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Unlocking the power of conversational AI in banking and finance

Discover why chatbots and conversational AI are key components of a smart CX strategy today.

By Subarna Ganguly, Staff Writer

Last updated January 25, 2023

Bank branches used to be commonplace on most high streets across Europe. Now, they’re becoming increasingly rare as more people switch to managing their finances online. One report predicted that 25 per cent of bank branches across Europe will close in the three years to 2023. But it isn’t a like-for-like switch from physical to digital. Customers are swiping, tapping, and chatting with businesses on their phones. In doing so, Artificial Intelligence (AI) is playing a critical role in their customer journey, giving them new ways to bank.

AI can enable financial organisations to anticipate customer needs before they arise and respond quickly when required. And, AI-driven customer service gets companies closer to delivering faster responses, happier customers and, ultimately, more competitiveness. In this post, we discuss the benefits of AI in financial services and look at conversational customer service in action.

Why smart customer experience matters

Getting customer service right is vital for customer retention across all sectors, but the stakes are especially high for financial service providers, given the high lifetime value of customers.

Companies are well-aware of the connection between quality service and customer retention. According to Zendesk’s 2022 Customer Experience (CX) Trends Report, nearly three-quarters (73 per cent) of companies see a direct link between customer service and business performance. We also know that six in ten (61 per cent) customers are prepared to walk away after just one bad experience. Interestingly, this figure is up 22 per cent on last year. Customers are raising their expectations rapidly and organisations are feeling the pressure.

With so much choice open to consumers, customer service is the key differentiator in the financial services sector right now. And financial service leaders are taking note. In our report, 77 per cent agree that customer service is a critical business priority. So, how does conversational AI help deliver that great personalised service that financial organisations want to achieve?

The role of conversational AI and chatbots in delivering smart CX

Artificial Intelligence can deliver productivity and efficiency benefits by automating repetitive tasks, directing customers to the most appropriate agents, and detecting data trends and insights that can help organisations with their decision-making.

Chatbots and conversational AI are key components of a smart CX strategy, but it’s important to note the difference between them. Essentially, the term chatbot describes just one tool in the box, whereas conversational AI describes the whole toolbox.

Chatbots can interact with users to provide information and solve simple problems without the need for human supervision. And if an agent is required, chatbots can direct the customer to the most appropriate person. Conversational AI has much wider capabilities. Using data insights, machine learning (ML), and language algorithms, conversational AI has the capability to automate a variety of tasks and enable customer self-service.

Zendesk’s chatbot and AI research shows that a third of UK businesses (34 per cent) find AI improves agent productivity, while more than half (54 per cent) expect chatbots to drive large savings.

Many of today’s consumers feel positive about the use of AI in customer service. Our research finds that 39 per cent of UK consumers expected AI to improve the customer experience they receive from companies. The fact that customers are embracing chatbot usage is also reflected in the data; our research shows that chatbot ticket volumes rose by 17 per cent between 2020 and 2021.

There is a clear business case for embracing conversational AI technologies. According to Accenture, a bank adopting AI could see savings of 20-25 per cent across IT operations, such as infrastructure, maintenance, and development costs.

AI in financial services is evolving fast

AI deployment within the financial service sector is also gathering pace and across all sectors companies are increasing their investment. Zendesk finds that a third (32 per cent) of companies are apportioning 10-24 per cent of their customer service technology budget to AI.

Things are moving so fast that regulators are struggling to keep up. For example, there is no harmonised legal framework in the European Union (EU) yet; all member states’ own local laws apply. This means banks and financial institutions acting across borders must consider local regulations.

Conversational AI in action

One example of a bank using technology to provide 24/7 support for customers, 365 days a year is Starling Bank. Using Zendesk, Starling Bank is assisting customers across multiple channels, including live chat on desktop or in-app. And customers are clearly happy; according to research by Which, Starling received one of the highest customer scores for current bank accounts, gaining five-star ratings across every part of its service.

Financial services provider Homebridge is another great example of conversational customer service in action. Homebridge uses Zendesk to deliver customer self-service and handle customer enquiries across multiple touchpoints, including phone, email, and chat.

Taking a strategic approach to AI in financial services

Good customer service isn’t just about ticking boxes and meeting basic expectations. If you value your customers, you must show them that you value their time and their preferences. AI is key to achieving this, but financial organisations need to take a strategic approach. Zendesk’s research finds that more than half (57 per cent) of businesses say their approach is reactive, not strategic.

Focusing on AI’s key strengths is vital when delivering smart CX. Talking to a trusted technology partner like Zendesk will help you explore AI’s potential, so you can leverage the tools that will make the most impact.

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