FINTECH SNARK TANK OBSERVATIONS
There have long been forecasts that bank branches will eventually disappear or at the very least decrease. Branch Today, Gone Tomorrow: The Case for the Death of Branch Banking by renowned fintech futurist Brett King was released in 2012, but even before that, in 2011, Forbes published an article headlined Who Needs Bank Branches? with the subtitle, “Good-bye, tellers. Good day, mobile apps.
However, none of the forecasts have materialised. Over the previous ten years, the number of branches has decreased—from 85,000 in 2012 to 72,000 in 2022, a little 1.7% yearly loss. But make no mistake—bank locations are still very much alive.
Branches Won’t Go Extinct Despite Poor Digital Banking
King’s reply is that he never foresaw the closure of every bank branch; rather, he foresaw a drop in branch locations and made an argument against branches.
Bankers will give you explanations such as “we can’t close them until their leases are up,” “community relations considerations,” “people keep establishing accounts at the branches,” and “people want to talk to people” if you question why branches are still open.
The first two explanations are persuasive, but the following two are not.
It is true that customers continue to create accounts in branches and state that they wish to speak with bank staff. However, these actions and behaviours hide the real reason why branches haven’t been closed out more quickly: digital banking isn’t that excellent.
Despite the development of additional features and capabilities for online and mobile banking over the past ten years, digital banking still can’t fulfil all the needs of bank customers.
A recent study by Cornerstone Advisors found that 28% of customers said the bank’s website or mobile app didn’t support what they needed to do, and 40% of customers between the ages of 21 and 55 who contacted a human when opening a checking account said they tried to get the information they needed online but couldn’t find it.
Only 22% of people stated they preferred to speak with someone.
Here’s what the survey omitted to say: How many of the 38% who believed talking to a person would be quicker and easier truly felt that way?
The answer, in my opinion, is “not a lot.”
Customers who call contact centres frequently wait on hold for a long time before speaking with personnel who need to do more research and follow-up to answer their questions.
And the situation in the branches now is unquestionably not better. As a result of the “great resignation,” banks frequently had to hire workers with minimal background in the financial sector.
The Path from Chatbots to Intelligent Virtual Assistants
Does this imply that bank branches will always be around? No. The chatbots will eradicate them.
You’re probably asking yourself, “Dude, what are you smoking? Have you ever utilised a chatbot? The situation is terrible!
You are correct. The chatbot experience isn’t great right now. Today.
However, it will improve, and this is crucial: the chatbot experience will advance more quickly than the branch and contact centre experiences.
However, the chatbot experience will be enhanced specifically because banks will develop their chatbots into intelligent digital assistants.
The transition from chatbots to intelligent digital assistants in the application of conversational AI technology is described in a new research from Cornerstone Advisors, which Kasisto commissioned and titled The Chatbot Journey: Making Intelligent Digital Assistants Integral Members of the Team.
Despite the frequent confusion between the two names, there are differences. Priyanka Shah of Kevit Technologies claims:
Digital assistants with intelligence (IDAs) are advanced chatbots. Chatbots are rule-based computers that carry out rote activities and answer common questions. Natural language understanding (NLU) is a feature of IDAs that helps them grasp and preserve conversation context while doing activities to meet user needs.
Fewer than one in five banks and credit unions now have chatbots in place, and only a small number of those organisations are actually providing an intelligent digital assistant, according to Cornerstone Advisors’ 2022 What’s Going On in Banking research.
However, the underlying technology—conversational AI—is already changing how customers use mobile banking. When compared to institutions that don’t use conversational AI, consumers rate conversational AI-enabled banks’ mobile banking services higher.
Chatbots Will Destroy Bank Locations
There are many knowledgeable individuals in the banking sector who will contest the idea that chatbots (or, more precisely, intelligent digital assistants) will eliminate bank branches. In fact, they will contend that nothing will do so since branches will always have a purpose.
This is a limited way of thinking.
Customers of banks visit those locations out of necessity rather than want (or think that they have to). They visit branches because they believe that conversing with another person is the best (i.e., quickest or most efficient) approach to complete their tasks.
Rejecting the idea that intelligent digital assistants could improve to the point where they could take the place of human interaction is akin to saying in 1997 that online banking would never be safe and feature-rich enough or in 2007 that mobile banking would never be effective enough to replace traditional banking.
Vernon Hill, the founder and CEO of Commerce Bank, which is famed for its in-branch experience, was questioned in the early 2000s about why the bank wasn’t investing much in online banking. Nobody wants a relationship with a machine, he said in response.
That may be the case, but nobody wants to be in a relationship with a brick.
“Welcome to the machine, my boy,” I said. Purple Floyd
