Difficult market conditions and competition from digital savvy entrants have been challenging traditional banks. But a solution is emerging that will enable these legacy players to innovate at relatively modest costs: chatbots.
Chatbots are software programs that primarily use business-to-consumer (B2C) text-based messaging as the interface through which to carry out any number of tasks. They appeal to banks because they require less coding and are therefore cheaper than banking apps; they also automate currently manual back-end tasks, saving them money on salaries and allowing some operations to run 24/7.
In a new report from BI Intelligence, we look at the drivers behind the proliferation of chatbots among incumbent banks, current chatbot use cases and their growing variety, and the strategic, consumer, and technological risks still attached to chatbots.
Here are some of the key takeaways:
Incumbent banks today are facing increasing pressure to remain competitive. The pressure is coming mostly from tech-savvy entrants that lure in consumers with user-friendly, cheaper products
To remain competitive, these legacy players must innovate digitally, and chatbots let them do so on a budget. Either a third-party provider can build a chatbot for them to roll out on a popular messaging app, or they can develop a chatbot in-house
Chatbots still have risks attached to them, but they are outweighed by their benefits. If technological, strategic, and consumer risks aren’t properly navigated, a chatbot can damage a bank’s valuable reputation. However, a well-executed chatbot can deliver huge savings
A successful chatbot has to be able to perform a task more efficiently than can be done manually. As such, banks should develop chatbots that effectively automate basic and time-consuming tasks. This will free up human staffers’ time for more complex inquiries, thus improving customer relations and loyalty
In full, the report:
Explains the factors driving chatbot proliferation generally and among legacy banks in particular
Looks at the developments in the technology underlying chatbots
Provides an overview of current legacy players’ chatbot use cases
Examines the risks still attached to chatbots and how to navigate them
Interested in getting the full report? You can download it here.