How AI-powered Chatbots Saved Banks $127m In 2019

Having good customer service is one of the many ways banks try to stand out from the competition. However having a stand out customer service experience can be expensive leading several firms to turn to AI solutions and in particular chatbots.

The analyst company Juniper Research has made a study on the impact the rise of chatbots have had for these firms.Juniper defines a chatbot as a:

“computer program utilizing technology designed to simulate conversational interactions with human users, which may also include automated processes triggered from these interactions”

In 2019 Juniper estimates that chatbots enables savings of  $165 million across all firms with the banking sector being responsible for 77% of that total. The savings are so large due to how expensive having human customer service, especially when run natively. The study states:

“Large cost savings in the banking sector are predominantly caused by the comparatively higher costs relating to customer service operations, rather than outsourcing call centers abroad, banks have sought to improve customer loyalty by hosting customer service advisors in native call centers, thus increasing the cost due to higher wages.”

The main 3 types of chatbot are app based, web based and those available on popular messaging platforms. Last year the number of interactions with chatbots was estimated to be larger than 4 billion generating retail spending of around $2.8 billion, however the chatbots have definitely had a greater impact in Asia and especially China, where more than $80 billion is projected to be spent via chatbots in China in 2024.

The technology is still in its infancy with most interactions requiring human intervention however it will only get better form here. By 2024 over 50% of retail chatbot interactions are expected to be completed without human intervention. However humans are still yet to warm to the idea of talking to a bot rather than a human. A survey in 2018 concluded that 56% of people would rather chat to a real person than a chat bot.

As the technology betters over time it is expanding outside of customer service and finance in general. The retail sector is also expanding its use of chatbots and some firms are even using it to help in their job application process such as the Development Bank of Singapore.

Its clear chatbots are not going anywhere and are destined to become a normal and essential part of our online experience as the technology becomes a substitute for labour and firms look to cut costs.

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