With RFi Group’s Australian Retail Banking Summit (ARBS) and Awards fast approaching, I thought it would be pertinent to take a look at one of the most interesting developments in banking technology – the coming together of technology and servicing through messaging platforms and chat bots.
If you had asked me two years ago whether I thought that we would see banks and financial services organisations leveraging services like Facebook Messenger as a customer servicing channel in a mainstream way, I would have been very sceptical.
And yet, when you think about it, it makes absolute sense for taking care of everyday enquiries. The types of enquiry that chew up call centre times, create long call queues and ultimately cause customer angst. Who wouldn’t rather type a quick message to their bank on the device of their choice and receive an (almost) instant response?
So around the world we are seeing banks beginning to implement these types of solutions. Not just fintech start-ups, but big traditional banks like Barclays in the UK and DBS in Singapore. Barclays launched a pilot in November 2016 offering customers the opportunity to ‘Bank where you like’ via mobile, tablet or desktop and chat to a member of staff.
Meanwhile, in January 2017, DBS has gone a step further and launched a chatbot service on Facebook Messenger called ‘POSB Digibank Virtual Assistant’. The service offers customers the ability to enquire about branch locations and ForEx rates and by mid-year will allow customers to transfer money, make credit card repayments (currently this is not possible in many online banking services in Singapore) and ask for their account balance.
The chatbot in use by DBS was developed by Kasisto, which is related to the developers of Siri and so has good pedigree. Importantly, customers can use natural language to communicate – for example, if they want to know their account balance they can just type ‘how much do I have’.
For me this is the answer to where banking technology will go, that is, using technology that consumers are already comfortable with in their everyday lives and bringing it into the banking context.
So, what are the next steps? With the use of chatbots, there are implications for cognitive computing and AI, where the ‘machine’ takes in the information that is provided by these chat interactions and uses it to spot patterns and learn and anticipate what type of consumers might need from a product or service. An extension of this would enable the population of an application form through just a natural chat between bot and customer.
Banking futurists have long been predicting the demise of the branch network...However, in Australia we have yet to see any significant branch closures in the last ten years, despite the clear cost benefits.
Does this mean an end for traditional banking? Well banking futurists have long been predicting the demise of the branch network and it is true that it’s becoming more common to see banks around the world that don’t have any branches. However, in Australia we have yet to see any significant branch closures in the last ten years, despite the clear cost benefits that banks would realise by cutting back on bricks and mortar. There are literally billions of dollars in branch network costs across the major banks in Australia. So where is the disconnect? There are a three key reasons that I see for the maintenance of the branch networks going forward.
Firstly, it is politically unpopular to close branches and the major banks have been under increasing political scrutiny ever since the beginning of the GFC (culminating in 2016’s parliamentary inquiries);
Secondly, any time there is a branch closure it is followed by a consumer backlash that impacts heavily on customer experience measures (which is now embedded on most bank executive’s scorecards);
Thirdly, branches are very visible and serve to reinforce brand awareness and perceptions of stability (crucial in the current environment of competition and uncertainty); and
Lastly, leases on branch premises are quite long (~5 years) and so any cost saving takes a long time to be realised (also the average bank CEO tenure is more like 4 years).
As enquiry volumes are taken away by chat and other new technologies, the need for heavily staffed centres will decline...In the long term, I believe it’s more likely that we will see the demise of call centres before we see the demise of the branch network.
Where I think it is much more likely that we will see reductions, is in the bank call centres. As enquiry volumes are taken away by chat and other new technologies, the need for heavily staffed centres will decline. In addition, many of the banks have already effectively offshored their call centres and the risk of closures on public perception is much lessened.
In the long term, I believe it’s more likely that we will see the demise of call centres before we see the demise of the branch network.