The business case for conversational money management

In a previous article (“Creating a banking conversation—looking beyond apps”), we introduced the concept of conversational banking and talked about why chatbots are slowly becoming essential for digital banking strategy. In this follow-up, let’s consider how conversational bots act as catalysts for personalized customer engagement. According to Gallup, personalized engagement could bring in additional revenue of $80 million per year for banks—and conversational bots could play a crucial role.

From money management to digital money management

The idea of money management has been around for a while. But the tools for it often exist as separate websites outside a bank’s digital banking environment. And even when they are part of that environment, they often live in a separate tab without any natural integration into the digital banking platform. Furthermore, these tools typically provide only a snapshot of the customer’s finances, rather than real insights. They require users to do most of the heavy lifting to gain an actionable understanding of their finances.

Recently, however, digital money management has started to generate a lot of interest with banks. These sophisticated solutions can help forecast and facilitate life goals for customers—then try to fulfill those goals either by matching them to existing products and offers or by creating a new offer. All this is made possible by the increasing power of analytics, machine learning and improvements in data visualization.

Earlier this year, Citi reported that digital money management has been ranked as the second-most-active fintech investment area after payments and lending. This trend is a step in the right direction for banks that want to enhance their relationships with customers and move toward playing an advisory role. At the same time, digital money management has not quite cornered the market. It still lacks complete engagement, and it still requires customers to wade through multiple pages or scroll down endless screens to understand their financial lives.

That’s where the chatbots come in. They can help reduce the time it takes to hook a customer by engaging at the decision-making moment via a rich contextual interaction.

Welcome to the world of conversational money management.

Conversational money management

Conversational money management is essential for the banks of the future. It blends personalized interaction with a banker or financial advisor with the speed and immediacy of a digital just-in-time interaction. For example: During checkout, a customer gets pinged by a bot informing him that he’s about to go over his retail budget—and offering a deal that can help him stay on track. Without the bot, that same conversation would have required the customer to keep an eye on his spending and any special offers manually inside an app, and he probably wouldn’t have had enough time to take advantage of the deal.

Conversational money management brings even more value to the table with the ability to engage customers at the moment of decision-making. Say a bot pings a user at the moment when she’s deciding to close a deposit, informing her that if she were to invest in equity instead, she would see much higher returns. The bot could then provide alternative investment scenarios over a chat screen, and the user could initiate new investments in the same context. This type of transaction simply doesn’t happen with existing digital banking solutions.

Ernst & Young reports that the investment market beyond high-net-worth individuals (HNWI) consists of mass-affluent and mass-market individuals who value both human guidance and technology. This demographic brings a significant $10 trillion in investable assets to the table. Using chatbots as automated advisors for money management allows banks to reach this large customer base more effectively without the added cost of employing thousands of additional human financial advisors.

What does all this mean? Conversational money management is poised to be the next big thing in digital banking.

At Mindtree, we understand chatbots and how they can change the face of digital banking solutions—when properly combined with the power of personalization and machine learning. Whether you’re interested in money management, payments, service recovery or customer service, we’ll help you explore the best use cases for your bank and get you started on your conversational banking journey.

Keep an eye out for part three of this series, where we’ll take a look at how to implement conversational banking. And when you’re ready to start a conversation with Mindtree, contact us.