The Ultimate Guide to Conversational Banking in 2023

The pressure for banks to retain customers, meet expectations, and innovate is at an all-time high. Industry leaders are turning to conversational banking for help. Here's what you need to know. 

What is conversational banking? 

Conversational banking is about serving customers through natural conversations. It streamlines the customer journey, reducing the number of actions a customer must take to complete a goal. 

For example, instead of logging online to check a balance, a customer can send a quick message to their bank. They can also use their preferred messaging app to open a bank account, cancel a lost card, open up a line of credit, and much more. 

In short, conversational banking helps banks deliver a great customer experience at scale. It keeps things: 

  • Personalized
  • Timely
  • Relevant
  • Simple/Easy
  • Seamless
  • Memorable
  • Consistent

The technology that powers conversational banking

To fully understand conversational banking, you should know that conversational banking is about more than just chatbots. The term "chatbot" usually refers to an automated, text-based exchange. 

Conversational technology has evolved well past those frustrating, text-based experiences. Conversational apps now power better, more intuitive conversations.

conversational banking vs chatbot

Conversational apps are the interfaces that make conversational banking possible. They can be deployed within the messaging apps we use every day, like WhatsApp and Facebook Messenger. 

Conversational apps take the immediate, personal and conversational style of text-based interfaces and combine elements of graphic interfaces like websites and apps. 

This means that conversations can include attachments, carousels, buttons, and other embedded elements that enable transactions to be completed without needing to leave the messaging app.

Why conversational banking matters now

Conversational banking addresses the top challenges that banks face in 2023. The key issues for banks today are that: 

  • It's difficult to retain customers
  • Customer acquisition is more expensive than ever
  • Banking customers have higher expectations than they did just one year ago
  • Our culture of connectivity and convenience is evolving rapidly 
  • Competition from fintechs and neobanks is fierce
  • Regulatory compliance is a barrier to transformation

The truth is, banking was a completely different business years ago. Now, customers are comparing banks to any other company, or any other service they use.

Apps like Netflix, Amazon, and Spotify have turned customer service into customer obsession. They've set the bar high -- and they've done so across all industries. Even traditional business models face pressure to match the convenience, speed, and service that tech companies offer.

These are complex issues for banks, but conversational banking effectively helps address them all. Conversational banking increases customer satisfaction, retains them for the long haul, and helps banks gain a greater share of wallet. 

The benefits of conversational banking

Conversational banking decreases time to resolution

Customers want (and expect) quick answers to simple questions. Conversational banking resolves most queries in less than 2 minutes.

The UX of conversational banking makes all the difference. Graphic elements enrich the experience for the user, while setting the stage for automation. 

conversational banking graphic user interface

Conversational platforms are ripe for automation

Beyond a good UI/UX, messaging makes it possible for businesses to scale. Messaging is a platform for automation that actually works.

With a combination of automation and messaging, businesses open up new messaging channels and handle more support volume without the need to grow their existing teams. 

A thoughtful approach to automation makes teams more efficient, freeing up human agents to focus on supporting customers in a more meaningful way.

Conversational banking increases loyalty and reduces customer churn 

Conversational banking resolves most queries in under two minutes, decreasing time to resolution. This, in turn, increases customer satisfaction and loyalty. According to McKinsey, when compared to their competitors, banks with higher customer satisfaction grow deposits 85% more quickly.

This is important considering that it is easier and less expensive to retain customers than it is to acquire them. In fact, Harvard Business Review illustrates how profitable it is to decrease churn; a 5% increase in customer retention leads to an increase in profits of between 25% and 95%.

The higher the customer acquisition cost (CAC), the more businesses save by retaining customers. The acquisition cost of a retail banking customer is roughly $200. That figure is on the high end of the spectrum, making customer loyalty even more important. 

Conversational banking decreases customer acquisition costs 

The benefits of conversational banking extend far beyond post-purchase support. In fact, many banks view conversational banking as a sales tool first, and customer support tool second. 

Our banking customers find that automated cross-selling results in a 7% increase in qualified leads. 

It frees up humans for more meaningful work

When tedious, repetitive, tasks are automated, it frees up human resources for more meaningful work. This allows them to become a greater asset to the organization. They’ll be able to hone problem-solving skills and focus on more rewarding conversations.

conversational banking experience with card

Conversational banking use cases

Below are just a few examples of how banks use conversational banking to enhance customer experiences. 

Automate FAQs 

Help customers check bank balances, find ATMs, check interest rates, and much more. Answer questions about credit or loan applications and get customers the information they need, exactly when they need it. On average, banks that use Hubtype automate 80% of their total inquiries.

Meet and track SLAs (service level agreements)

Exceed performance standards with intelligent automation. Decrease first response times (FRTs) and escalate conversations to human agents if needed. 

Turn transactions into relationships

Automate questions about bonus points, recurring payments, expenses, and transfer limits. Turn simple transactions into convenient, memorable experiences. When customers are consistently delighted with a bank's services, they are more likely to recommend it to family and friends. 

Send reminders and notifications 

Give your customers peace of mind with reminders about payment deadlines and financial processes. Notify customers about changes in credit scores or relevant news. 

Solve urgent issues fast

Offer immediate help when it matters most. Send notifications about suspicious charges and help customers take immediate action. 

The road ahead

The banking industry in the middle of digital transformations. Customer expectations are at an all-time high, and they demand intuitive digital experiences. Messaging combines existing communication preferences, intuitive experiences, and automation for winning customer support. 

The growth of messaging, the democratization of automation, and the rise of mobile have created the perfect environment for conversational banking to flourish. Over the next three years, it is not a matter of if banks and insurers will adopt conversational strategies— but when.

Need help with your conversational banking strategy? Learn more about how Hubtype can help.