Imagine that before responding to a co-worker's Slack message about going to lunch, consumers could ping their bank from the popular office messaging system to ask if a $12 burrito bowl at Chipotle fits within their budget. The bank's bot says the bowl is OK, but maybe skip the guacamole. After all, that's extra.
That's the future a handful of banks and fintech startups are envisioning as they look to be on the forefront of using the next generation of artificial intelligence software, which promises to go beyond their not-so-great predecessors.
"Chat bots are not new but they are coming of age," said Keith Armstrong, founder and chief operating officer of one such personal finance bot, Abe.ai.
Abe.ai and firms like Digit, Penny, Trim and Kasisto use artificial intelligence to let customers ask their bank-related questions through their bots on a handful of platforms: SMS text, Facebook Messenger, Slack and other third-party messaging channels that particularly appeal to millennials.
Banks are dabbling in the conversational language trend, too. USAA and Ally Bank have virtual assistants on their own mobile apps, while American Express and Bank of America have announced their plans to use chat bots on Facebook Messenger — an app that has one billion users.
The bot trend transcends fintech and banking. According to Gartner, an estimated two-thirds of consumers in developed markets will use virtual personal assistant services such as Apple's Siri or Google's Google Now daily by the end of this year. By 2019, the research firm predicts, requests for customer support through consumer mobile messaging apps will exceed requests for customer support through traditional social media.
While startups and banks with big innovation budgets are forging ahead, analysts are suggesting the industry as a whole proceed with caution. A report from Forrester Research set to be released this month advises most banks to avoid investing in the AI tech — for now.
"Chat bots on messaging platforms are meant to simulate human conversations ... but today many either fail to communicate accurately or offer clunky and awkward exchanges," Peter Wannemacher, a senior analyst at Forrester, writes in the report, titled "Bots Aren't Ready to Be Bankers." "Bot conversations often fall short of great customer experiences."
According to Forrester's research, there are lingering algorithmic trouble spots with today's AI software. That might be acceptable if an order on Taco Bell's Tacobot on Slack gets botched or if weather bot Poncho says the weather will be "undefined." In banking, however, "undefined" wouldn't be funny when customers are asking for their balance.
"That is our concern," Wannemacher said in an interview.
To be sure, he believes already investing in chat bots makes sense for some banks that are digitally advanced and have funds to experiment.
And, of course, the algorithms only improve with use. Eventually, Wannemacher could see a day where chat bots will help democratize finance so a bank customer — regardless of wealth — could ask a bot something like "should I be buying a house soon?"
For now, the companies looking at chat bots are considering which channels are the right way to connect.
At Abe.ai, the startup has been building its algorithms to run on Slack first because it is targeting young professionals who are just out of college, working at their first jobs and dealing with student loan debt. (It is considering other channels, like SMS, too.)
Armstrong said Slack, a platform that allows coworkers to communicate easily, is a natural place to connect. People are coming to work stressed about money. So the Slack bot is meant to help consumers address their concerns that won't just magically disappear when the daily grind starts. (Employees have to ask their companies to integrate with Abe.ai's Slack bot.)
"People don't leave their money problems in the parking lot," he said.
Another fintech company looking to connect via Slack is Kasisto, a conversational AI platform company. "It's a new channel for banks to engage their customers," said Zor Gorelov, Kasisto's chief executive. The company is also offering AI via Facebook Messenger and SMS.
Royal Bank of Canada will be testing Kasisto's technology with employees. The pilot program, which is expected to run this year, will use the smart bot technology to let clients message RBC to get access to account balances, transaction history and answer some general questions.
"We know that our clients are increasingly looking for seamless, convenient and secure mobile banking experiences and by potentially adding a smart bot through Facebook Messenger, we're helping to meet the evolving expectations of our clients," Linda Mantia, executive vice president at Royal Bank of Canada, said in an email to American Banker.
Kasisto also introduced direct-to-consumer MyKAI, which lets any consumer with a U.S. bank account use a subset of KAI banking features. MyKai can show balances and search transactions across accounts; however, it cannot make payments or transfer money from bank accounts unless it is integrated into the bank or Venmo. Currently, there's a waiting list to join.
Regardless of the provider, the messaging medium is particularly suited for an audience all banks are vying for: millennials.
"An entire generation is coming of age financially now," Armstrong at Abe.ai said. "They grew up in the world of texting."
As he sees it, the Slack channel is more natural for young adults. "It's just a more fluid and seamless experience," he said.
And Abe.ai’s hope is that an easy experience will drive behavior that yields healthier financial habits. "The need for help is certainly there," Armstrong said. "Too many U.S. citizens are living on a financial cliff."