As digital banking and mobile banking continue to grow and replace more traditional banking methods, it provides an unprecedented opportunity for both traditional banks and fintechs to provide complete new channel services to meet customer demand and preference and to truly scale.

As Mohamed Keraine, Global Head of Digital Banking at Standard Chartered said in our Banking Uncovered Podcast, “There is no value in digital itself, its value is in its ability to scale.” One of the key opportunities this presents is for banks to interact via chat as opposed to the branch or phone. RFI Global’s data shows that since the pandemic over 70% of consumers in Asia and the Middle East have not only used chatbots to communicate with their bank but want to continue to do so. Chat provides the ability to be asynchronous – this is key as it shifts the power of time control from the bank to the consumer as compared to the branch or the phone. It also allows the consumer to multi-task.

As Olivier Crespin, four times bank founder, points out, this is because ”people want to do things faster from anywhere, at any time – people want to save time… people would prefer chat.” And, chat allows you to be discreet – you can use chat in a crowded area, and it remains secure and discreet as opposed to the phone where others can hear you.

Security and AI

Customers want speed and ease when using digital, but they also want security – chat can provide this. RFI Global’s data shows that speed and ease/ convenience rank as no. 1 and 2 both as drivers of choice and as drivers of satisfaction with concerns around security as the no. 1 barrier and driver of dissatisfaction.

The issue of security is critically important with chat. However, it’s not just with the banking app. As chat evolves and becomes more sophisticated, banks need to integrate their chats with other digital channels customers are using such as WeChat or WhatsApp. As Mohamed says, “they must leave the customer where they are”, but as they do so cyber security raises its head.

How do you control customer authentication in these situations? As the rigour around authentication increases, so contrarily the customer experience worsens, becoming slower and more difficult – the very attributes that RFI Global’s data shows drive customer satisfaction and digital engagement, resulting in increased NPS scores of 25 points.

Further, as Olivier states “Digital brings velocity” – it brings acceleration, so for cyber security you need to be able to check instantaneously. As the risk increases so too does the need for the bank to resolve it faster. Fortunately, digital is not only the cause of the problem but also the solution. AI or more specifically generative AI can simultaneously check all the required pieces of data. It can check the transaction patterns and recognition signals. By combining AI with chat, you are able to not only solve security issues but also provide the best customer experience. As Olivier says, “AI is able to bring all the pieces together”.

Why is the West trailing the East?

There are, however, strong regional variations when it comes to chat. The pandemic was critical in driving customers from their preferred branch interactions with the bank to interactions via chat, but since the pandemic, customers have responded differently depending on the market. While preference for chat continues to grow in Asia and the Middle East, there is a lack of appetite and reluctance in Western markets. In the UK, in particular, there is strong dissatisfaction with live chat with customer usage at less than 50%, customer satisfaction at less than 50% and customer preference for interacting via chat with their bank at a concerning 1%.

The issue is a failure by the banks and fintechs, as far as consumers are concerned, to provide a valuable experience; with concerns around security (25%), lack of personal touch (30%), lack of capability (23%) by the chatbot or simply the bank/ fintech not providing the service (13%). In fact, almost a third of UK consumers still consider a branch visit or phone call to be easier than live chat.

Banking as a platform – the challenges and opportunities

This problem is exacerbated as we move to banking-as-a-platform and super apps. Olivier talks about the need for banks and fintechs to build banking-as-a-platform, where banking can be seamlessly integrated into the other digital channels that the consumer is inhabiting. Understanding customers preferred behaviour not just in banking is critical, Mohamed says, as everyone working in digital banking needs to understand that they are psychologists, not technologists.

However, in the world of super apps, the regional preferences and differences are even more stark. Consumers in Asian and Middle Eastern markets see huge value in super apps combining shopping, food delivery, travel, taxis, media and budgeting with their banking app. Less than 10%, and an average of only 5%, say they don’t want their banking app combined with these. In Western markets like the UK, US, Canada, France and Australia between 35-40% of consumers say they don’t want their banking app linking with other apps. We saw this same variation (Australia excluded, which led all other markets for take up) when contactless first appeared, with concerns around security and lack of clarity in the value proposition. Only when the value proposition became so compelling did the security concerns start to alleviate.

Banks and fintechs in Asia and the Middle East need to continue to leave the customer where they are and provide secure and seamless experiences. As customers move from web chat and native solutions to genuinely integrated offerings these banks and fintechs will need to become chat-first institutions. In the West, banks and fintech still need to make the case for why this is necessary. They need to focus on developing generative AI to answer customer concerns around security and invest in personalisation and the capability to create a compelling value proposition around chat. Only when they are able to do this will they truly provide the ease and speed that customers crave for greater digital engagement.

Listen to a more in-depth discussion around all these issues in our Banking Uncovered podcasts:

The future of digital banking – enhancing customer relationship with data, Mohamed Keraine, Standard Chartered – Listen here

The importance of building a digital bank, Olivier Crespin, bank founder – Listen here

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