OBSERVATIONS FROM THE FINTECH SNARK TANK
Predictions of the death – or at least the demise – of bank branches have been around for some time. In 2012, well-known fintech futurist Brett King published Branch today, gone tomorrow: The case for the death of branch bankingand even before that, in 2011, Forbes published an article entitled Who Needs Bank Branches? with the caption: “Goodbye cashier. Hello, mobile apps.”
However, the predictions have not come true. The number of branches Has has declined over the last 10 years – from 85,000 in 2012 to 72,000 in 2022, an annual decline of just 1.7%. But make no mistake, bank branches are far from dead.
Branches will not die unless digital banking improves
In King’s defense, he never predicted that Everyone Bank branches would close – he predicted their numbers would fall, and made a case for the death of branches.
When you ask bankers why there are still branches, you get answers like “We can’t close them until their leases expire,” “Community considerations,” “People are still opening accounts in the branches,” and “People would like talk to people.”
The first two reasons are good explanations, but the second two are not.
It’s true that people do continue to open accounts in branches and to say that they want to speak to bank employees. But these activities and attitudes obscure the underlying reason why stores weren’t closing faster: Digital banking is not that good.
Despite the addition of new online and mobile banking features and functionality over the last decade, digital banking just doesn’t do everything that banking customers need to do.
According to a recent study by Cornerstone Advisors, 40% of consumers aged 21-55 who contacted a human about opening a checking account said they tried to get the information they needed online but couldn’t find it, and 28% stated the bank’s website or mobile app didn’t support what they needed to do.
Only 22% said they would rather talk to someone.
And here’s the thing, the poll Not report: Of the 38% who thought it was easier and faster to talk to a human, how many actually found it easier and faster?
I bet the answer is “not much”.
Consumers calling contact centers often sit on hold for long periods of time only to speak to representatives who can’t answer their questions without research and follow-up.
And it’s certainly no better in the branches these days. Due to the impact of the “big resignation”, banks are often forced to staff branches with people with little banking experience.
The chatbot journey to intelligent digital assistants
Does this mean we’re stuck in bank branches forever? no Chatbots will kill them.
I know what you’re thinking: “dude, what are you smoking? Didn’t use chatbots? The experience is awful!”
You’re right. Today the chatbot experience is not very good. Today.
But it gets better, and here’s the important part: The chatbot experience will improve faster than branch and contact center experiences.
More specifically, however, the chatbot experience will improve as banks continue to develop their chatbots into intelligent digital assistants.
A new report by Cornerstone Advisors commissioned by Kasisto entitled The Chatbot Journey: Turning intelligent digital assistants into integral members of the teamexplains the development in the application of conversational AI technology from chatbots to intelligent digital assistants.
Although the two terms are often used interchangeably, there are differences. According to Priyanka Shah of Kevit Technologies:
“Intelligent digital assistants (IDAs) are evolved chatbots. Chatbots are rule-based systems that handle routine tasks with general FAQs. IDAs are equipped with Natural Language Understanding (NLU) that helps understand and maintain context for conversations while performing tasks to meet a user’s needs.”
According to Cornerstone Advisors’ What’s Going On in Banking 2022 study, only one in five banks and credit unions currently uses a chatbot — and only a handful of those institutions truly offer an intelligent digital assistant.
But the underlying technology – conversational AI – is already making an impact on consumers’ mobile banking experience. Institutions that use conversational AI have higher customer ratings of their banks’ mobile banking experience than those that don’t.
Chatbots will kill bank branches
There are many smart people in the banking industry who will disagree that chatbots (or more accurately, intelligent digital assistants) will kill bank branches, and will actually argue so Nothing will kill her – that branches will always matter.
This is short-sighted thinking.
Bank customers do not go to bank branches because they want to—they go because they to have to (or think they have to). They go to branch offices because they think that talking to another human is the best (ie quickest or most effective) way to get what they need done.
Rejecting the notion that intelligent digital assistants could become good enough to replace human interaction is like thinking in 1997 that online banking will never be secure and feature-rich enough, or thinking in 2007 that mobile banking will never be good enough will become the primary channel for bank interactions.
In the early 2000s, Vernon Hill, founder and CEO of Commerce Bank, known for its industry experience, was asked why the bank wasn’t making large investments in online banking. His answer: “No one wants a relationship with a machine.”
That may be true, but nobody wants a relationship with a brick.
“Welcome son, welcome to the machine.” -Pink Floyd
For a copy of the Cornerstone Advisors report The Chatbot Journey: Turning intelligent digital assistants into integral members of the team Click here.