Customer Experience
Dec 20, 2018

Why mass adoption of digital technology is getting closer for retail banking

Significant technological developments show that the momentum toward mass adoption is getting faster

When you think about artificial intelligence (AI), its emergence as a viable way of automating retail banking services has only come about in the last few years.  Progress with machine learning algorithms; increases in computing capacity, coupled with decreases in cost; and the generation of vast amounts of data have made the development of conversational AI possible. Many banks are only just starting to use this technology now, but, in the coming years, we are going to see a proliferation of AI-powered banking assistants.

The first conversational AI-powered virtual assistant was Apple's Siri, introduced as a feature on the iPhone 4S in 2011. Today, there are 500 million monthly active Siri users around the world. Other major tech players have followed Apple's lead. For instance, in 2014, Amazon launched its voice user interface (UI) Alexa, which was incorporated in its smart speaker system Echo. Voice UI is increasingly becoming a part of our lives, with the worldwide smart speaker market growing 187% in Q2 of 2018 alone.

Improving the customer experience

Why are more and more consumers buying into voice UI? Because conversational AI allows users to carry out complex actions without having to interact with screens. For companies, that means an opportunity to streamline and simplify the customer experience. In retail banking, for example, customers can use natural language processing technology to ask questions and get answers immediately. For elderly and disabled banking customers, it means being able to bank without the hassle of going to a local branch or looking at a smartphone or computer screen. With smart speakers and home devices seemingly everywhere, users have a strong reason to use retail-banking chat apps instead of traditional channels. And with the expanding internet of things ecosystem, the opportunity for conversational AI to improve the interoperability between smart devices inside and outside the home will only increase.

But rather than thinking of voice UI as an extension of existing digital banking channels, retail banks must build their voice UI capabilities from the ground up. It is important for them not to make the same mistakes as 10 years ago, when many saw mobile banking as an extension of their existing online-banking services. By treating voice UI as a separate entity, companies can conduct thorough research into customer behavior and glean relevant insights into the user experience that will help the technology mature into a fully fledged part of retail banking.

In the UK, NatWest Bank is testing an AI-powered digital human named Cora that will answer customers' questions in branches. Clydesdale and Yorkshire Banking Group is working with Amazon's Alexa to give its customers more power over how they handle their finances, enabling them to ask questions such as, “How much money is in my account?"

On the customer side, the willingness to use voice UI technology already appears to be there. Genpact research suggests that 27% of retail-banking customers would be happy to set up new bank accounts using voice assistants like Alexa and Siri. A visual-free UI banking experience is closer than we think. Even now, retail banks are integrating their services through conversational AI capabilities into their customers' day-to-day lives via smartphones and smart home devices.

Keeping up the pace of change

Building on the readiness of consumers is not going to be easy, as voice UI technology also brings with it certain dangers to retail banks. Non-incumbent players, some from outside financial services entirely, can easily enter the market as challengers to the larger, slower-moving, traditional banking organizations. It is essential not to fall behind, as there is a significant advantage in being one of the first movers.

What consumers value today is a differentiated, personalized customer experience. They now expect the same level of usability across the board as when they interact with Amazon—a phenomenon sometimes called the Amazon effect . Banks must ask themselves how they can provide this for their customers to differentiate themselves, given that retail-banking services only vary slightly between organizations. Offering a conversational AI-enabled, screen-free UI is one way in which they can stand out from the crowd. The question is: How can banks do this using only voice? And, once this has been achieved, how can they create a unified experience across their various customer channels – voice UI, mobile and online banking, and traditional call centers?

A more tangible threat posed by voice UI is security. How will banks ensure that their offerings are protecting their customers' data? How can a conversational AI service accurately verify customers only by their voices? How can banks prevent valuable customer information, such as PINs and passwords, from being overheard? Another thing banks should keep in mind is how to effectively cross-sell products without diluting the customer journey.

At the moment, many of these issues are still a long way off. First, banks need to begin developing and testing voice UIs by prototyping conversational AI offerings, as well as conducting research, augmented by customer experience analytics, that looks into voice UI design and the future customer journey. This isn't always easy. Swedish online bank Nordnet recently ended its partnership with US tech company IPSoft, citing its customers' underwhelming response to its AI co-worker Amelia, which was designed to speed up the customer-onboarding process and consequently improve customer satisfaction. However, in the same market, Swedish bank SEB is using Amelia with more success, winning an industry award for the work done using voice UI. Seeking out partners from other industries, in this case the tech sector, is a tried-and-tested way to deliver differentiated customer experiences and gain market share.

About the author

Alex Bray

Alex Bray

AVP, Omni-Channel Acquisition & Servicing

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