Conversational Banking: From Branches to Bots
As chat platforms and bots replace browsers and apps, the way we access bank services will change. This is a good thing.
It’s Christmas 2015 and I am in Delhi for my friend’s wedding. He’s French and naturally his parents have flown in (smelly) cheese and (good) wine for a little pre-party. We are in desperate need of quality French bread. Enter Goodservice, a well named instant messaging based concierge service. We text over our request “We need real French bread delivered to our hotel”. “Sure”, they respond. “Angels in My Kitchen?” they suggest and share a link to the website and pricing. “Yes please — delivery as soon as possible”. They know where we are because we’ve shared our location and the delivery is dispatched. Any issues along the way are easily handled in the same chat.
GoodService is backed by Silicon Valley’s Sequoia Capital and is one of many chat-based concierge services to emerge over the last few years (Operator, Magic, ‘M’, Siri, Cortana). Having used it the appeal is hard to miss — it’s like the first time your Uber ride ended and you just got out and walked away without fumbling for change or worrying about tipping. You wonder why it wasn’t always this way.
The Year of ‘Conversational Commerce’
It’s not just concierge services — ‘chat’ is the new black. Chris Messina called 2016 the ‘Year of Conversational Commerce’. According to him, this will be the year that we start “utilizing chat, messaging, or other natural language interfaces (i.e. voice) to interact with people, brands, or services.” Much has been written on this recently and for good reason, it will fundamentally change how and where we access and use services on the Internet.
- How: ‘Conversations’ will replace GUI as the dominant user interface
- Where: ‘bots’ within messaging services will replace apps and websites
Back To the Good Old Days of Talking To People.
Despite our best efforts, we all still carry on conversations pretty frequently — the big exception to this being software, including services on the Internet. In order to create an interface that was immensely scalable we created a Graphic User Interface (GUI, or gooey), a world of icons, menus and clicks. This brought websites and then apps to the masses, but as the number and variety of services grows exponentially GUI as a design paradigm is struggling. There are over 1.5 million apps on iTunes alone, each with its own take on GUI design. It’s confusing.
“In contrast to a GUI that defines rules for each interaction — rules which, frustratingly, change from app to app — text-based, conversational interactions are liberating in their familiarity. The text I type is displayed on the right, the text someone else typed is on the left, and there’s an input field on bottom for me to compose a message.” Jonathan Libov
In contrast, conversations via text are powerful in their simplicity — and we are all extremely familiar with this format. Of the top 10 apps used in the world, all are social in nature and six are mostly instant messaging. As of the end of 2015 there are more active users on messaging services than on social media; and this excludes SMS and email, which are both essentially IM. We don’t need to learn how to use another app or website, messaging is something we all already understand.
Messaging also avoids many of the downsides of ‘real-world’ conversations:
- It is asynchronous; you can respond whenever it is convenient for you. This means we can fit these conversations into our lives, rather than have them interrupt us.
- Text based conversations are efficient. My typical conversation to organize Friday night drinks is: “Beer?” > “Yes” > “Chill Winston @ 7?” “Yup”. No need for small talk.
- Modern messaging has evolved beyond simple text and the ability to add rich content to our conversations — photos, emoji’s, GIFs, our location, web-links, voice messages — helps us to communicate clearly and quickly.
This is why most people under 30 already use messaging services as their default way of communicating with friends on their phone.
There Isn’t an App for That!
If you want to organize a coffee with your buddy you don’t download their app or visit their website; you message them. The same will apply as we start to have conversations with businesses on the Internet. Need to order an Uber? Send them a message and let them know you’re ready to be picked up. Want to move $100 from your checking account to your savings account? Easy — just message your bank. The reality is downloading apps is a pain, but starting a conversation is easy. As Parmy Olson at Forbes said recently ‘The golden era of apps is already over”. The average American downloads zero new apps per month. iPhone users have an average of 119 apps on their phone, but spend 84% of their time using just five of them.
The simplicity of this move towards a ‘conversational interface’ belies the power of it; instead of going to apps or web browsers to access services on the Internet, we will go to chat platforms like Messenger, WhatsApp, SnapChat, Kik or SMS.
“Chat apps will come to be thought of as the new browsers; bots will be the new websites. This is the beginning of a new internet.” Ted Livingston, CEO at Kik
This reality already exists in China. WeChat (known in China as ‘Weixin’) has grown from being a basic instant messaging service to being the default portal for the Internet. In addition to over 650 million active users, over 10 million businesses have ‘official accounts’ in WeChat. The result is that you can do almost anything within WeChat, from ordering a taxi to paying back friends, putting money into a savings account, booking an appointment with your doctor, ordering a pizza or chatting with a celebrity. In China, more of these official accounts are created every day than websites. If you want to be online your default option is building a ‘bot’ in WeChat.
Featured CBM: China, WeChat, and the Origins of Chatbots
Western messaging services are looking to emulate this ‘app within an app’ world that WeChat has created. They are moving from being chat ‘apps’ to being chat ‘platforms’. In 2015 Facebook Messenger and SnapChat both added an easy way to pay friends (baking in payments is step 1 for facilitating commerce). In December Messenger released a feature enabling users to order an Uber from within the app and rumor is it will announce its own bot platform in April. Others, like Telegram, Kik and Slack have been doing this for longer. The WeChat of the West is coming soon.
“We’re just getting people used to the idea that you can message more than just people on Messenger” Seth Rosenberg, Facebook product manager
Moving to ‘Conversational Banking’
— The digital equivalent of visiting a bank branch and talking to someone.
There is a lot to like about the experience of banking in branch. You walk up to the teller, tell them what you need and they help you out. This is a familiar, conversational interface and the teller is only giving you information relevant to what you’re asking. In contrast, bank’s digital experiences, delivered as apps and websites, are rarely as user friendly. They have tended to take the Yahoo approach to design, cramming in as much content as possible in an attempt to have something that is useful or relevant to you on the screen. They also offer little or no personalization. Very simple example; try finding your IBAN number. Don’t know what that is? That’s exactly the point, we all need different things from our bank. If we were in a branch we could just ask ‘What’s my IBAN number?’
Featured CBM: Banking with Artificial Intelligence
Talking to tellers in bank branches is a much easier interface and ‘Conversational Banking’ digitizes this experience within a messaging user interface. You only get information you asked for and that is relevant to you at the time. Want to check the balance in your checking account? Message your bank and ask. Need to send $100 to your friend in Australia? Ask your bank, their ‘Forex’ bot will help you out. Better still, your bank will learn what you ask for regularly and make those options easier to find.
What Might This Look Like?
Receiving and paying credit card statements — This should be as simple as your bank messaging you your statement and you tapping to view and pay it. They can give you a nudge to set up auto-payment and push reminders as the payment deadline approaches. If you see something you don’t recognize you can easily flag it in the chat.
Saving — We know we should do it, but it requires thought and effort and, as a result, it is easy to procrastinate. Like putting your name on the organ donor list. Platforms like Digit do a great job automating this, but we still need to visit their website or download their app and go through an often painful sign-up process. A ‘savings bot’ removes this friction and is also a great way to deliver in context prompts and updates (e.g. just before Friday night, it can push me my budget for the weekend?).
Featured CBM: Meet ‘Bond’, A Bot That’ll Make You Richer
Travelling — Going to Mexico for some beach time? Lucky you. You’ll need to let your bank know so they don’t freeze your cards when you’re away. This is often a pain in existing bank apps but easily done via messaging. Better yet, your bank could tell that you’re abroad and send you a message asking you which cards you’re using. This is also a great opportunity to cross-sell extra’s like insurance or FX.
These are simple examples but it is not far fetched to imagine most bank services, from savings to investment, insurance and lending, being delivered via a simple conversation.
For more examples of what this could look like check out Sudhir Nain’s article’s on ‘Chat Banking’ and ‘Chat UI for Wealth Management’.
Banking Within a Chat Service OR Banking With a Chat Service?
As chat services replace web-browsers and apps as our default portal for the Internet, a big question for banks is are we ‘chatting’ to bank ‘bots’ within messaging services or are we banking directly with Messenger, WeChat, Telegram or Kik?
The latter is no joke. Messaging services are baking payments to friends and payments to merchants into their platforms. As they do, the line between them and banks will blur. If banks lose payments they face a real risk of disintermediation. Again, we can look at WeChat as an example. In addition to payments to friends and merchants, WeChat offers savings accounts and personal loans. Over 10 million people save with WeChat, with over US$16.2BN under management (an average of US$1,610 per user). Rival AliPay has $94BN under management. Neither has been in market with this product for over three years.
The Internet changed in 2008 when Apple launched the App Store. Today over 1 billion apps have been downloaded and apps are an integral part of every bank’s user experience. The Internet is changing again. Banks need to adapt. Remember, technological change is exponential, not linear.
For more on Financial Tech: Artificial Intelligence (AI) and Fintech
About the Author
Written by Jake Tyler and Cole Devoy at Finn.ai. We are building ‘Conversational Banking’ as a white-labelled product, starting with a simple peer-to-peer payments plus instant messaging platform.
Comments? Chris Messina started the tag #convcommerce; I’m looking to branch this for banking at #convbanking
