The Future of Personal Banking: How Conversational AI is Elevating Customer Support in Financial Services

By Vanessa Hojda

Imagine traveling back to 2006 and describing to someone how we do personal banking today. They’d have a hard time believing that banking and financial industries—typically plagued by traditional, outdated legacy processes—could ever offer more than the laborious processes they’re used to.

Fast forward to 2024, the age of seamless, convenient financial technology like app banking, tap-to-pay, and Apple Pay in stores. You’ll find personal banking customers who aren’t as accepting of outdated banking experiences. Two-thirds of millennials expect real-time customer service and three-quarters of all customers expect consistent cross-channel service experience, according to McKinsey.

The monetary risks are high for financial service businesses that don’t join this new age of customer service expectations. Last year, Salesforce reported that 39% of banking customers who switched banks did so due to poor customer service. With costs rising along with the expectations of customers, the usual strategy of adding more well-trained employees to deliver great customer service just isn’t viable anymore.

That’s why companies are turning to AI to deliver personalized customer service that customers want—when and how they want it.

The Rise of Conversational AI in Financial Services

In its early years, AI was used in financial services primarily for tasks like fraud detection and risk assessment. Today, in the new age of Generative AI tools like ChatGPT, AI has evolved into new areas, including conversational AI.

Conversational AI is the technology that allows machines to engage in human-like conversations by combining natural language processing, machine learning, and other AI techniques. It can provide instant, accurate, and context-aware responses to customer questions. With conversational AI, companies can automate customer support tasks and offer personalized recommendations to customers based on their historical interactions with the business. 

Because of these benefits, the financial services industry is eager to adopt conversational AI in customer service operations. These businesses are confident that AI can fulfill—and exceed—customer expectations for real-time, personalized, and convenient service. In 2023, Ernst & Young reported that nearly all (99%) of the financial services leaders they surveyed reported that their organizations were deploying AI in some way, and all respondents said they are either already using, or planning to use, generative AI (GenAI) at their organization.

On top of that, Accenture’s Banking Top Trends for 2024 found that the banking industry will be profoundly impacted by gen AI—more than any other industry.

The type of at-scale personalization of customer service enabled by Conversational AI allows banks to anticipate customer needs and offer highly-tailored services, which leads to better customer engagement and opportunities to up-sell and cross-sell products.

Building Trust and Loyalty Through Human-Like Interactions

A lot is at stake for these types of customers—they need to feel that they can trust their financial institution to handle their money securely and efficiently. Research by HBR on conversational AI confirms that a high level of responsiveness and accuracy of customer support can help customers feel more confident in their interactions with a business. 

In personal banking there are so many options available that customers can easily switch to another bank if they’re not satisfied. According to McKinsey research, the average visit to a bank app lasts only half as long as a visit to an online shopping app, and only one-quarter as long as a visit to a gaming app. Conversational AI presents a scalable and efficient way to provide memorable experiences that translate into more engagement.

Some of Forethought’s financial technology customers have seen tangible, measurable impact to their trust and loyalty metrics by implementing Conversational AI in their customer support operations.

  • Kickfin, a cashless tipping software, leaned on conversational AI to solve their customer trust and loyalty challenges. The company was able to provide 24/7 after hours support and solve customer inquiries quickly and accurately. After the implementation of conversational AI, the company saw a 72% increase in self-serve rates.
  • Abra, a full-service crypto platform, achieved a 6.3x return on investment based on cost per ticket and deflections and a 40.7% self-serve rate.

Simplifying Banking Transactions for a Seamless and Secure Experience

Traditional banking is the area that will be most transformed by the benefits of conversational AI. But this technology isn’t completely free of perceived risks. According to the FTC, security remains a top concern for consumers when it comes to Generative AI technology. Issues like data confidentiality and discriminatory practices are some of the apprehensions that customers have towards the application of AI in their day-to-day lives.

Luckily, businesses can do a lot to mitigate those concerns. For example, businesses can follow best practices for data privacy and consumer safety, like the redaction of Personally Identifiable Information (PII), Protected Health Information (PHI), and financial records. This approach removes the privacy burden on businesses by aligning with the GDPR’s standards for data minimization and residency requirements and by eliminating the possibility of discriminatory practices from input data.

Despite these concerns around privacy, the adoption of AI by the financial services industry will only keep growing. In a report released by OliverWyman in partnership with UK Finance, researchers found that the adoption is accelerating very quickly, with most financial service businesses involved in some form of AI testing before adopting the technology. Customer service is one of the top areas they plan on adopting conversational AI over the next few years.

The Next Evolution of Customer Support in Financial Services

Generative AI is more than just a customer support tool—it’s a growth multiplier for financial organizations. An Accenture analysis found that within three years, generative AI could magnify a bank’s operating income by two to three times by driving scaled growth and reducing operating costs. 

It’s not far-fetched to imagine AI having that impact. Conversational AI allows customers to access banking services conveniently, receive personalized assistance, and navigate complex processes with ease. It can also empower financial service businesses to provide round-the-clock support, streamline operations, and deliver personalized services, allowing them to keep up with the exponentially rising demands of customers that grow in tandem with the evolution of AI.

We went back in time to 2006 at the start of this article to paint a picture of how far financial technology has evolved. Now, imagine what the next 20 years will look like. Conversational AI will continue to improve in response times, proactive assistance, the leveraging of data analytics to understand customer needs, and many more customer support functions. This technology will enable financial institutions to build stronger relationships, based on trust and loyalty, and stay competitive in a digital era that can move too fast—if you’re not paying enough attention.

Dive in.

Interested in generative AI for customer support? Check out this guide to learn about the 3 key pillars you need to get started.

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