Progressive financial firms are leveraging chatbot technology for financial institutions leveraging machine learning and artificial intelligence (AI) to create intelligent “virtual assistant” chatbots, able to answer complex questions from customers and respond with natural speech.
These chatbots bring rewards such as:
- including increased customer loyalty
- deeper client engagement, and
- significant cost savings
They also bring security risks if they don’t meet financial data security standards. By addressing these risks, financial firms can safely and securely use chatbots to engage with customers.
Chatbots for Financial Firms: The Rewards
Since integrating chatbots and taking advantage of their enhanced AI abilities, financial firms are seeing rewards in two primary areas: increased customer engagement and lower customer-service related operating expenses.
An Enhanced Customer Experience
With customers expecting a high level of personalization and availability, chatbots provide a cost-effective way to provide an enhanced customer experience. Chatbots offer:
Ease of use—Today’s chatbots understand conversational questions. Customers can type in their questions or use voice-to-text to easily ask their questions.
Personalization—Once customers have been authenticated, chatbots can greet visitors by name and give them information that they frequently request, such as their account balance or recent transactions.
Availability—In addition to being available 24/7, financial firms are also, such as Facebook Messaging. Customers don’t have to download a new app and try to find relevant features; chatbots can meet them where they already are.
For example, Bank of America’s Erica is billed as a virtual financial assistant. Erica was released near the end of 2016, and she interacts with customers through text messages and Bank of America’s mobile app. While chatbots like Erica will not necessarily be able to evaluate all human factors to provide the information or advice, she answers questions about account balances, routing numbers, and how customers spend their money.
Powerful Cost Savings
Juniper Research estimates that every chatbot inquiry saves four minutes of call center time, with an average of $0.70 saved per interaction. They project that healthcare and financial sector chatbots will save these industries $8 billion by 2022. Chatbots provide these savings by:
Handling simple interactions—Customer service personnel can focus on more complex interactions, streamlining the communications process for customers and reducing the number of customer service representatives needed.
Making fewer IT demands—Chatbots are relatively simple to maintain and don’t require an extensive amount of storage, which helps ease the burden on IT departments. Chatbots can also be deployed for basic IT troubleshooting, such as password resets, allowing IT to focus on other business infrastructure goals.
Improving employee efficiency—With regulations and privacy requirements frequently changing, it can be a challenge for front-line employees to stay up-to-date on the latest policies and procedures for handling infrequent or complex transactions. An internal chatbot can prompt employees through these interactions, allowing them to complete transactions more quickly and more accurately.
SEB in Sweden started with an internal chatbot, Amelia. In her first three weeks, she assisted 700 employees manage transactions. She handles basic IT issues and helps employees with tasks such as opening new accounts. SEB has also implemented Aida, her customer-facing counterpart.
Now let’s take a look at the downside of chatbots for financial institutions. If not implemented properly, chatbots could put network security at risk.
Chatbots: The Risks
As chatbot sophistication increases, so do the efforts of bad actors to infiltrate chatbots. Overcoming authentication challenges, mitigating any operational and reputational liabilities, and keeping on top of integrations between solutions, and keeping records and logs for legal and ethical needs will all need to be addressed as more chatbots get introduced into the industry. However, there are three primary areas to consider when implementing chatbots:
- Data storage: Chatbot data must meet financial data security standards. Financial firms should consider what data a chatbot has access to, what the data is being used for, and where this data is being stored. With the strict regulatory standards in place regarding customer data privacy and data storage, your chatbot should be designed from the ground up with these regulations in mind.
- End-user vulnerabilities: Social engineering is an increasingly common method for cybercriminals to access private information. If bad actors gain access to a chatbot, a customer or employee could unknowingly reveal sensitive information. End-users could also simply leave their devices unlocked or open, leaving them vulnerable to theft. Financial firms should (similar to annual Security Awareness Training) around cybersecurity best practices when implementing chatbots to help mitigate these risks.
- Third-party applications: Integrating chatbots into third-party applications is appealing to consumers, but it also leaves open areas for vulnerability. Your chatbot is only as secure as the third-party application. End-to-end encryption and multi-factor authentication help minimize these risks.
As with any newer technology, security is a concern, especially for financial institutions since the industry remains a major target for cybercriminals. Yet forward-thinking firms discover ways to integrate new technology while protecting core assets. Here’s how:
3 Considerations for Implementing Chatbots in Financial Firms
In spite of the possible security challenges, many financial firms considering chatbots the rewards outweigh the risks. To integrate chatbots with security in mind, here are three key considerations:
- Identify your business requirements—What areas of your firm would most benefit from a chatbot? Do you want to begin with an internal chatbot, prospective client-facing, or a ? Prioritizing will help you choose an appropriate chatbot developer and deployment strategy.
- Create a chatbot deployment strategy—When it comes to chatbot development, if your internal team isn’t developing your chatbot, look for a vendor who has experience working with financial firms and the strict financial data security standards that your chatbot will be required to meet. Develop a deployment schedule and plan for gradually rolling out and training your chatbot.
- Consider an informed partner—Developing, deploying, training, and maintaining a chatbot will take time and resources. A knowledgeable partner can assist your firm in finding an appropriate vendor and developing a roll-out strategy.
At DataComm we’re experienced with the challenges and issues facing financial firms. We provide managed services, security consultations, unified communications solutions, and more to help you take advantage of the latest and most effective technology. Contact us today to learn more about how we can help your firm.