App-based banking to App-less banking
The Banking sector has entered a new phase, where customers expect seamless, personalized service on a “whenever” and “wherever” basis. For the past few decades, banks have been moving customers toward the new ways of digital and self-service channels. This has given rise to Internet banking or Mobile banking through which a bank allows its customers to conduct financial transactions remotely using a mobile device and a multitude of applications. Banking transactions are done ‘over-the-net’, where a client has to enter into the bank’s ‘Digital Branch’ rather than a physical branch. However, due to the nature, number, and complexity of banking applications, and issues like regular upgrading, patches, and connectivity, customers are a bit apprehensive about opting for an app-based banking environment. There are several other factors that impact app-based banking, such as the learning curve of customers associated with new technology, concerns about security compromises, or simply an unwillingness to start using technology. Some customers do not even get to download various banking apps for internet banking.
This has prompted banks to conceptualize and bring in new concepts into banking, where app-less banking is emerging as a top contender. App-less banking simply refers to reducing the dependency of transactions on banking applications. Banks are moving toward simplifying their application landscape, reducing integration points, and using conversations for banking transactions. This move, from application-based transactions to conversation-based transactions, is called app-less banking.
App-less banking platforms
App-less banking platforms integrate data, applications and channels seamlessly, allowing banks to deliver multiple micro-experiences over various channels like SMS and WhatsApp. This is enabled by delivering multi-domain business use-cases in an agile way that leverages modern application architecture principles. These platforms can be easily integrated for faster Cloud deployments. It enables banks to create and offer improved customer journeys ensuring issue resolution with minimum response time, resulting in higher level of customer satisfaction. Customers’ queries can be directed to self-service modules by interfacing with SMS, a chatbot or WhatsApp, thereby empowering customers, improving response times, and reducing the load on customer service teams. Some solutions also offer to put text by customer on user interaction points e.g. text in “WhatsApp handle”. These technology handles are able to understand and link user messages to a particular bank, indicating to the bank that it is an existing customer and responding accordingly using an OTP or biometric authentication. Some of the solutions available in the market are from Mulesoft, Adobe, Google, and Amazon. Yes Bank has recently rolled out their app-less banking initiative as a part of their digital transformation strategy. It has collaborated with Karix Mobile to deliver app-less banking to their customers over a mobile browser using progressive web-app technology.
Conversational banking enabling App-Less banking
App-less banking is related to omni-channel banking, conversational banking and chatbot-based banking. Conversational banking is a way of banking where the banker uses AI-powered chatbots to text or speak questions or commands. It is the communication with the customer through voice/message-activated interfaces to enable a two-way digital customer experience. Customers do not have to download apps and their banking is done through the channel they like most i.e. chat. This type of banking brings financial information to customers through channels they are already using. The difference between banking apps and conversational interfaces is that it does not require users to learn their structure, navigation, and terms to perform banking operations.
Banking-bots are instant messenger chatbots that interact with the customer’s bank account. Abe, for example, connects to a bank through Yodlee, a financial data provider, using an encrypted token. These bots can tell users how much money is in their account, how much they spent on a particular type of expense and possibly create a budget. Chatbots serve customers regarding financial matters 24/7, helping them handle banking operations or even locating the nearest ATM for them. Chatbots are nothing but AI-powered intelligent personal banking assistants for customers. A chatbot can track customers’ spending patterns and monitor transactions history. Artificial intelligence makes it possible to learn about a customer’s spending habits and provide advisory about the customer’s financial well-being.
Chatbots also help in preventing fraud hence boosting customer confidence and satisfaction levels. Banking operations using chatbots enable customers to tackle issues in real-time and on their own. Erica, the smart assistant implemented by Bank of America allows customers to easily block their credit cards using a simple command, without a human agent.
AI and machine-learning algorithms also analyze a customer’s activity and predict what type of banking products can help them manage their finances. The bot can recommend those products to a customer on a chat supporting conversion. This is making banking more personal. AI customizes responses to different customers after analyzing their moods and accordingly addresses issues on chat.
Examples of Conversational Interaction methods
Facebook, WeChat, Telegram, Slack, WhatsApp
- Familiarity with users and widespread adoption
- User security for transactions not mature
Siri, Cortana, Alexa, Google Assistant
- Familiarity with users and can gather additional information during a conversation
- Difficult user security and voice signature not passed to application
Mobile Banking App Assistants
BoA (Erica), USAA, Ally Assistant
- High user familiarity
- Difficult toggling between mobile assistant
Internet of Things
Smart cars, wearables, connected TVs
- Intelligent devices for anticipation and fulfilment
- No widespread adoption and user security is a concern
Banks that want to succeed in a digital economy need to make fundamental changes to the way they operate. Banks should prioritize responding to innovation opportunities and quickly convert them to customer services. However, the use of new technologies isn’t a sure-fire guarantee of success for banks. They need to ensure that the mind-set of customers also changes and keeps pace with the speed of technology change. Emphasis has to be on simplifying things for customers and creating value for them in the age of digital disruption.
App-less banking, conversational banking, and chatbots have a long way to go before they achieve their full potential. How easily customers will adapt to these new ways of banking remains to be seen. Will banks be able to convince customers to move away from human conversations and start using bots? Will customers feel secure dealing with intelligent machines? How will data privacy regulations, legal compliances, and policy concerns be met? All these questions need deep evaluation.
Also, intelligent systems are as effective as the data that is fed to them, which impacts their effectiveness. Integrating all systems with chatbots could prove to be expensive. It is also difficult for bots to understand the context of the conversation and nuances involved.