The Rise of Fintech Chatbots
With the growth of artificial intelligence in every area of online activity, chatbots have grown in sophistication to fill the role of customer service agents. Transparency Market Research predicts the global chatbot market will be worth $994.5m by the end of 2024 – a huge rise from only $113m in 2015.
Whether ordering food online or asking for assistance with your new tablet, chatbots are there to offer assistance. Accordingly, research firm Gartner stated that nearly $2bn in online sales will be performed through a mobile assistant by the end of 2016 and bot specialists Personetics, comment that 50% of financial firms already have chatbots in place. They say over 75% think it will be a viable commercial opportunity in two years.
Unsurprisingly, “fintech chatbots” are now emerging in financial services, ready to disrupt the sector, and are now fulfilling a number of roles for financial services customers. A range of firms have now launched their own chatbots such as Mastercard with its “Kai” chatbot. Mastercard “Kai”, says it will provide a “true dialogue with consumers and provide personalized service, seamless user experience and contextual offers and rewards.”
It’s been launched with the view to extend Mastercard services to customers on messaging platforms to make financial information and decisions part of “consumers’ everyday lives” and is initially launching in Facebook Messenger. The Mastercard “Kai” bot is also based on technology from a firm called Kasisto, which created KAI banking.
Mastercard says the KAI chatbot will enable US customers to ask about their account, review purchase history, monitor spending levels and learn about a range of other services. Kasisto’s KAI banking technology has also been harnessed by a number of other financial firms looking to utilise its knowledge of financial services and conversational artificial intelligence ability, including the Royal Bank of Canada.
Fintech startups with chatbot technology
Bank of America has also launched its own chatbot, Erica, which uses similar technology and goes the next step of utilising audio and visual functionality. “Erica” will use a proactive approach to analyse customers’ financial data to generate recommendations as to how they should utilise their finances. Rather than waiting for the customers to enter questions, it will harness artificial technology and analytics to make recommendations like making higher debt repayments and may warn about various issues on their account like their overdraft.
Several new fintech startups are also coming through with chatbot technology such as Earnest, based in London. This is a financial app that it says “answers questions on your personal finances and proactively gives you insights.” An example would be that it might notify you of your salary being paid and then show how you have being spending your money over a certain period of time and what you have been spending it on, even with visualisations.
San Francisco based Digit is similar to Earnest in providing insights on spending habits but it goes a step further by moving money into a savings account if you can afford it. Fortunately money is still easily accessible once put into savings. In India, an app called Coupy has been developed under the Coupon Hippo brand. It is accessed through Facebook messenger and suggests coupons to customers which can then enable them to save money.
How useful are fintech chatbots?
One of the obvious benefits of fintech chatbots is the cost saving as they can potentially help firms downsize workforces, such as the hugely expensive 24/7 call centres.
By solving many queries, chatbots could also help customers save time by avoiding long waiting times on calls or queues in banks. Banks may also be able to pass these savings onto customers with better lending or savings. Equally if fintech chatbots make clever enough suggestions such as how to save money or pay off a debt, customer debt potentially be alleviated before becoming an issue, saving everyone time and money.
For banks, being able to gather a huge amount of customer data and to then target customers online easily and quickly with certain products could boost their sales and long term profit margins.
Cons of chatbots
Negatives surround the capability of fintech chatbots in dealing with such an important and sensitive issue as finance. Forrester Research suggests that while chatbots can be effective, the customer service is often unacceptably poor and that “chatbots are not ready to meet customer expectations.”
There is an added level of complexity when it comes to lots of financial data, and it could have serious repercussions if it goes wrong. Individuals may be given wrong information which could potentially worsen their financial situation.
Similarly, if they are in a difficult financial position and are not adequately helped their situation may be made worse. Put simply, if a food delivery chatbot goes wrong, you might get the wrong pizza, but if someone is given the wrong financial information or even sold an unsuitable financial product, the outcome could be much worse.
In a world where people have become alienated from financial firms and banks have suffered reputationally in the last decade, more perhaps should be done to encourage face-to-face interaction and warm customer service. Consumers will not get this with a faceless, emotionless chatbot.
Privacy and data collection is also a concern and consumers may not feel comfortable with banks collating their financial history, particularly if used for sales purposes online. Banks already do a great deal of marketing but people may find getting targeted in an online messaging environment too intrusive.
Startup Finn.ai develops white-label personal banking chatbots for financial firms. CEO,Jake Tyler, argues bots have found an audience by servicing the immediacy demanded by today’s customer. It is hard to disagree that today’s consumer wants to be helped immediately, in real time, and preferably online. However, while chatbots are certain to become more common in financial services, several issues remain unresolved as to their effectiveness and ultimately whether the technology is advanced enough to serve today’s demanding financial customers adequately.