Commentaries and insightful analyses on the world of finance, technology and IT.

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July 25, 2016

Chat bots: So banking can be as easy as chatting

- By Kiran Kalmadi and Durga Prasad Balmuri

Imagine you are chatting with your friend Vikki about a new film, over a messaging app, when you suddenly realize that you need to transfer money to her and book yourself an Uber cab as you are heading out for dinner. In a regular scenario, you would log into your mobile banking app, authenticate yourself, enter the required payee details, and submit a request to initiate the transfer. You would then open the Uber app to book your ride. What would it be like though, if you could do all this without leaving the messenger? As it happens, that is now perfectly possible.

Enter 'chat bots'*. With a chat bot integrated into your messenger, all you need to do is type a simple message like "Send $100 to Vikki," to transfer money, and "Get me an Uber," to book a cab -- all right within the messenger.

Since the beginning of 2016, the focus on chat bots has increased significantly. The likes of Facebook, Google, Microsoft, and Apple are all investing in bots and looking at ways to integrate them into mainstream applications. Interestingly, the 'bot' jargon gained popularity when in April 2016, Facebook announced that it was opening up its 'Messenger' platform to third-party chat bots. This meant that people would be able to interact with bots in Messenger the way they talk to their friends -- all thanks to artificial intelligence (AI), natural language processing (NLP), and some human help. In fact, many banks have recently started showing a keen interest in chat bots.

Today, banks from across the globe are exploring chat bots as a means to answer FAQs, educate their consumers, send them personalized offers, and help them with everyday banking activities like making enquiries about balances, transferring money, paying bills, etc. While the Royal Bank of Scotland (RBS) already has 'Luvo,' an AI bot meant to answer customer queries, Bank of America and American Express (AmEx) are embracing Facebook Messenger's chat bots. Bank of America's bots will enable its customers to receive real-time alerts and important communication. The AmEx bot, meanwhile, is working on innovative ways of interacting with customers. Once a customer opts for AmEx bots, they will start receiving real-time notifications about their purchases, alongside personalized alerts like their card's benefits and purchase-related services. Just this month, Russia-based 'Tochka Bank,' of the Otkritie Financial Group, launched a Facebook Messenger bot for a whole range of financial services. The bot will help the bank's customers check their account balance, contact customer support, make payments, and help them find nearby ATMs via GPS.

Considering the variety of possible offerings, chat bots can not only be a convenient way for customers to interact with their banks, but can also help banks increase engagement levels and thereby improve loyalty. However, challenges like authentication issues and user errors mean that banks may initially use Messenger bots where authentication and funds are not involved -- like search, general enquiries, and education -- and with time, slowly graduate to live chats and alerts, and then finally include transactions that require authentication
This is just the beginning and the area is expected to see a lot more traction over the coming months. Until then, keep watching this space for further updates. Amidst all this, I forgot to ask Vikki - did you receive the $100 I transferred?

*Webopedia defines 'Chat bot' as being short for 'chat robot', a computer program that simulates human conversation, or chat, through artificial intelligence.

July 11, 2016

Smart machines: Will they disrupt the banking industry?

Decades ago, self-driving cars were nothing more than an unrealistic dream. But in today's tech-savvy world, this dream is now a reality ― with the concept of smart machines. Once considered in the same vein as our childhood super heroes, smart machines are now all set to rule our industries.

Smart machines are basically intellectual devices that use cutting-edge technology to displace human chores. These machines can make use of loads of facts and figures from various sources to offer new kinds of information and can analyze huge amounts of data and information to reach conclusions that human beings can't even begin to imagine!

Examples of smart machines include self-driving cars and cognitive computing systems that can process problems, make choices, and provide solutions without the need for human involvement. In fact, smart machines are poised to be the next digital disruptors across all sectors! They will revolutionize the way businesses are run and can be especially useful within the banking industry.

Smart machines can offer huge latent benefits to early adopters in the financial services sector, including better customer experience, higher productivity, and larger profits. Banks are now deploying smart machines across an array of jobs. In fact, many banks will replace the jobs humans used to do, while others will introduce services that were not possible earlier. Thus, it is crucial for IT decision-makers within banks to prioritize prospective investments into smart machines.

Applications of smart machine technology in the banking industry include smart vision systems, virtual customer assistants, smart advisors, smart security, virtual personal assistants, as well as smart infrastructure.

An animated avatar of a virtual customer assistant, which is smart enough to offer intelligent help to customers while creating a fun experience ― such as the flapping and drumming on the screen of a tablet or a smartphone ― is an example of the kind of smart machines that banks will look to invest in the near future. Similarly, the demand for smart vision systems is likely to increase dramatically for the purposes of identifying thefts, authenticating using laser ray technology, measuring consumer attention spans to predict customer actions, etc.

Smart infrastructure is another innovative area in which banks will soon be investing in. Smart detection technologies implanted in building infrastructures can help bank executives predict problems, make well-versed decisions for asset maintenance, and even use green technologies.

So by when will we be able to witness the impact of smart machines in the banking and financial industries? Well, it is expected that most banks will invest in smart machines and their supporting technologies over the next few years. However, an impact of this will be the removal of millions of banking jobs, specifically in the US and UK. However, to counter this and to sustain superiority over machines, bankers should look to move more complex roles like expert thinking, breakthrough ideation, and complex communications to us humans while leaving the more mundane banking chores to the smart machines.