Conversational banking is a new way of banking using popular messaging apps like WhatsApp, SMS, and other instant messaging platforms to deliver personalized banking services and customer support. It has become more popular as customers now expect a faster, more personalized banking experience from their bank. Recent advances in security and authorization technologies have made it possible for banks to offer personalized banking experiences that are tailored to the customers’ needs and preferences.
However, that does not mean conversational banking is without risks or disadvantages. Here are some of the pros and cons of using this technology.
The Pros of Conversational Banking
There are many advantages to using conversational banking. These benefits provide customers with a more tailored and convenient banking experience and are some of the most important reasons why people are increasingly embracing this technology.
Convenience for Customers
One of the main advantages of conversational banking is that customers no longer need to travel to a branch or use online banking. With this technology, people can perform transactions and inquire about their accounts on their preferred channels, such as text messages, WhatsApp, or other messaging apps. This, in turn, leads customers to save time, as they do not have to visit a branch or wait for a response from customer service.
Use a Platform Your Customers are Already Comfortable With
Another advantage of conversational banking is that it allows customers to use platforms they are already familiar with and comfortable with. This means companies can launch campaigns with just the touch of a button, reaching customers in real-time and using one interface to operate through.
Businesses can send automated and fully personalized messages, promotions, and offers to customers. This gives banks much more flexibility to build customer loyalty.
Fewer Costs on Branch Upkeep
Using conversational banking can also help banks reduce their operational costs. By moving to a digital platform, banks can now invest less in maintaining physical branches. As digital banking is much less expensive than keeping up with the cost of a brick-and-mortar branch, this can significantly decrease operational costs.
All Customer Data in One Place
With the advent of conversational banking, all of the customer’s data can be stored in one platform, making it easier for banks to analyze their data and create campaigns. Banks can also use customer segmentation and target specific customers with tailored messages and offers. This can help banks increase their conversion rates and build loyalty among customers.
24/7 Availability
One of the main advantages of conversational banking is that it offers customers 24/7 availability. Banks can use chatbots to answer customer inquiries in real-time at any hour of the day or night since chatbots do not need sleep or meal breaks. One bot can also handle multiple customers at the same time. This provides convenience for customers and helps banks save money on additional labor costs.
Accessibility for People With Disabilities
Importantly, conversational banking offers people with disabilities a more accessible way to engage in digital banking. Not everyone can visit a branch for their banking activities, but with conversational banking, they can use digital channels to get the info and services they need. Many platforms can also be adapted specifically for people with different needs in terms of hearing, sight, or mobility.
The Cons of Conversational Banking
While there are many advantages to using conversational banking, there are also some important potential downsides that any financial institution should be aware of.
Initial Investment
Setting up a robust conversational banking platform requires a significant investment in time and resources to get right, to keep running smoothly, and to constantly adapt and update to meet evolving customer needs. It should be remembered that a conversational banking platform full of glitches and communication issues will very quickly lead customers to abandon the platform and potentially the bank altogether.
Security
Banks came into existence because they are safe and trusted places to keep the money. The onset of the digital age has not lessened that expectation. Any movement to digital has to come with guarantees and security protocols that protect customers' data and money. In a world where fraudsters are becoming more and more sophisticated, this is an ongoing game of cat and mouse that requires significant investment from banks and financial institutions to keep on top of. Data breaches can quickly cause catastrophic reputational damage for a financial institution and need to be avoided at all costs.
Loss of personal touch
Not everyone is a fan of WhatsApp, SMS, or other messaging platforms. They may not have the access, the ability, or the inclination to get fully involved. There are very significant portions of the population who have not grown up with such technology and resent the fact that physical services are being slowly (or quickly) removed and replaced with a technology that they have little interest or experience with. For many, a trip to the bank branch to meet face-to-face to discuss their finances is something to be valued. This technology should not sweep away everything that has gone before so the reality is that the majority of banks and financial institutions will need to opt for a hybrid approach where technology and conversational banking will complement, but not replace, existing methods of banking.
Conclusion
Conversational banking offers significant advantages for both the bank and the customer. It provides banks with convenience and cost savings, while customers can get access to services 24/7. However, it is important to remember that a human touch is still important to many customers.
This technology can be an excellent way to increase customer loyalty while saving time and resources. Therefore, conversational banking should not be overlooked as a tool for financial institutions. It has the potential to revolutionize the way people do banking, so it is important to consider its advantages and disadvantages before making a decision. With the proper implementation and sufficient resources, conversational banking can be an excellent tool for banks to increase customer satisfaction and improve their bottom line.
