What Is Conversational Banking?

December 7, 2016

The digital banking revolution has made accessing our financial information easier than ever. Online and mobile banking platforms have mostly eliminated the need to visit brick-and-mortar branches by providing convenient access to our financial information through websites and apps. Tasks like making deposits, checking account balances, and paying bills can all be done on the go and at the push of a button.

But something is missing.

Although we can access our financial data quickly and easily, most of us don’t know the first thing about how to interpret or act on it. Making a budget, setting and achieving financial goals, paying off debt, saving for retirement . . . do any of us know how to do these things on our own? While fast and convenient, current digital banking models come at the cost of disconnecting customers from their financial providers. We’re missing out on the personal interactions normally provided by the traditional teller-client relationship that made us feel connected to our banks.

Conversational Banking


Enter conversational banking. Unlike mobile banking apps that require you to search for information in graphical user interfaces (GUIs), conversational banking lets you access your financial information using voice- and text-based chat interfaces. Powered by recent advancements in artificial intelligence (AI), machine learning, (ML) and natural language processing (NLP), financial “chatter bots” — or chatbots, for short — are contextually aware virtual assistants that can be programmed to ask and answer questions in familiar, conversational language. This two-way interaction provides a more intuitive experience that lets you get fast answers about your finances as easily as if you were messaging a friend.

Conversational banking isn’t entirely new. Banks have been delivering conversational banking features since the early 2000’s via Short Message Service (SMS). With such “text banking” services, customers can opt in and request access to their financial data simply by sending their bank an SMS message. But historically, this service hasn’t been very intuitive.

Take Wells Fargo’s text-based banking, for example. Users are required to memorize and text a series of rigid commands plus the last 4 digits of their account number to get the information they want. If you forget a command or enter it incorrectly, the service doesn’t provide a useful response. Financial chatbots, on the other hand, converse with you in the familiar language we all understand. No more memorizing clunky commands or cycling through in-app menus searching for information. Financial chatbots expand upon and enhance the core features of text-based banking to provide a more intuitive, conversational experience.

Wells Fargo text banking
Wells Fargo’s text banking service

The Rise of Conversational Commerce

Financial chatbots are part of a larger shift toward text- and voice-based commercial interfaces. With the rising popularity of mobile messaging platforms like Facebook Messenger, Slack, and WhatsApp, more and more of us are spending the majority of our screen time on messaging platforms. A recent Business Intelligence report showed that messaging platforms have overtaken social media in popularity and engagement, and in July of this year, Facebook Messenger announced it had reached 1 billion monthly active users. Clearly, messaging platforms are here to stay.

Messaging apps overtaken social media networks
Messaging apps have overtaken social media networks in monthly active users

Tech giants like Facebook, Microsoft, Google, and Amazon have already recognized the potential to monetize these platforms by providing easy access to brands and services. In 2015, Facebook Messenger and Snapchat built peer-to-peer payments services into their platforms, and Uber integrated with Facebook Messenger to allow users to request a ride from within a Messenger chat window. Earlier this year, Taco Bell partnered with the workplace messaging platform Slack to launch “TacoBot,” an AI-powered chatbot that can place a Taco Bell order for you. In all, there are now more than 11,000 bots on Facebook Messenger alone, and that number is only expected to increase as companies continue to release their APIs and encourage the building of third-party bots. In light of these developments, Chris Messina has dubbed 2016 “the year of conversational commerce” and predicts that the trend for businesses to interact with consumers via messaging platforms will only continue.

Uber integration Facebook Messenger
Uber’s integration into Facebook Messenger

Given the commercial applications of conversational interfaces, financial institutions have recently begun taking an interest in AI-powered chatbot technology. In several regions, including China, India, Africa, and the UK, financial providers have launched chatbot technology to provide banking services through a convenient chat interface. Within the past year, American banks have caught onto this trend and begun investing in similar technologies. In October, Bank of America announced its AI-powered chatbot “Erica,” which will be available in 2017. Shortly after, Mastercard announced the launch of Mastercard Kai, an AI-powered chat banking interface that integrates with Facebook Messenger and other chat platforms. Meanwhile, third-party tech companies are developing white-label financial chatbots to market to institutions lacking in-house chatbot technology. Conversational banking has arrived and is changing the way we interact with our banks.

Conversational banking has arrived and is changing the way we interact with our banks. Click To Tweet

Making Banking Personal Again

It’s easy to see why the big banks are taking an interest in conversational banking. Financial chatbots open up opportunities for financial institutions to reintroduce a personal voice to mobile money management and financial planning while learning about and connecting with their customers. Conversational banking provides a more personal mobile banking interface with a number of benefits for both users and banks.


Bringing back the customer relationship

The personal interaction of the teller-client relationship was once (and for many people still is) an important part of the banking experience. Your bank teller knows your name and can talk you through your money questions. Mobile banking apps, while convenient, don’t offer this. With the widespread adoption of mobile banking technologies, the human connection between banks and their customers has been lost.

Conversational banking can bring back the personal banking experience by giving you someone to talk to about your finances again. You get the contextually-relevant answers to the questions you ask from a digital financial advisor you can carry in your pocket.

Personalized financial planning advice

It’s one thing to have access to your financial data; being able to interpret and use it is another. Conversational banking uses intelligent data analysis to deliver the most accurate and useful financial insights and advice.

Through the power of machine learning, banks can study your spending habits to make predictions about your current and future financial outlook. With these data-driven insights, you can simplify your financial planning and improve your financial well-being.

Integrating financial planning into daily life

Online and mobile banking apps work well if you remember to log into them from time to time, but with so many apps and services competing for our attention, most of us don’t do this as often as we should.

Conversational banking brings the financial information you need to the messaging channels you already use, so banking becomes just another part of your day. And with two-way conversational capabilities, a chatbot can proactively contact you with push notifications so that you’re always in the know about your finances. This proactive outreach provides consistent guidance to help you establish better spending and saving habits.

The Future of Banking

Banking has changed a lot in the past fifteen years. With the development of touchscreen smartphones and the launch of the app store in 2008, banking went mobile. Now with the rise of conversational commerce, banking is changing again. Financial chatbots restore the personalized, familiar banking experience that’s missing from mobile banking. It’s time for banks to adapt to provide this experience or risk losing their customers to the competition.