Banking UX

Chatbots – saviour or disintermediator?

Chatbots – saviour or disintermediator? Main image: Julia Tim,
Written by Stephen Greer

Banks should start thinking about how chatbots and AI fit into a long-term digital channels strategy, says Stephen Greer.

AI is becoming increasingly interesting to bankers. Last year, I wrote a blog about Assistant as an App, looking at how concierge apps such as MaiKai and Penny are offering up AI-driven financial management services. My colleague Dan Latimore also recently posted a blog on AI and its impact.

The emergence of chatbots within popular messaging apps such as Facebook Messenger, Slack, Kik and WeChat similarly has the potential to shift how customers interact with financial institutions. Chatbots offer incredible scale at a pretty cheap price, making adoption potentially explosive. Facebook messenger, for example, has almost a billion active users a month. WhatsApp (soon to launch chatbots) has about the same. These apps offer some extremely high engagement, and with app downloads decreasing, users are spending more time on fewer apps. According to TechCrunch, 80% of the time spent on a mobile device is typically split between 3-5 apps.

Chatbots give the bank the ability to automatically appear in almost all of the most used apps in the world. The opportunity with digital assistants is immense, and given the nature of bank transactions, it’s not hard to imagine chatbots becoming a widely used engagement method. Most of banking is heavily rules-based, so the processes are often standard. Frequent banking requests are pretty straightforward (e.g., ‘Send this person X amount of money’ or ‘Transfer x amount from savings to checking’). Bank-owned chatbots are also more built for purpose than some of the multi-purpose third-party products on the market, making the functional scope targeted. While chatbots are still very early days, it won’t be long before these kinds of interactions are accessible and the norm. Bank of America already has one, while many others have plans or pilots.

The video below (skip to 7:30) shows what an advanced chatbot might be able to accomplish. The image below that, from the Chatbots Magazine, is another conceptual banking use case. The possibilities are compelling.

Source: Chatbots Magazine


While the opportunity with digital assistants is enormous, banks must be aware of how this affects their current ongoing digital strategy. For example, if chatbots overcome the hype and become a long-lasting method for accessing financial services, then what effect will that have on traditional banking apps? Will chatbots make it foolish to invest large sums of money in dedicated mobile apps?

For all the promise this technology brings, banks need to be aware that this could be a step towards front-end disintermediation. The threat of tech companies (or other large retailers) stepping in to grab banking licenses and compete directly with incumbents was short-lived. The more realistic scenario was always relegating core banking functions to a utility on the back-end of a slickly designed user interface created by a fintech startup. The incumbents lose the engagement, even if they are facilitating the transactions.

Are chatbots a step towards front-end disintermediation, or are they an extension of the bank’s main app? If you believe that chatbots are a stepping stone (or companion product) towards a world where the best UI is no UI, and where AI evolves to the point of offering significant functional value, then banks could be at risk.

Are chatbots a step towards front-end disintermediation, or an extension of the bank’s main app? Click To Tweet

Fragmenting the customer journey

This isn’t a call to hysteria by any means, nor am I calling chatbots wolves in sheep’s clothing, but banks need to be aware of the potential impact. As voice- or message-based interactions become the norm, they will have an effect on a bank’s dedicated mobile app. In this environment, the mobile app will need to evolve to become something different – non-transactional.

Chatbots will only further fragment the customer journey, requiring an even clearer understanding of how consumers are choosing to handle their finances and make transactions. Banks need to start thinking about how chatbots and AI fit into a long-term digital channels strategy, one that doesn’t handcuff the institution into a no-win proposition of competitive disadvantage versus wilful disruption.

READ NEXT: Bank of America’s new chatbot is a higher form of intelligence

– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Main image: Julia Tim,

About the author

Stephen Greer

Stephen Greer is an analyst with Celent’s banking practice and is based in Madrid, Spain. His research focuses on retail banking trends, with an emphasis on digital channel technology.

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