A new generation of consumer banking: chat banking is here to stay

Consumers prefer chat banking

Banking is not just an essential life function conjuring up images of stately offices, tellers, and familiar ATMs. It’s a seamless mobile experience and successful brands are understanding the change and adapting to the new opportunity that chat banking offers.

Interestingly, the main driver is consumer expectation, not the technologies. This important shift is not a trend, but a seismic shift in banking, commerce, and consumption. Going digital is no longer about making friendlier websites, moving business operations to the cloud or publishing a mobile app. Those are important, but not sufficient to capture today’s consumer imagination. We are seeing tangible changes already happening in developing countries where constraints drive innovation and are a harbinger of a worldwide movement.

Two key developments centered around the shift are the emergence of a mobile everything lifestyle and chat as a business channel.

Two chat applications, Facebook Messenger and WhatsApp, command 48% of the 5.86 billion monthly active users of popular chat applications globally.

Further, of the top 10 popular messaging apps, 9 have APIs to enable businesses to have a presence within the chat channels. In China, the two largest applications, WeChat and QQ Mobile, were the earliest to capture the mind set shift of consumers, from using the messaging application as a social platform to a full-blown channel to transact with businesses with the same convenience. It should, therefore, be little surprise that banking follows suit.

Convenience drives consumption.

Why should a consumer have a disjointed experience doing banking in a separate app, while commerce interactions are seamless and driven through a familiar chat interface? This spells a shift in app consumption: from an-app-for-that, to a-chat-for-that world. We believe that chat as an interface is the next big step in making businesses accessible. People love using messaging apps like WhatsApp, Facebook Messenger, and Slack. Other platforms like Amazon Echo, Siri, and virtual and augmented reality, are on the rise. Consuming app-like rich visual experiences within a chat is gaining momentum.

ABSA recently launched chat banking on WhatsApp using the Clickatell API.  Close on its heels, three of the largest banks in Nigeria are rolling out their chat banking experiences on WhatsApp. This is a movement gaining momentum across large regions in Africa and India.

Banks are increasingly being seen as a commerce destination, not just a place to safeguard your money and get loans. In developing countries, banks offer direct debit-to-pay for services that can be acquired digitally: airtime, data, entertainment, electricity, the list is long. The service providers get access to customers on banking channels, and banks get to engage their consumers. All done through chat.

Consumers learn about new products and services from friends and family conversations, group chats, and social proof. A business or bank is then just a click away. Transactions begin with a simple “Hi”. Zero app downloads, zero website navigations, zero learning curve.

Marketing is now seamlessly interwoven into social conversations.

Brand credibility and trust is always under a microscope and not controlled through PR alone. The emerging population is leading the behavioral change.
Millennials drove the push to mobile and smartphones. And now, millennials are about to be surpassed by Generation Z. Gen Z will comprise 32 percent of the global population of 7.7 billion in 2019, nudging ahead of millennials, who will account for a 31.5 percent share according to a recent Bloomberg analysis.

Marcie Merriman, an executive director at Ernst & Young LLP in her article “Rise of Gen Z: New Challenge for Retailers,” writes, “Gen Z, like all generations, was borne from disruption. Today, the very goal of businesses, political groups - not just technology companies - is to disrupt the status quo, to change how people think and live".

Thanks to the internet, social platforms, smartphones and advancements in mobile technology, events and innovations are shared instantly and disseminated globally.

The emerging population is leading the behavioral change. Millennials drove the push to mobile and smartphones.

Technology makes the transformation a reality at a faster pace than ever before. Starting with smartphones and affordable data access, now within easy grasp across a wide economic spread, we are seeing rapid emergence of AI, virtual agents, and automation into production. Voice platforms integrated with AI driven by Amazon, Google, Apple, and Facebook are getting increased adoption.

Large organizations in the US are making the shift. JP Morgan has embarked on a “digital everything” consumer business model to build an entirely digital bank. According to the Aug 2018 research article, “This is in part because customers no longer need to rely on banks for financial services - 60% of US bank customers say they are willing to try a financial product from a tech firm they already use, and that number rises to 73% for customers aged 18- 34”.

In summary, consumer-driven digital transformation is once again upping the stakes for the banking experience. Banks need to think beyond traditional engagement. Consumers are loyal to their learnings and experiences. They might not remember the details of an interaction, but they will remember how it made them feel. And that makes all the difference in acquiring, retaining, and growing the customer base.

Clickatell has had the fortunate opportunity to enable large banks to fulfill their chat banking ambitions in challenging market conditions. We have a long history
in partnering with brands globally for their consumer communication needs.

Our expansion into transactions and customer engagement was born out of the opportunity to help brands succeed in this rapidly evolving market.

Clickatell can help you win consumers and keep them happy. We'll be at BAI Beacon 2018, so visit our booth or set up a meeting to find out how we’ve helped some of the world’s top banking institutions with their digital strategies, including powering the 1st global chat banking service on WhatsApp.