Conversational Commerce and the Rise of the Chatbot

By Tim Bohlman

What is conversational commerce? For many, it is merely a phrase, sometimes said in the same breath as “voice first banking,” perhaps with murmurs of “chatbots,” and “novelty.” In the end, many experts in the industry simply wrote off this area of technology as something for later, but certainly not anything that would affect the financial services industry in the next two years, much less today. Then curiously, those murmurs changed. Companies began to take notice of intelligent personal assistants such as Amazon Echo’s Alexa, Apple’s Siri, Google Assistant, and Microsoft’s Cortana. Last year Facebook facilitated the introduction of tens of thousands of chatbots in its Messenger app, taking care of everything from customer service, small transactions, to recommendations – and all in real time. Then, in October, Bank of America unveiled its Erica Voice AI banking system.

Erica is the first of a new generation of chatbots, designed specifically for financial institutions. Powered by machine learning, Erica will interface with customers, allowing them to check account balances and pay bills, and will even be proactive, eventually making recommendations based on predictive data. Bank of America’s head of digital banking, Michelle Moore, said that one day soon Erica may contact customers on how to boost their credit or even assist with financial planning.

Bank of America is not the only financial institution with big plans for chatbots. According to a recent survey conducted by Personetics, a fintech firm serving banks and credit unions, more than three quarters of the financial institutions they surveyed think chatbots will become a viable commercial solution within two years. Nearly half of the respondents (46%) say they are currently developing their own chatbot solutions or have an active project in the works, and 26% say they have plans to begin within the next 12 months. According to a separate survey by Accenture, consumers are also proving to be more receptive to an automated service and support experience. 71% of consumers surveyed said they would consider automated advice on what kind of bank account to open, 74% on what kind of insurance coverage to purchase, and 68% on how to plan for retirement.

“The modern financial institution must enable customers to conduct their business and get personal assistance over any digital channel,” said Horia Velicu, Head of Innovation Lab at BRD Groupe Société Générale. “Our goal is to create an experience in line with how customers want to interact with businesses in the digital age. If I can order a ride or buy food on Facebook Messenger, I should also be able to manage my money in the same conversational and real-time environment.”

There is a kind of heady optimism from financial institutions that are exploring chatbot technology, and although it is tempered by concerns over privacy and security, most still believe that chatbots will play a major role in the years ahead. Looks like the future is getting here ahead of schedule, and credit unions can’t afford to blink.

Solutions

Have a plan for conversation commerce in your omichannel strategy

Whether or not you think it’s a buzzword, many organizations are approaching omnichannel strategy as an absolute necessity. A recent study of 46,000 consumers found that omnichannel tactics are giving adopters a competitive advantage, and a whopping 73% of consumers used multiple channels during their shopping journey. The study, conducted by researchers at Medallia and Rice University, also found that the more channels a consumer used, the more valuable they were. On average, customers that used more than 4 channels spent 9% more than those who just used one channel.