligent bots



Kamal Misra, Senior Director and Head of Banking, Capgemini Invent India


Humans needed an alibi for efficiency as bots came calling and laid claim to the psychological frontier called “conversations”. Through an eclectic mixture of structure, design and innovation, these conversational agents or simply put, intelligent bots have taken the world by storm. In common parlance, the term intelligent indicates that these bots are engineered with speech recognition, natural language processing and machine learning capabilities to establish the quasi-human stereotype. While conventional bots chug along a mesh of mapped out conversations steered by a decision tree framework, the more advanced versions typically dip into a legion of Generative Artificial Intelligence (AI) and Natural Language Processing (NLP) conduits to synthesize responses.

These so-called Conversational User Interfaces (UI) and Intelligent bots have brought about a significant transformation in the banking industry. The emergence of these technologies has enabled banks to automate their processes, enhance customer service and experience, and reduce costs. Intelligent bots are gaining widespread popularity in the banking industry as they are designed to cater to a broad range of customer needs while being user-friendly.

Kamal Misra

A leading research firm got to unravel that the average cost for a phone steered transaction is around $2.50, while the same done online could be pegged at as low as $0.17. Bots peppered with low development costs and high data ingestion, processing and synthesizing capabilities have a considerable advantage over other digital media when it comes to efficient customer engagements.

Multilateral innovations in this space have revolutionized customer service in the banking industry. Intelligent bots can provide customers with instant and accurate answers to their inquiries without the need for human intervention. They can also assist customers with a wide range of services from checking account balances, transferring funds between accounts, and paying bills, to providing personalized recommendations such as ways to save money on fees and interest rates.

The advent of sprightly social media based conversational interfaces into monolithic banking structures has not only spawned “super apps” espousing the cause for well-rounded customer propositions, but also infused energy into an always-on, hyper-personalized advisor-inside-pocket wizardry. More power to robo-advisors and personal financial managers, as these bots fight off disintermediation, in that, they allow a 24×7 ever-engaging platform for banks to push their proprietary offers and recapture mindshare.

A case in point is Erica, Bank of America’s intelligent bot that had taken a herculean effort to be given shape and tested, has gone on to graduate with flying colours. Erica using advanced machine learning (ML) and cognitive messaging can adapt to complex and variable conversations with the customers. The chatbot can go as far as talking about cashflows, bills, transactions log, balance tracking, offers recommendations with discernible ease, while relaying back to the development team challenging issues such as navigation and unanticipated events. The bot is designed to improve customer experience, enabling them to access services faster and in a more personalized way.

Banks can use these technologies to automate tasks such as account opening, loan processing, and fraud detection. Also in the fray are tasks pertaining to lead generation, application generation and processing, bots can help banks reduce costs and enhance efficiency while freeing up staff to focus on more complex tasks. Bots backed by the ever-evolving AI / NLP capabilities, engage with customers right from the pre-approval phase to documentation and onboarding with necessary conversations throughout the stages, thus allaying any risk of abandonment in the mind of the prospective customers, establishing the first stamp of loyalty.

Capital One’s Eno goes a step ahead. Built entirely on the cloud, Eno’s Natural Language Processing (NLP) system with the help of complex deep learning algorithms, has been programmed to decipher when customers enquire about account balance in umpteenth number of ways. A research pilot by Capital One discovered 2200+ diverse ways or expressions that a customer can intend to use to ask for an account balance, using different phrases, abbreviations, spellings and connotations. Eno’s NLP training included the ability to recognize and imbibe new misspellings and abbreviations that it previously did not get trained on. It also assists with credit card activation, fraud detection, account management, and offers recommendations on how customers can improve their financial status. Eno enables customers to access services faster and eliminates the need to visit a bank branch, thereby improving customer experience and reducing costs for the bank.

COIN (short for Contract Intelligence) from the stable of JP Morgan Chase investigates 12,000+ contracts annually, saving the bank an estimated 360,000 person hours.

Caixabank’s chatbot with its advanced AI engine claims to understand and respond to 1500 questions in different language. As per the bank, the chatbot received on an average 50,000 questions per day through 2022 and has purportedly given an optimal response to 85% of the total questions posed, leading to no further human intervention.

Furthermore, intelligent bots are transforming the way that banks provide personalized recommendations to customers. These bots use machine learning algorithms to analyze customer data such as transaction history, spending patterns, and credit ratings, to provide personalized recommendations that are tailored to each customer’s unique needs.

Wells Fargo’s Control Tower is an intelligent bot that offers services such as personalized financial advice and recommendations on how to save money on fees and interest. Control Tower can also help customers to set up savings goals and track their progress over time, further enhancing customer experience.

Morgan Stanley plans to roll out a low-cost digital only avatar of it’s next-best-action system aimed at providing pre-emptive investment options to customers through its network of 16,000 financial advisors. This class of augmented relationship management advisory helps customers receive personalized alerts tied to specific life events, such as a child’s birthday or illness.

In addition to improving customer service, automating routine tasks, and providing personalized recommendations, intelligent bots are transforming the way banks engage with customers. These technologies can be used to provide customers with personalized experiences, such as targeted marketing campaigns and customized financial advice.

Ally Bank’s Ally Assist is an intelligent bot that provides customers with personalized financial advice and recommendations. Ally Assist uses machine learning algorithms to analyze customer data and provide personalized recommendations on how customers can improve their financial status. Ally Bank can also use Ally Assist to provide targeted marketing campaigns to customers based on their spending patterns and financial goals, thus enhancing customer experience and driving customer loyalty.

However, despite the many benefits of intelligent bots in the banking industry, there are also potential risks and challenges. One of the key risks is the potential for fraud and security breaches. Banks must ensure that their conversational UI and intelligent bots are secure and protected against hacking and other forms of cybercrime. This is crucial as these technologies often hold sensitive customer information that could be compromised if not adequately protected.

Another potential challenge is the need to ensure that these technologies are accessible and user-friendly for all customers, including those with disabilities and those who are not familiar with new technologies. Banks must provide appropriate training and support to ensure that all customers can use these technologies effectively, which will help reduce customer frustrations and increase adoption rates.



Top banking trends of 2023 and global outlook of banking and fintech for the year ahead



Author: Professor Marco Mongiello, Pro Vice-Chancellor, The University of Law Business School


You’d be forgiven for assuming that the global outlook for banking and fintech will be dominated by the usual suspects:

Artificial Intelligence – AI plays an increasingly prominent role in banking and fintech by enabling personalised services, fraud detection, predictive analytics, use of chatbots and robo-advisors.

Blockchain and Cryptocurrency – the secure, decentralised and swift system for financial transactions that blockchain has brought to the fore a few years ago, is now becoming ubiquitous. An increasing number of transactions are recorded through blockchains technology, primarily in the cryptocurrency market.

Digital Banking and fintech – accelerated by COVID-19 pandemic, the adoption of digital banking is a trend that will persist as customers have become accustomed to the convenience and efficiency of digital banking. Moreover, fintech enables access to financial services for previously underserved populations in developing countries or less affluent social groups in more affluent societies. This includes mobile banking services, peer-to-peer lending platforms, and microfinance solutions.

Open Banking – another global trend is the use of open APIs (Application Programming Interfaces) that allow third-party developers to build apps to facilitate customers’ access to financial data and services from banks.

Nonetheless, the challenges posed by these rapid changes are reminders that banking, an industry that by its very nature needs to be conservative, risk averse and solid, wobbles on the unchartered grounds of fast and turbulent innovation, where entrepreneurship instead thrives. The underlying rationales of banking and fast digital innovation are not incompatible but do need solid operations and thought-through decision-making to avoid causing catastrophic collapses.

The recent examples of Silicon Valley Bank, Silvergate, FTX and Wirecard are stark reminders that digital entrepreneurship applied to banking doesn’t just bring to customers the visible transformation of valuable new services, but also dents (perhaps as an unexpected consequence) the rationale itself of the role of banks in the global economy. Moreover, the central banks’ ability to contain the effects of single banks’ defaults is no longer a certainty, as experienced just over a decade ago and more recently. The markets’ sentiments are hardly reassured by the commitments of even the most coveted players, such as the European Central Bank, the Federal Reserve, and the President of the United States himself.

Regulators are lagging behind and their attempts to catch up may cause further seismic shocks to the global banking system. For example, another trend that is emerging is one of artificial intelligence decision-centres (i.e., decentralised offices of banks which take autonomous decisions on behalf of investors) outside the most stringent regulatory environments, enabling banks to operate globally more efficiently and more competitively. And we can expect that regulators will close the gap either abruptly, as it is currently happening in China, where private banks are subject to an escalation of regulatory and monitoring restrictions, or more gradually as it is happening in Europe and in the US.

The questions we face, as individual or trade customers of our high street banks, as direct investors or clients of managed funds, are whether banking will become more user-friendly yet, for our daily use but riskier, too, or is it simply becoming more efficient, transparent and also safer.

I’m afraid that the answer is by no means an obvious one. Therefore, caution, level-headed decision- making and critical thinking have never been as important as these days. Whether you are looking after your family savings or growing your pension reserve, the imperative is that you keep updated about the providers of the financial services you rely upon as well as about the general regulations that apply to your financial transactions. This is where, for example, you need to be familiar with your rights in case of cyber fraud, as well as learning how to minimise the risk of becoming a victim thereof. Also, taking additional steps to evaluate the credibility, solidity and reliability of the online provider of that app that was recommended by a trusted friend, may prove a very good move.

Similarly, whether you are the CFO of a medium or large company, or are a sole trader wrestling with your own business’s finances, you need to reflect on what you really want from your bank in the first place. That is before you started to be swayed by the whirlpool of offers of ‘opportunities’ to multiply your financial investments. Chances are that your initial approach to your bank was dictated by either a need for financing your working capital, as per your budget and strategic plans, or to find a safe place for your temporarily idle liquidity. Perhaps you were also after some basic treasury services such as swift payments and debt collection. Maybe some other financial services closely related to your business operations, e.g. factoring. The advice is to give very careful consideration to services that are more remote from your business, because the trend for the next years is that more and more of those will be offered to you. But many new services will disappoint those who, sadly, cannot afford financial mishaps as they look to run and grow their business.


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Will ‘Britcoin’ change the way we bank?




The Treasury and Bank of England recently announced a state-backed digital pound is likely to be launched in the UK later this decade, following the popularity of cryptocurrencies. However, the ‘Britcoin’ will be backed by the central bank, ensuring the digital pound will be much less volatile than its sister, cryptocurrency. Could a digital pound backed by the central bank be the answer to utilising technological developments in the finance system for the better?

Ross Thompson, Accountancy and Finance Lecturer at Arden University, considers what we can expect from ‘Britcoin’, how this will impact consumers, businesses, and the economy, and whether ‘Britcoin’ could be the revolution to restore our confidence in the banking system.

Trust in our financial system hit an all-time low post the 2008 financial crash. Even ten years on from the collapse of Lehman Brothers, a survey found 66% of adults in Britain still don’t trust banks to work in the best interests of society.

This means there remains to be apprehension for people to sign up to and use a bank to help manage their money. The UK doesn’t seem to struggle too much in this arena, however, as according to the Financial Conduct Authority (FCA), most UK consumers (96%) have a current account from a bank or building society. Regardless, there is still a significant number of adults who do not have a bank account or are what is known as ‘unbanked’.

The lack of trust plays a big part here. More people want better control over their money and to cut out the middleman, hence why cryptocurrencies and blockchain became a tempting option, as it can potentially remove the need for banks for any transactions. However, the volatility of these currencies has been a cause for concern for many investors and regulators.

Blockchain and cryptocurrency are gaining more traction and are becoming more of a viable option for businesses, especially due to talks of regulations coming into fruition. This is especially true with cryptocurrency, with the government announcing crypto assets will be subject to FCA rules in line with the same high standards that other financial promotions such as stocks, shares, and insurance products are held to.

The “Britcoin” aims to solve the issues traditional Bitcoin presents. It would be backed by the central bank, which would ensure its stability and reduce its volatility, making it a more attractive option for investors and providing greater confidence in the stability of the financial system. Britcoin will be as stable as the inherent stability of the British economy and political system. It would also provide an opportunity for the UK to stay at the forefront of technological developments in the finance system – a system in which it can sometimes be slow to react.

One of the key benefits of a digital pound is that it would be much faster and more efficient than traditional banking systems. Transactions could be completed almost instantly, regardless of where the parties involved are located. This would make cross-border transactions much easier and could even help to boost international trade.

The Bank of England’s Governor, Andrew Bailey, stated: “a digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability”, pointing toward the other advantage of a digital pound. It would offer more security as transactions would be recorded on a distributed ledger, which would make it much more difficult for hackers to tamper with the system. It would also provide greater transparency, as all transactions would be recorded on the ledger and could be easily traced if needed.

However, there are also some potential drawbacks. One concern is that it could lead to a reduction in the use of cash, which could have implications for those who do not have access to digital technologies or who prefer to use cash for privacy reasons. There are also concerns that a digital pound could be used for illicit activities, such as money laundering or terrorism financing. On top of this, more details are required in relation to the levels of personal account privacy; the potential to usher in ‘big brother’ banking systems is a growing a concern regarding state digital currencies.

Around 85 central banks are currently engaged in projects to create digital currencies, according to figures from the Bank for International Settlements. But as it stands, many feel there is probably little need for a digital pound; with a growing amount of people using their debit cards, phones and watches to fulfil the same function, a digital pound is deemed unnecessary. On top of this, many of the public fear that a government digital currency could potentially infringe on their privacy – despite the BoE stating the currency would be subject to rigorous standards of privacy and data protection.

And in countries where a digital currency has already been established, there has been little uptake – widely due to the lack of trust between central banks and citizens. It seems gaining users’ confidence should be the Bank’s first priority. The House of Lords economic affairs committee stated last year that a digital pound would pose “significant risks” such as state surveillance, financial instability as people convert bank deposits to CBDC during periods of economic stress, an increase in central bank power without sufficient scrutiny and could be exploited by hostile states and criminals; it is safe to say that the nation’s ‘Britcoin’ will need to be very well thought out.

It has the potential to revolutionize the finance system, however, and could provide significant benefits to investors and consumers alike. However, the potential risks and drawbacks must be carefully considered before any decision is made to launch such a currency. Having said that, if it is implemented correctly, a digital pound could be a powerful tool for utilising technological developments in the finance system for the better.

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