Among all the businesses that are operational today, the banking industry holds the greatest potential for automated communication. Evidently, the banking industry is where chatbots and virtual assistants can display their capabilities, given the large number of daily questions to complex issues they encounter on a daily basis. Artificial intelligence (AI) caters to simple customer requests like checking balances, transferring cash, or reviewing account history, thereby sparing bank employees the time to focus on more complex issues.
Moreover, its 24/7 accessibility and the ability to manage several conversations and tasks simultaneously help to reduce customers' wait times, which eventually increases customer satisfaction. Some of the biggest US banks launched their virtual assistants and chatbots for banking in 2017. According to a survey by the banking journal, over half of those surveyed (54%) reported using generative AI tools. Customers of national banks were much more likely to have that level (66%) than those of regional banks (42%).
Additionally, 72% of respondents under 40 reported using chatbots. Only 27% of all respondents, however, stated that they trust AI to provide financial advice and information. Financial information came in somewhat higher than medical information (25%), but lower than travel information (37%), when compared to other kinds of advise. The following article explores the complexities of conversational AI chatbots, their applications throughout the banking and financial industries, and, with it, the advantages and disadvantages of employing this new AI technology.
What are banking chatbots?
Banking chatbots, in simple terms, are artificial intelligence-powered software that converses with banking customers over different online interfaces, including messaging apps, websites, and mobile applications. Banking chatbots utilize natural language processing (NLP) and machine learning (ML) to grasp and provide customers' queries and, at the same time, carry out other banking activities automatically.
It must also be noted that banking chatbots can even work as virtual bank representatives and respond to various customer queries at a moment's notice, such as issues related to account information, transaction processing, and settling customers' grievances. Apart from this, banking chatbots give customers uninterrupted access to banking services anywhere and at any time, 24/7. With minimal human intervention, the skilled AI software will communicate smoothly with existing systems in order to retrieve account data, provide updates, and more.
Banking chatbots are the most convenient method today not only to accelerate activities that were so long handled by human intervention, but at the same time, banking chatbots assist in financial fraud detection, handle transactions, evaluate credit scores, suggest banking products, offer financial advice and improve overall customer satisfaction.
How do banking chatbots work?
Banking chatbots are used across a varied spectrum. As already discussed above, banking chatbots are used for fraud detection, personalized banking experiences, providing financial advice, and many others. In this section, we will study in depth how banking chatbots are implemented in real-time.
Solving customer queries
The bank websites offer a plethora of information. Finding the correct information and navigating and sculpting through it can sometimes become tiresome and complex. But now that chatbots have been introduced, the first thing a consumer sees is a pop-up that asks what they need. The customer is directed to the appropriate page with the information they need by entering their queries or selecting a few alternatives. Thereby eventually helping the consumer find the information they need faster and more conveniently.
Managing payments
Certain banks have implemented chatbots to assist their clients with payments. These chatbots compile the various offers available to bank customers and subsequently assist them in completing the payment process. These chatbots assist in streamlining the payment process so that customers don't have to exert extra effort to select and accept the best deal. HDFC Bank OnChat is one such chatbot that assists with various bill payments via Facebook Messenger.
Automated voice response
In order to talk to customers, a number of banks utilize automated voice response systems. If a consumer dials the bank's toll-free number, he/she is first routed to a chatbot that processes his/her specific needs and then guides him/her in the right direction. Consumers have the option to select a number of options, and the ChatBot will provide the information if it can do so by itself.
Benefits of using banking chatbots
With the gradual expansion of banking chatbots, it is evident that from time on, banking chatbots will be the next big thing in the finance industry. Some of the key benefits of using banking chatbots are listed below.
1. Personalized customer attention
Every customer is different, after all. Your consumers can feel like just another number on your roster if you don't engage with them personally. A negative brand image and high turnover ratios may result from this. You may satisfy consumer expectations about response times and answer quality by tailoring client interactions.
You can satisfy the needs of a wide range of clients, including night owls and clients from abroad, if you have natural language comprehension and are available around the clock. Apart from this, a lot of chatbots are multilingual. Providing multilingual customer service can provide a business with a significant competitive edge and draw in clients from all over the world.
2. 24-hour availability
The primary point of distinction between a human and a conversational chatbot for banking is the latter's ability to handle a specific volume of requests in a single day. In contrast, a banking chatbot has no restrictions or timetables, thereby enabling it to resolve issues and respond to queries from potential customers outside of regular working hours, which would otherwise be highly costly for the organizations.
3. Fraud detection
A single fraudulent attack can irretrievably damage the reputation and profitability of a bank brand. Through the examination of consumer buying behavior and identification of anomalous payments, banking chatbots can assist you in minimizing your exposure to fraud. To protect both you and your customers, any outliers identified are immediately alerted to them for authentication.
Latest Statistics on Banking Fraud!
According to statistics presented by the Indian Ministry of Finance, the total engaged in digital financial crimes amounted to INR 4,245 crore in the first 10 months (April–January) of the year 2024–25, and 2.4 million cases were involved. That is a 67% rise over INR 2,537 crore recorded in 2022–2023—that is, 2 million cases—Monetary fraud involving 2.8 million cases of INR 4,403 crore was unearthed during the year 2023–2024.
4. Enhanced lead generation and customer retention
Banks and growing financial organizations frequently get several requests at once. You can use a conversational chatbot to ask these clients questions about their requirements rather than putting them in a line for actual customer support representatives. Conversational chatbots can relieve your live customer support personnel of a bottleneck by providing basic answers to questions concerning balances, transactions, and due dates. Even at times when there are a lot of queries, this enables you to meet client expectations.
5. Improved customer awareness
Banking companies can develop customer and loyalty programs to increase retention rates thanks to the vast number of resources this automation technology can provide. Similarly, it can also help users understand how to buy bank products and services and make better financial decisions, which eventually improves client-company trust and boosts their collaboration. Furthermore, this may break with the nonchalant image of banks and generate leads, owing to aspects like gamification, videos, and other communication elements.
6. Multilingual support
With time and development in technology, removing communication barriers is essential to offering exceptional customer service. This is due to the fact that customers today can buy any kind of banking product from anywhere in the world. According to the US Census Bureau, the total number of Americans who speak languages other than English is approximately numbered to 67.8 million, and with time it is expected these numbers to increase over the next two to three decades.
Chatbots can be used to provide multilingual services to clients who speak multiple languages. Chatbots can either prompt the user to specify the language they want to use at the start of a session or employ artificial intelligence (AI) to make an educated guess about the language from user input. Multilingual chatbots can engage in conversation through chat, text, or voice in multiple languages. Multilingual chatbots may also be supplemented with AI in order to perform routine tasks and answer general questions in the preferred language of the consumer.
7. Cost reduction
According to claims by autonomous research, by 2030, chatbots will enable financial institutions to reduce their daily costs by 22%. Additionally, these solutions might save up to 30% on customer service costs. Thus leads to the conclusion that a banking chatbot is a tool that aims to reduce the operating expenses of every bank and financial organization.
Seamless integration and WhatsApp banking
Chatbots can route simple tasks and customer queries, but sometimes, a human agent must be engaged. AI allows bots to capture important information at the beginning of a conversation and apply intelligence and routing to route the conversation to the most suitable agent according to issue priority, expertise, availability, and capacity.
These seamless transitions from the chatbot to operators can accelerate service, save time, and increase customer satisfaction. Seamlessly integrate the chatbot with your current finance applications, i.e., risk management software, finance CRM, and your core banking platform. End users have real-time notifications and seamless data sharing across platforms when implemented correctly.
To communicate with their clients, banks set up a chatbot or a special WhatsApp number. Through this, clients can check their account balances, initiate monetary transactions, receive transaction notifications in real time, and get updates about sales and promotions. Apart from these facilities, existing customers can manage their accounts, while new customers can get onboarding messaging through WhatsApp banking.
Challenges of banking chatbots
Even though banking chatbots have been a rage in recent times, there are still a few challenges that are often faced by the ones using them. Listed below are a few drawbacks of using banking chatbots for your reference.
1. Banking chatbots need to be fed adequate information
One of the most significant issues faced by banking agents is that the chatbot only responds to queries whose information has been programmed before. For queries that are not pre-fed, chatbots cannot reply to such queries, thereby leading to human intervention.
2. Restrained conversations
Most chatbots reply in a scripted sequence. This can, in the long run, provide a less personal and machine-like experience. Occasionally, questions that are phrased differently by the clients are not responded to by the banking chatbot. Furthermore, chatbots lack the sincerity of humans; hence, there are occasions when clients would feel like their issues were not seriously considered or their needs were not met.
3. Needs to be updated
Information that is programmed into the banking chatbot must be updated at regular intervals. One must be responsible for omitting and adding fresh data for chatbots to utilize. Banking chatbots can provide clients with inaccurate messages if they are not updated with current data.
4. Technical issues
Implementing banking chatbots can also lead to certain technological issues. To begin with, chatbots require internet connectivity on your customers' side. An online platform may not be ideal for customer support if there are customers without the internet or who are perplexed regarding how they can use it. Banking chatbots may need customers to have greater technical capabilities than making a simple phone call or talking face-to-face with a customer support agent.
Fact Check!
Customer usage of chatbots is still limited, indicating that they don't always assist consumers in achieving their objectives, even if customer service and support leaders are placing an increasing amount of emphasis on them.
• According to a survey by Gartner, Inc., just 8% of consumers engaged a chatbot during their most recent customer care encounter.
• Just 25% of respondents look forward to using the chatbot once more in the future.
Top use cases of banking chatbots
The top Five use cases of banking chatbots are discussed below in detail for your reference.
1. Conduct crucial banking tasks
Artificial intelligence banking technology has made it unnecessary for customers to queue up for standard replies. Instead, banking chatbots could provide them with speedy access to secure and efficient services. Banking chatbots can also perform routine operations such as transferring funds from one account to another and settling monthly charges.
2. Handling general customer queries
Bank employees don't have to spend their time on monotonous jobs because chatbots can handle basic client queries and assist in solving typical issues. Because agents are able to concentrate on more crucial duties, staff turnover is reduced. Additionally, chatbots can collect consumer pain point data, which staff members can use to enhance services.
General Questions Asked by Customers to Banking Chatbots
• What is my current balance?
• Can I see my recent transactions?
• Remind me to pay my credit card bill?
• Are there any pending payments?
• How should I transfer money to another account?
• What are the steps to pay my utility bill?
• What loan options do you offer?
• What is the interest rate on my loan?
• I am having trouble logging in. What should I do?
• I think there is a fraudulent transaction. What should I do?
3. Transaction and account management
Customers can use chatbots to set up recurring bill or subscription payments as well as to start payments and transactions. Users can also request that banking chatbots alert them when a subscription is about to expire. They can also give real-time status updates and examine the transaction history. Additionally, they can quickly find particular transactions or spot errors. Chatbots can assist in flagging and reporting transactions that appear suspicious if needed.
4. Personal banking assistant
Personal assistants can be created with chatbots. This implies that they are able to respond to inquiries on loans, banking services, etc. They could assist in blocking a card, closing an account, or identifying a transaction. They can also pay the bills or handle routine money transfers. Additionally, some assistants are able to examine a person's purchasing patterns. Users can ask chatbots to schedule transaction reminders for a specific time. They can help users navigate this process as well.
5. Customer feedback and surveys
Feedback and reviews are essential elements in creating a powerful brand image. Chatbots for banking make it easy to get feedback from customers, both positive and negative. You may collect valuable data by using your chatbot to perform both short- and long-form surveys. These surveys essentially help the bank cover the shortfalls and come back with customer services that are made, keeping every demographic and age group in mind.
6. Identify and resolve suspicious activities
By processing transactions, patterns, and customer behavior in real time using AI and machine learning, banking chatbots help identify and resolve suspicious behavior. They also notify bank staff of potential fraud or security compromises and, through automated workflows, speed resolution.
Real-time monitoring chatbots that observe transactions and customer interactions can detect unusual patterns or activities that can be indicative of fraud or security vulnerabilities. Chatbots are able to identify any fraudulent activities just by looking at the transaction history and monitoring consumer behavior. When chatbots detect any kind of questionable activity, they immediately notify bank employees or trigger automatic security systems to prevent the account from any further fraudulent activities.
7. Promote reviews and feedback
Chatbots perform brief surveys or solicit feedback by asking questions at the end of all conversations. This simple feature of a customer service chatbot allows banks to monitor client satisfaction and pinpoint areas for improvement. On bank websites or mobile apps, chatbots interact with potential clients by responding to their preliminary questions regarding credit cards or mortgages. Sales teams follow up on the leads they produce and the contact information they collect. One of the most popular tools for creating an AI-powered sales funnel is a lead generation.
Fundamentals of banking chatbots
Banking chatbot fundamentals are components that make an efficient and effective banking service possible. Some of the top fundamentals of banking chatbots are listed below for your reference.
1. Conversational
Your banking chatbot should, at the minimum, be conversational. In syntax, language, and punctuation, customers need to feel like they are talking to a human being. Customers will get frustrated if your chatbot is not personal, which translates to a poor experience. The good news is that most banking chatbots employ natural language understanding to mimic human language. However, one of the core aspects of your chatbot should include conversational banking.
2. On-brand
As your chatbot represents your company, its functionality must be aligned with your brand. For example, your chatbot should know your policies regarding late fines, deadlines, and other essential information. Your chatbot can disseminate misinformation if it is not adequately back-end trained, which will confuse customers and generate a mismatched company image. Ensure that all of the necessary back-end information is accurate and current prior to your banking chatbot going live.
3. Transactional
Putting a banking chatbot in place should result in cost-saving opportunities. After all, you are taking away some of the burden from your live customer service staff. Pay attention to expected cost savings when looking for a banking chatbot. Banks should resort to defining cost savings goals for their businesses and make sure to track actual results. If there is a significant discrepancy between their expected and actual outcomes, it may be time to examine the banking chatbot's foundation more closely and make necessary modifications.
4. Informative
Value is another critical ability your chatbot must have. Chatbots should not provide generic answers. Instead, they should be customized to meet the specific needs of the consumer or query. For example, if a consumer asks for the due date of the credit card bill. Your customer will not find your chatbot very helpful if it comes back with a generic answer such as "Bill due dates are different depending on when your credit card was opened." The information your chatbot gives needs to be accurate and specific; for instance, "Your bill is due on September 25."
5. Secure
The data and information exchanged between your chatbot and the client need to be secure. The chatbot often holds sensitive information, including a customer's address or account number. Being a chatbot that is self-sufficient without relying on external sources is an elementary element to consider. You reduce the possibility of private client information leaking to unauthorized parties when all information is processed and stored within the chatbot platform.
6. Integrated
Your chatbot should not default users to a completely different portal. Rather, it should be an extension of your mobile app or website and function smoothly in the background. Customers will question the legitimacy of the chatbot if they have to use a different platform. Ensure that your chatbot is integrated into the existing technology stack of your organization. This enables the chatbot to use important systems, like your customer support database and your knowledge database, to provide meaningful information to customers.
7. Analytical
Chatbots must be capable of more than just answering simple queries. In fact, your banking chatbot should feature an analytical component in order to properly utilize cross-sell and upsell methods. It should be able to collect data from clients and provide reports that your management team may examine. For instance, your development team can quickly fix a mobile app problem if lots of users report the same problem. In addition, your market strength in terms of competition can be enhanced by the constant analytical data your chatbot provides.
8. Continuously improving
Although most chatbots will utilize machine learning, always double-check for continuous improvement. You ought to leverage the information your chatbot provides to enhance your system and provide customers with something worthwhile. With time, continuous improvement enhances your value proposition to customers by ensuring your system is more efficient and effective.
Ensure the enhancements and changes your chatbot adds, however, are appropriate to both your brand image and the expectations of a chatbot. An example is when a chatbot can identify that users use casual language. Your business might not emerge as a credible and trustworthy source because of this. You may thus need to adjust your chatbot adjustments in a way that will redirect your goals and strategies.
9. Integration
The chatbot ought to be able to easily interface with the bank's current systems, including platforms for customer support, transaction processing, and account management. Through this integration, the chatbot can conduct transactions, retrieve current account information, and deliver precise, real-time updates. By automating repetitive activities it also helps to reduce errors and manual labor.
Best banking chatbots
Discussed below are the top Five banking and financial organizations that have implemented banking chatbots.
Copilot.Live
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One of the first names to be included in the list for the simple fact that the Copilot.Live chatbot is a unique AI tool that seamlessly collects leads and analyzes data to provide accurate information, finally allowing users to connect with support agents in case of trivial issues. Thereby making a very effortless transition throughout.
Indocord
Indocord was created to help organizations offer individualized financial services in a variety of languages, which in turn promotes greater financial inclusion.
Kasisto (KAI)
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KAI provides banks with transparent multi-channel connectivity and extensive financial intelligence, enabling them to enhance customer service and business efficiency.
IBM Watsonx Assistant
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The IBM Watsonx Assistant was primarily created to manage complex customer queries, enhance the quality of service provided, and identify fraudulent activities.
Haptik
Haptik, another chatbot platform, helps improve the customer experience by enabling natural language communication with customers, which in turn helps them deal with complex financial decisions.
Tidio
Despite its primary focus on e-commerce, Tidio is an ideal choice for financial institutions seeking to maximize client relations and corporate efficiency. Those of you who are seeking to know more about the top banking chatbot platforms can visit our blog, Top Banking Chatbots, wherein we have elaborately discussed the top 10 banking chatbot platforms along with their key features in detail.
Real-world examples of banking chatbots
The section below has taken the top 5 banks and has elaborated on the chatbots that were implemented and their progress so far.
Ally assist from Ally Bank
Ally Bank was one of the first banks to introduce a chatbot, Ally Assist, in 2015 to provide their customers with easy, individualized customer support for account management. Ally Assist can be accessed through the Ally Bank iPhone app and is used for account information requests, transfers, and bill paying. Apart from this, the bank introduced an Ally Skill for Amazon's Alexa that allows users to conduct basic financial operations using voice requests.
Amy from HSBC
HSBC's virtual assistant, Amy, can be seen on several pages of the bank's website. Amy helps clients get quick responses to frequently asked questions about the bank's products and services and is fluent in English and Traditional Chinese.
Citi Bot SG from Citi
Customers can use Citi Bank's Citi Bot SG chatbot for questions regarding the nominal account details via Facebook Messenger. They can also obtain answers to queries about their credit card, bank, and savings account balances, transactions, rewards, and payment details.
Eno from Capital One
Eno takes proactive measures to seek information about particularly large bills, suspected fraud, or unusually high tips. Monitoring free trials to remind clients before they expire is another unique feature.
Erica from Bank of America
Erica provides credit scores, expense reports, refund confirmations, and reward and account balances within the interactive interface. The Bank of America chatbot is also capable of sending bill reminders and identifying duplicate charges. Erica provides information on trading, investment balances, holdings, and quotes. For those who look forward to knowing the intricacies of the world of banking chatbots, you can look into our blogs on top banking chatbot examples, wherein we have discussed in detail a list of top banks that have implemented chatbots.
Future trends and innovations in banking chatbots
With more banks set to adopt AI chatbots for a variety of banking processes and use cases, the future of conversational AI in banking seems to be a prosperous and auspicious one. As NLP chatbots and voice assistants provide smoother and more personalized banking experiences and increasingly innovative interactions that will ultimately bring value to customers, AI will deliver personalized products, such as credit card package suggestions based on user preferences.
Banking will become more of a routine and simpler interaction through many developments, such as generative AI, which, in the long run, will accelerate and streamline all types of banking operations. The finance industry is evolving with the quick development of conversational AI, eventually improving the entire client experience in terms of better processes and increased productivity.
Banking chatbot best practices for implementation
Banks have to consider many aspects when they choose and implement their chatbots. Among the challenges are security, AI technology, and the cost of operations. It might also be complicated to integrate a virtual agent into your services, considering the ever-increasing demands of your customers. To ease things a bit for you, below are five best practices and guidelines for implementing an AI chatbot in banking.
Ensure compliance and security
As banking chatbots handle personal client data and monetary transactions, security and compliance are the top priorities. Strong authentication measures such as multifactor authentication, biometrics, or secure communication channels must, therefore, be put in place. Make sure the software complies with PCI-DSS guidelines for the processing of financial data and data protection legislation such as GDPR.
Integrate with the existing system
The effectiveness of the chatbot depends on whether it has been integrated in harmony with the core systems within the bank. Account management, transaction processing, and customer relationship management (CRM) systems constitute such core systems that need integration with the chatbot.
Prioritize natural language processing
Invest in advanced NLP (natural language processing) software. This will ensure that the chatbot is able to handle complex interactions, properly understand consumer queries, and provide relevant responses. Train and update models based on ongoing real-world interactions.
Work on improvement and feedback
The chatbot's efficiency and user experience can be enhanced by applying sentiment analysis and customer reviews. One of the methods to do the same is to add new data continuously to train and refresh the machine learning models of the chatbot to enhance its performance over time. Some of the best practices in chatbots include providing the system to disabled individuals, support for several languages to a large number of customers, and emergency backup systems for humans. Banking institutions can effectively use chatbots to give their users a fast, secure, and personalized experience by implementing the following best practices.
How to create a banking chatbot?
To implement banking chatbots, you can follow the steps mentioned below elaborately.
1. Navigate through the website
The first step that you must take is to navigate through the official website of Copilot, www.copilot.live/usecase/chatbot-banking, and click on the signup button.
2. Click on the free signup option
The next option includes creating a profile for yourself that can be personal or professional at your convenience. You can add various data, such as your name, DOB, upload your picture, and other likewise details.
3. Add data source
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You will next be required to add your data source. This data source can be your WhatsApp data source, website data source, or a PDF.
4. Training your chatbot
One of the most crucial tasks that need to be taken up right after adding the data source is training your bot. In this step, you can train your chatbot as per your requirements. The process by which you train your bot is exactly how the bot will respond to your clients when probed.
5. Deploy to your website
Once your chatbot is created, the final step requires you to deploy the same to your website or app through various methods. For the unaversed, the step-wise process to create a banking chatbot has been discussed in detail for your better understanding in our other blogs that might interest you. Each step has been clarified with examples and a live autonomous section where you can create your own chatbot through a first hand experience.
As artificial intelligence (AI) sets in a new era, we will likely bid adieu to the outdated norms of conventional banking and embrace a future full of boundless possibilities. With AI chatbots gradually taking a step forward, banks globally are set to undergo a revolutionary change in customer service and achieve unimaginable levels of operational efficiency. As per a report by McKinsey & Company, AI chatbots assist clients in real-time, while predictive analytics make financial products extremely customized.
Artificial intelligence-powered fraud detection systems scan large sets of data for abnormalities in real-time, thereby adding security. Back-end processes become more efficient and less expensive by being automated. The COVID-19 pandemic had the unexpected negative consequence of driving numerous businesses online between the years 2020 and 2021. Although chatbot-driven payments are still relatively new, 2025 will witness a rise in this technology.
