The Future of Banking

The Future of Traditional Banks in the Era of Digital Banking

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Amid the Digital Banking era, the rise of mobile apps, and conversational AI, have you ever wondered about the future of traditional branches? Why the digital banking looks more charming to people? What the banks of the future will look like? Have you ever thought of the main reason why people choose a bank and why they leave for another? Answers are simple.

All banks, whether traditional or digital, seek to achieve customer service excellence to remain competitive since customer service is the #1 reason people leave their banks. Moreover, most customers tend to go for that comfortable use of services available as branch proximity is the #1 reason why they choose a bank. So what can be closer to customers than a digital branch? It is forecasted that 88% of customers’ bank interactions will happen through smartphones, and traditional branch visits by a millennial will be limited to 2 times/year by 2022.

It’s with no question, your digital branch is by far your largest branch. The majority of customers prefer digital banking services over traditional branch visits. Digital banking provides via smartphones the same services as a traditional branch with extra benefits, ranging from banking services available to customers 24/7 and financial management to financial decisions, and new products and services especially with those quipped with AI Conversational Financial Assistant. Thus saving customers the hassle of reaching a traditional branch.

Despite that, some banking apps still suffer from poor experience and we still see a large number of traditional branches and ATMs located at different sites.

In the UK, there is a 36% drop in retail banks’ branches and ATMs by 2022, many banks are closing branches and taking out their ATMs. So it’s obvious where the future is heading, and more investments in digital banking should be done.

Introduction of AI Conversational Financial Assistant

The AI-powered Conversational financial assistant is set to have human-like conversations, allowing customers to interact with their banks wherever and whenever they want via text or voice commands. A typical banking App has 140+ services served in 400+ screens. While with a financial assistant, one voice/text command can get everything done yielding to the most natural, frictionless, automated interactions.

Conversational Financial Assistant is revolutionary, it’s as if banks give a digital branch with a personal assistant for every single customer. It helps banks generate more revenue and cut costs in many aspects automating the processes and leaving humans at the traditional branches to deal with more complex issues.  

Bank of America introduced Erica in 2017. Today, over 50% of their users are interacting with Erica. Erica’s interactions raised to 94.2 MM by 2021 compared to 1.7 MM when it was first launched. Bank of America CEO, Brian Moynihan explained when asked in the Global Research Financials CEO Conference - Company Call saying “if you think about the last 12 years, we had 6,100 branches and $300 billion in deposits in our consumer business. We now have 3,800 branches and we’re up to a trillion dollars in deposits, so think about that leverage. That is dictated by the ability to serve customers digitally for lots of things, so what is going on at branches is, “more sales”.

So the future of banking with Conversational Financial Assistant is basically to leverage the bank’s assets as a digital branch and use the infrastructure of the bank’s traditional branches for more sales. That’s the strategy that’s been showing extreme success for Bank of America.

It’s worth mentioning that users, don’t tolerate frustration, at all. They don’t mind a long process as long as they know what to do.  In AI, the machine learning process gets more complex with time, and what’s critical here is the inflection point of the accuracy that determines if customers will use the service or not. How to overcome this complexity? Break it Down into Smaller Phases; FAQs, covering simple basic questions. The Existing Services Deep-Linking, covers more advanced questions such as issuing a new card. The Complete Transactions phase is for transferring money and paying bills. And finally, the last and the most interesting phase is giving recommendations, this is a great advantage to onboard and engage with users.

To conclude, the actual human interaction provided by traditional banks, in many occasions, cannot be replaced, but the future is very promising for digital banks and conversational banking as technology still holds many opportunities for the banking world.

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