We Need to Talk!

My dad is a world-class talker! He can be having a conversation, and if someone interjects with another topic—related or not—he can pick right up where he stopped, even if several minutes have passed. Once, he dozed off to sleep mid-sentence, and when he awoke, he started right back up as if he’d never quit! He grew up in a generation where face-to-face was THE method of communication. And as a child, I remember all too well those times (some not so fondly!) when he, or my mom, would call me in and say, “We need to have a talk.”

As consumers have become more tech savvy and time constrained, financial institutions have responded with more sophisticated means of electronic interaction, from ATM machines to mobile banking. But some financial situations require a bit more interaction than these can supply, and “chatbots” may be the solution. “Chat what?” as my dad would ask.

According to Dictionary.com, a chatbot (or “chatterbot”), from the root words “chat” and “(ro)bot”), is a “[ro]bot meant to be able to interact conversationally with humans. A chatbot is either an exercise in AI [Artificial Intelligence] or merely an interface as in an infobot.” Chatbots Magazine indicated in April 2016 (https://chatbotsmagazine.com, The Complete Beginner’s Guide To Chatbots) that such a service could reside in any type of chat app or service, including personal finance, and gave numerous examples of how and why chatbots will work in many areas of application, as well as reasons why they are believed to be the future of electronic communication.

While chatbots and other means of applying artificial intelligence are not new to the financial industry, they have had limited capabilities, along with performance that has not been as robust as desired. A couple of financial services providers appear to have challenged these results and are moving forward with new chatbots. On Monday, October 24, 2016, Bank of America announced their 2017 offering of a chatbot named “Erica” that will allow customers to communicate via text or voice within their mobile app and get answers to questions, financial scenarios, etc., that would have previously required a trip or call to a branch. One example given was that based on the consumer’s normal monthly expenditures, an additional payment amount could be applied to their credit card, resulting in potential interest expense savings. Unlike branch or call center personnel, this is available at customers’ convenience and not just during normal business hours. Based on activity in the consumer’s account(s), tailor-made suggestions will be offered, and Erica will also use other financial information to help them make better and smarter financial decisions. The hope is that this will provide the benefit of personal service, as well as financial guidance, that would be generally be offered to the institution’s most important consumers The following day, MasterCard announced a chatbot named “Kai” that will be provided to the institutions that issue its cards sometime in the future As you have probably already guessed, some are saying that chatbots will have a negative impact on staffing needs, will lead to a more impersonal consumer experience, and some argue they should be provided by non-financial firms so that advice and offerings will not be limited to the financial institution’s products and services. According to the same CNBC.com article, it is predicted that 6 percent of jobs will be lost in the next five years as artificial intelligence expands. But, for financial industries, this type of programming is still in its infancy, is not intended to affect jobs but to enhance banking, and it may take years for a chatbot to be able to provide interaction approaching that of face-to-face. And as implied in the NYTimes.com article, a seasoned branch or call center employee will likely still be better able to deal with unique financial situations that require a personal touch and understanding that cannot be mimicked by a program.

So, time will tell if financial chatbots will be embraced as the future of electronic communication, and the success, or lack thereof, of the aforementioned offerings will likely play a large role in that. I can hear my dad now once he gets wind of this: “People just don’t sit down and talk anymore like they used to!”