Conversational banking: revolutionising customer interactions in financial services

For financial services firms, the next evolution of customer interactions will be driven by conversational interfaces, which draw on the potential of GenAI and AI agents to redefine consumer engagement strategies and the provision of services through the digital banking and telephony banking channel suite.

Conversational banking – the application of these conversational interfaces to help customers engage with their banking services – has the potential to truly transform customer experience in the digital banking age, helping customers engage more naturally, through speech and text to solve problems and access information without complex website and mobile app navigation. 

Banking in the background – the notion that customers can get on with their daily lives and engage with their banking services in an unobtrusive way – would be achievable through greater adoption of conversational interfaces. 

Five imperatives for future success

To stay competitive and future-proof customer interactions, institutions must align with five imperatives that are essential for delivering a successful conversational banking strategy that delights customers, drives operational efficiency and allows for scalability.

1. Omni-channel, unified customer journeys 

The power of conversational banking will not come from adding a chatbot button to a ‘Contact Us’ page and allowing it to answer basic FAQs. Many industries have started to realise the power of integrating their interaction channels, both in terms of how they are managed and designed as well as how they show up for the customer. 

AI and natural language processing (NLP) enable seamless transitions across multiple channels allowing customer interactions to flow between chat interfaces, voice assistants, and contact centre agents, across devices like mobile phones, smart speakers, and laptops. To date, financial services have in the most part achieved a multi-channel strategy, giving consumers choice across different channel types but omni-channel is the true end-state for all to aim for. 

The rise of wearables and augmented reality will further accelerate the need for versatile voice and written engagement approaches. Customers will increasingly expect flexibility in how they engage, whether through everyday messaging platforms like WhatsApp or authenticated banking channels like telephony or mobile apps. It is the connected nature of these interactions, and the ability to start and finish in different channels, which will enable truly unified customer journeys.

2. Scaled, real-time hyper-personalisation 

Personalisation begins with greeting customers by their name, learning from the context of previous interactions and considering more nuanced responses to customer queries, responding in a human-like and empathetic style. 

Chatbots and virtual assistants can now replicate human traits which improve customer engagement and build trust, through traits such as politeness, open questioning style and confirming a customer’s understanding of the response. The personalisation these technologies can offer, need to strike a fine balance, being helpful but not intrusive; remembering me and our last interaction, but not overstepping or pre-empting my  needs, particularly where the AI is acting autonomously. 

New advancements – such as real-time sentiment analysis and live word pattern detection – allow these new technologies to build genuine connections with clients, enhancing customer experience through personalised tone and pace of conversation. 

3. Smart, context-driven routing 

Prioritising customer interactions can now move beyond simple routing based on query type or wait times. Natural language interfaces can analyse additional context, optimising service delivery by matching customers with the most suitable agent based on urgency, customer profiles and risk factors. 

This intelligent distribution supports a multi-skilled workforce equipped to handle diverse customer interactions, rather than limiting operations to departmental silos.

4. Accessibility and multi-modality

Branch and telephony banking have been the solution for solving for vulnerable customer groups and offering customers that require extra support, a channel to engage with. Conversational interfaces – voice, text, and future wearable integration – offer inclusive solutions for customers with visual or mobility challenges, shifting beyond traditional branch and phone channels as the fall-back option. 

The ability to train AI, to recognise accessibility requirements and tailor interactions and responses in a way that works for that customer group, allows for a highly scalable and inclusive customer engagement approach. 

5. Organisational data products

Conversational touchpoints generate rich, multi-dimensional data. Combining fraud signals, user behaviour, sentiment, and interaction patterns enables smarter, real-time decisioning and friction reduction. 

Disparate systems from all customer interactions across journeys and channels, can be brought together into data products that can allow for superior customer interactions. 

Fraud data collected from the payment instruction, user behavior analytics from the mobile app, previous customer contact data and real-time word pattern analysis all combined to give a multi-faceted assessment of that fraud case. The power of this enhanced data doesn’t negate the need for humans in the loop, with a continued imperative for trained and skilled human insight that can distinguish behavioural patterns and vulnerability. 

• 24/7 customer support. Around the clock support must be viewed as table stakes, with agents unconstrained by working hours. This gives customers the flexibility to resolve queries whenever they need, while also helping firms manage operational demand more effectively. The always-on availability becomes a key differentiator in the service proposition, ultimately driving higher customer satisfaction and loyalty.
• Significant economies of scale. Implementing AI-powered technologies can unlock significant economies of scale. As customer demand rises, the continuous learning of AI models enhances their accuracy, driving down costs and improving return on investment. With more data feeding into these models, they become increasingly efficient in resolving customer queries. This not only optimises processes but also reduces failure demand, further improving the customer journey.
• Reduced customer attrition and complaint volumes. First contact resolution is a key driver in reducing customer attrition, and ultimately escalation through to complaints. Offering a human-like experience through a chat bot or voice assistant, can replicate the service levels customers demand but a fraction of the cost of an agent interaction. Reducing moments that cause customer frustration and harm, ultimately lead to lower complaint volumes and dissatisfaction.

Avoiding the mistakes of the past

Historically, when a new customer channel has launched – telephone banking, online banking, mobile apps – they have been developed independent of other existing channels, resulting in disjointed customer experiences. 

As customer journeys are modernised and accessed via new channels, existing journeys and channels have typically been forgotten, their interconnected nature ignored, and additional complexity has accordingly been introduced to the overall end-to-end experience. 

This situation is in part a result of the teams implementing and managing these channels working independently, the reliance on siloed technology stacks and architectures, and a lack of consideration for cross-channel hand-offs and the times customers need to speak to a human where they can’t solve the problem themselves.

In many financial services organisations, we have seen the creation of a ‘chatbot team’ or ‘IVA team’, sitting in isolation from the web team, app team and contact centre team. The fear is that this will only exacerbate further fragmentation across the customer experience. 

It is therefore essential that any strategy seeking to explore opportunities around conversational banking stays focused on the end-to-end customer journey. Furthermore, it must carefully consider how conversational banking interfaces can integrate with existing customer channel strategies, technology architecture and the overall customer experience.

Realising the benefits

There are a number of practical steps, financial services can take to realise the benefits of these trends, which are actionable now and start on the pathway to conversational banking:

• Understand your customers and how they like to engage – Start by understanding the behavioural traits of your customers, the channels they engage with and how they like to engage with you such as time of day and common queries. This should increase customer confidence, improving their engagement with financial services in the moments that matter ultimately leading to more query resolution and less complaints. 
• Identify areas of high operational demand – Analyse your most frequent queries across your channels and explore how intelligent technologies can ease the load and justify investment. Through better customer understanding, financial services can better tailor capacity and improve customer interaction journeys to remove friction. 
• Assess your technology readiness – Conduct an architectural review to understand the barriers to implementing conversational interfaces and determine where you can scale.
• Design solutions across the end-to-end customer journey – Look at how conversational interfaces support the end-to-end customer journey, how they can support existing channels and develop an iterative test and learn approach to constantly measure and improve the experience. Moreover, the ability to reinvest customer journeys, with new approaches and technologies that turn the customer journey on its head to really solve customer needs. 
• Develop data products – structure your data, combining customer, product and channel data attributes, to create a searchable data set to be used by your AI capabilities.
• Build AI capabilities – Set up a machine learning centre of excellence to train models, improve response accuracy, reduce bias, and enhance emotional intelligence.

To kickstart your conversational banking journey, please use the form below to contact our experts:

Sam Riordan, Executive Director, UK Banking & Payments

Graeme Carmichael, Executive Director, UK Banking & Payments

Costa Stathis, Managing Principal, Head of Product & Experience