The competition among financial service providers is increasing. New, innovative providers are constantly entering the market. Customer expectations are rising. Especially established banks have a hard time keeping up with the rapid change. They tend to lag behind current technological developments rather than play an active role in shaping the future of banking.
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This article shows how chatbots in financial services can help make processes more uptodate and customer-friendly and to drive innovative developments in banking.
5 advantages of chatbots in financial services
Features such as automated responses and voice payment are powerful use-cases for chatbots in many companies, as they make conversations in customer service much more comfortable and efficient. However, in addition to these advantages, there are more use cases of chatbots that are of particular interesting to financial services.
1. Close security gaps
Topics around security issues of online services are more present than ever before. Companies are aware of the rising concerns. According to the Global Fraud and Identity Report of 2018, 75 percent of companies state that they want to improve security measures and authentication processes. The financial sector should set a good example by using chatbots to improve these areas.
While most customer service employees do their job conscientiously, there is always some residual risk of employees acting with gross negligence regarding sensitive data processing and create security breaches. Automated processes with the help of a chatbot can prevent this. By processing the data without human intervention, this vulnerability could be avoided.
2. Detect fraud attempts
Fraud attempts are another problem all financial service providers face. Identity theft is one of the biggest problems. Around 61 percent of bank fraud losses are due to identity theft. Improvements in this area can make a significant contribution to reducing these losses.
Chatbots can detect conspicuous behaviour and help to spot identity fraud. For example, a bot can analyze the writing pattern or capture the user’s location via IP address. This data can be compared with previous conversations. If any discrepancies are found, the bot can send a message to a human employee and request further investigation.
3. Simplify authentication
In addition, chatbots in financial services enable the use of biometric authentication methods. These make the use of financial services not only less complicated but also more secure, as voice or face recognition is used to authenticate users. According to Deloitte, transactions (75%) and the opening/closing of accounts (67 %) are currently seen as the main use cases for biometric authentication methods in financial services.
Chatbots can not only compare voice with the stored voice recording but can also detect tension or nervousness in the voice in real-time. Similar to anomalies in writing behaviour or location, the bot can forward suspicious results to a human employee.
4. Attractiveness for younger target groups
Financial services need to rethink their strategy to target younger audiences. Depending on the age of the target group, communication behaviour changes and deviates from the habits of older customers. The millennial generation has already grown up with digital communication channels. Messaging services and bots in social networks are part of their everyday life.
If established banks want to win over younger target groups, they have to adapt to the communication behaviour of this target group. Otherwise, they will lose these customers to more innovative Fintech start-ups. Chatbots are an important component to adapt to the digital-oriented communication behaviour of younger target groups.
5. Consulting as an additional service
Very few people are good at dealing with money or have a clear idea of how to save for retirement. The wrong financial decisions, however, can lead to financial difficulties in the short or long term. A lot of times, this can be avoided.
Chatbots can help by analyzing users’ financial habits and using these insights as a basis to give individual financial tips that help the user to manage money better. In addition, the bot can assist with day-to-day finance tasks and prevent that deadlines are missed, or pre-defined spending limits are exceeded.