Banking Channels History
Customer interaction and channels preferences have experienced significant changes over time and are constantly evolving and expanding across all industries, including banking. To consolidate customer satisfaction and cultivate customer advocacy, banks must endeavour to continue to meet these changing needs through use of innovative and progressive technology.
Self-service banking interactions with technology were first introduced to customer's through implementation of ATMs, marking the advent of self-service banking. For staff, their introduction to the digital age began with some employees using text terminals that provided the first user experience with computing, though these character interfaces lacked intuitive design and required training. Channel options for customers experienced further expansion with availability of phone banking in the 1980s, while staff started using graphical windows screens. By the early 1990s PC banking had begun to surface, enabled through use of dial-up modems, though the expense of purchasing a home computer at this time resulted in limited early adoption.
The first significant digital revolution, able to bring about real change in customer banking habits and interaction options, occurred in the late 1990s. The graphical web browser and the Internet set technology on a ground-breaking path to digital proliferation. With the millennium on the horizon PCs adoption was on the rise, experiencing wider use in the home and the office, despite considerable bandwidth limitations and most initial websites providing fairly basic content. Despite the hype and interest in internet banking from its inception, it has taken many banks almost twenty years to reach the milestone of over half their customers actively using internet banking.
Much like internet banking, its pioneering successor of mobile banking faced similar adoption rate issues, taking time to mature. In certain countries this maturity remains to be reached, with regular use of mobile banking not yet surpassing over half the customer base. Mobile phones were created in the 1970s and early iterations of mobile banking applications first appeared during the late 1990s, available on feature phones but lacking in usability and failing to capture wide adoption. It was not until 2007, when smartphones and apps were introduced and readily adopted soon after, that the true mobile revolution gained traction, popularised largely by Apple. Today, mobile banking is experiencing ever-increasing popularity and frequency of use, with leading mobile banks such as BBVA expected to have over 50% of their customer base on mobile this year.
More recently, since 2016 and increasing year on year, there has been growth in interest and adoption of conversational interfaces for banking. This rising awareness and application of conversational interfaces extends beyond banks, with aggregators who've successfully leveraged open banking to provide services on top of existing banks also implementing conversational abilities. The proficiency and agility of such aggregators is an area of concern for banks to be taken seriously, offering stiff competition and even posing a potential disintermediation threat. Aggregators and third parties cannot offer everything banks can, lacking established customer relationships and longstanding reputations. However, their advantage lies in their agility and digital-first strategy, able to take significant share of customer interactions and provide alternative products and services.
What is Conversational Banking?
It would be easy to consider conversational banking to simply be another self-service banking channel, with little to differentiate it from other channels that fall under the same category. Conversational banking is highly unique and able to offer a number of significant benefits for banks over other channels, both assisted and self-service. To dismiss conversational banking would be to dismiss greater personalised services and an improved customer experience.
Conversational banking is a bi-directional interface between a customer and a bank, where a conversation can be initiated by either participant through a voice, text or visual interface. While the responses given by the bank are machine generated, responses can be delegated to bank staff where necessary to gently handle more difficult or sensitive conversations.
Conversational banking can be delivered in a number of ways, including:
- SMS text (and in the future RCS – Rich Communication Services)
- Voice Assistants, for example Siri or Alexa
- Robots and Avatars
- ASL – Automated Sign Language (Visual recognition of sign language used by deaf people that is translated to text and vice versa)
Growth of conversational interfaces
Across the world chat apps receive unprecedented volumes of use and popularity, offering widespread appeal through their convenience and the ever-increasing reliance today's consumer has on their digital devices. Facebook Messenger, WhatsApp and WeChat are among the top five apps used globally, according to a report (Mobile Metrix) from Comscore. When combining the user base of these three platforms, the cumulative number of monthly active users is over 3.5 billion. The amount of time spent on chat apps is equally substantial, as according to Apptopia, over a three month period in 2018 WhatsApp users spent a total of 85 billion hours chatting. To give this figure context, 85 billion hours equates to 3.5 billion days, amounting to half a day per person on Earth. The use of chat shows no signs of slowing, with growth in messaging traffic predicted to rise 20% year on year through to 2020, when 274 billion chat messages per day are forecast. As of 2018, there were 300,000 monthly active bots on Facebook Messenger alone.
As highlighted earlier, conversational interfaces exist in a variety of forms and the number of conversational services available continue to proliferate, with 50,000 skills (voice apps) now available on Amazon Alexa. Amazon's voice assistant Alexa has been a triumph for the tech giant, possessing over 45 million monthly users of Alexa in the USA alone, with an average of two devices per user. However, this immense figure is dwarfed by the combined number of users of smartphone voice assistants Siri and Google Assistant, reaching a colossal 90 million monthly active users. In total, over one billion devices provide voice interface access globally.
Benefits of Conversational Interfaces
As expected of a progressive, customer-centric technology innovation, conversational interfaces offer a host of benefits over typical app capabilities and features. The principal differentiator between conversational interfaces and apps is their usability, offering a more user-friendly experience due to all interfaces operating the same way. In contrast, apps vary enormously in look and feel, each featuring their own distinct style of menu and method of navigation. When interacting with a conversational interface, the customer also benefits from no longer facing the limitations and restrictions of the app provider's terminology. Instead, the customer can engage with the interface using their own vernacular, as a well-developed conversational interface should have the ability to recognise and process the user's request no matter how it is phrased.
The ease of use of a conversational interface becomes apparent before the user has even initiated a conversation, as these interfaces do not require installation. Instead conversational interfaces are configured to work with a platform, such as Facebook Messenger, by the provider, enabling the customer to immediately connect with the service. Bypassing installation also saves the customer from any additional time spent on frequent app update installations, as well as precious memory space on their mobile device.
Conversational interfaces also offer greater customer convenience, largely due to the accessibility of voice assistants. Voice assistants are provided over a hands-free conversational channel, providing quick and easy access compared to paying attention to screen visuals and manually typing into a phone. The ever-growing popularity of voice assistant services with consumers is reflected in the rising number of devices integrating voice assistant support in the home, car and public places. This exponential growth is clearly showcased by a recent Google announcement during January 2019, reporting that over one billion devices now support its voice technology.
However, it is worth noting there are some key differences between voice and chat/text based conversational interfaces. As such, it is likely that one interface will be better suited to certain customer needs than the other, depending on the context of each individual situation. Text-based chat interactions are typically conducted using a personal device, keeping conversations private between the user and the interface where they cannot be overheard. In fact, chat-based services are generally limited to personal devices, offering increased security and greater privacy than is possible over products intended for use by groups like smart speakers and smart TVs. One of the most notable differences between the two conversational interfaces is the opportunity chat-based services have to become proactive, by issuing reminders and suggestion to users through push notifications. Similar functions have yet to be made widely available through voice interfaces, (limiting conversation initiation to the customer).
Additional benefits that support specific business objectives are summarised below:
- Accessibility – available 24x7x365
- Quality – better decisioning based on a full view of customer data and history of interactions
- Empathy – can pass to human agent for difficult or sensitive issues
- Drive loyalty through deep insight, rewards and gamification
- Increase interaction with proactive engagement
- Reduce cost – fewer human agents
- Consistency – fewer errors and greater consistency
- Self-learning – improves with every decision/interaction
- Scaleable – just more computing, no hiring/training
- Can support all users not just customers
- Ecosystem orchestration e.g. IFTTT
- Deeper customer journeys beyond banking
- Emotional intelligence and NLP, personalised interaction
- Scenario play/planning ("what if" analysis)
- Smart visualisation