Conversational banking — the ability to chat with a non-human (like Siri or Amazon’s Alexa) about your finances — will become increasingly common. Should consumers engage with conversational banking? What are the pros and cons?
Just as the past decade has seen the rise of the app, conversational banking (via things like financial chat bots) is having its day in the sun. Some banks are integrating with Alexa so customers can interact with their checking accounts, while other banks have built bots on Facebook Messenger. Will these efforts entice consumers, and do consumers really want to communicate with their financial institutions on these platforms? That answer remains to be seen and will depend entirely on a consumer’s comfort level with the concept of convenience, security and privacy.
Most people agree that conversational banking can be incredibly convenient. There’s no need to download a separate app, simply connect your device to your bank account. Bots have the potential to provide a vast array of financial insight based on a consumer’s personal spending behavior.
Proponents will say that this ease of use increases the likelihood that consumers will become more aware and vigilant when it comes to their finances.
Want to know if doing X will get you to your goal of Y? Just ask. Want to see how much you have left to spend on your groceries this month? Ask. Responses are free of human bias and can help consumers understand their finances more if they ask the “right” questions. At the end of the day, bots will only be able to respond to what they were designed for. This is a developing technology and we can expect both functionality and security to improve over time.
As powerful as this new technology has the potential to be, it is still developing and will take some time to be proven effective and helpful. Aside from an obvious security concern, the realized usefulness of this channel is very dependent on how effectively each institution implements conversational banking. If chat bots aren’t implemented properly, they can’t adequately respond to customers’ requests — providing a non-useful, even frustrating experience.
Privacy and security is also a huge (and obvious) concern. The fact is, this new interface provides brand new opportunities and vulnerabilities for fraudsters to exploit. Institutions will have to climb a steep learning curve to protect data and systems from unauthorized access. By allowing customers to access banking services via a third party, there is additional concern around personally identifiable information (PII) data security.
Finances tend to be very personal and as such, many people hold this information close to the chest. The last thing most would want is to have a guest walk into your home and ask Alexa for your account balance.
Fraudsters have bypassed facial recognition security protocols by showing a video of themselves. It is likely that early on, fraudsters could patch recordings together to fool voice recognition. In addition, voice recognition software can fail when a person is sick and loses their voice. Ultimately, your financial safety depends on the technology being used, the security access protocols and how it is encrypted.
As with most new technologies, there really is no right or wrong answer. It’s more about understanding the tradeoffs and making the right choice for your family and lifestyle, and convenience versus security.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Banking.com or NCR Corporation.
Written by Todd Harris
Todd Harris is the CEO and President of Tech CU. An industry veteran, he has more than 25 years’ experience in financial services, including in the banking, credit union and leasing company sectors. He also has extensive expertise in economic theory, ALM, Fed policy, financial markets, risk management and product development.