By FintechOS · June 30, 2022
6 minute read

Virtual assistants: how Alexa can help financial services

Virtual assistants: how Alexa can help digital banking

Virtual assistants like Amazon Alexa could become commonplace for digital banking and other financial services. They can reduce costs and improve customer satisfaction. However, using the tech to make brands stand out will be a worthy challenge.

There’s no doubt that digital transformation and mobile technology have made everyday digital banking easier. Simple transactions can be done in the time it takes to log on to an app or website without hanging on the phone or, worse, stepping into a branch. Yet, the quest to reduce that friction ever further by making banking as slick as possible is potentially a game-changer. Voice-activated, artificial intelligence-powered virtual assistants like Amazon Alexa have the power to transform the customer experience. Not to mention, save banks time and resources.

Retail banks at the forefront with virtual assistants

It’s still early days, but among financial services, retail banking is making the most headway. Insurers are still behind in the digital customer service space. Only 7% of UK insurers using chatbots according to INTNT.AI, an AI business. New York-based Ally Bank’s Ally Assist was among the first global banks to launch a virtual chat assistant in 2015. Since then, a small wave of banks has launched their own equivalent.

Virtual assistants in their pioneering phase predominantly performed simple tasks. Customers could ask via their mobile phones for an account summary, or transaction history to receive an automated vocal response. So far, so simple; but for the customer, it was little more than a gimmick that arguably only some might find helpful.

Since then, virtual assistants have developed, and have much further to go from basic transactions to more complex queries. Furthermore, the development of virtual assistants and chatbots has sharply increased through the pandemic. In 2019, Cornerstone Advisors showed only 4% of mid-size banks and credit unions were using chatbots. By 2021 the figure had tripled to 13%.

Customer benefits of virtual assistants: personalization

Brands can enhance their services with more personalization. The AI and machine learning behind the voice can collect information from the users’ choices and project various future scenarios based on its ability to learn and forecast. Unlike chatbots, virtual assistants like Amazon Alexa can develop cognitive abilities through natural language process (NLP). Advanced virtual assistants can process questions asked in hundreds of variations.

Critically, the context of the user interaction is retained. Over time it is possible for highly personalized pieces of advice to be formulated, according to customer behaviors, transactions, and questions asked. This personalization leads to greater customer satisfaction in digital banking.

Customer benefits of virtual assistants: always-on banking

One of the most attractive things about Amazon Alexa and other virtual assistants is their convenience in being available to digital banking customers 24/7 and through multiple channels. Beyond transactions and balance checks, simple requests or problem-solving such as password resets or adding a payee can be done instantly. According to AI Multiple, 64% of users would want 24-hour service. 55% would expect an instant response and answers to simple questions, while only 35% expected answers to complex questions.

Customer benefits of virtual assistants:  advanced insights

Increasingly, virtual assistants like Amazon Alexa are doing more than executing basic tasks. Some will help customers keep track of their spending and provide advanced insight into how they’re spending their money. Bank of America’s Erica provides customers with a weekly snapshot of spending, the ability to search past transactions, monitoring of recurring charges, and notifications about changes to credit scores. Other virtual assistants include a function where the customer can ask how much they spent in a particular shop or service in the last month.

The potential to provide speculative answers, such as mortgage or loan interest calculators, is also there, at the same time harvesting data to tailor and personalize.

Benefits for banks

For digital banking, there is the clear benefit of improved customer satisfaction and the resulting better customer retention. There are also cost savings, in that Amazon Alexa and other virtual assistants can execute basic functions a customer service employee could carry out. This frees up time-consuming mandatory tasks within human customer service teams.

Additionally, reduced human interaction at one level removes some complexities. Since virtual assistants are operating through specific data, it limits the risk of errors.

Research by Forrester found that 69% of organizations (not just financial services) saw decreased operational costs as one of the top benefits of personalizing customer interactions through AI, 62% anticipated more productive agents, 55% expected greater visibility into customer needs, expectations and behaviors.

Overcoming the barriers

Of course, virtual assistants are based on new technology that different generations will adopt at different speeds. Critically incumbent financial services brands are at risk of losing younger generations who are more open to banking with startups and disrupters unencumbered by legacy systems. Virtual assistants like Amazon Alexa provide the appearance of being (for now) cutting edge.

In a 2021, digital banking consumer survey for Deloitte, only 57% of Gen-Z respondents and 62% of Millenials said they were satisfied or very satisfied with their bank. This is compared to 82% of Boomers. Meanwhile, 28% of Millennials were likely to switch, with just 6% among Boomers. The low adoption rate among insurers has a negative impact as customers are generally directed to an agent for most requests.

There is some debate as to why insurance businesses have been more skeptical. Their focus is still more on the viability of chatbots than the voice-activated AI of virtual assistants. One reason put forward is that insurance queries are slightly more complex than retail banking ones and the early limitations of chatbots have remained as a perception. Yet, AI-powered bots and virtual assistants are now much better at understanding intent and can improve accuracy exponentially within weeks.

The power of new technology

With the saved costs and improved customer satisfaction, no financial service firm can afford to be left behind. The power of these tools is immense and businesses keen to stand out will look to constantly enhance and improve their virtual assistants. Established brands eager to propel themselves forward will want to ensure that their data and back-office systems are capable of plugging into the technology to enhance the learning capabilities of their AI.

To find out how the FintechOS platform can help prepare your technology ecosystem for the advent of chatbots, virtual assistants, and AI, book a demo.

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