Here's Why You Should Avoid Your Bank's Chatbot

Technology is transforming the way we interact and conduct our day-to-day activities, including our financial transactions. One such technological breakthrough that has taken the banking sector by storm is the rise of chatbots. More and more financial institutions are adopting this innovation every day. However, as much as chatbots present several advantages, such as improving customer experience, efficiency, and cost reduction, there are several risks that you should be aware of.

What are chatbots?

Chatbots are artificial intelligence systems that simulate conversation with human users. In recent years, many banks have deployed chatbots to help their customers with basic queries, savings and checking account transactions, and customer service issues.

The financial industry has widely adopted chatbots in various platforms like bank websites, mobile applications, and social media accounts. As of last year, around 98 million users in the United States (accounting for about 37% of the population) interacted with chatbots from their bank. This figure is expected to rise to 110.9 million users by 2026.

What risks should you be aware of?

According to the Consumer Financial Protection Bureau (CFPB), while chatbots are useful, consumers need to understand the limitations of chatbots. The CFPB is responsible for gathering feedback from consumers regarding their experiences with financial products and services.

As the use of chatbots has become more common in the financial industry, users have increasingly raised some concerns and submitted complaints with the CFPB. Here are some of them.

Noncompliance

Like the processes they replace, chatbots must comply with all applicable federal consumer financial laws. Financial institutions are at risk when using chatbots to respond to customer queries, as they may provide inaccurate information or fail to recognize when a customer is invoking their federal rights.

Additionally, there is the potential for these chatbots to compromise customer privacy and data. As such, it is essential that financial institutions exercise caution when utilizing this technology.

Privacy and security

While chatbots may seem convenient and time-efficient, they can also pose security and privacy risks for customers. For example, your personal and financial data could be compromised if the chatbot is hacked or accessed by cybercriminals.

Additionally, the chatbot may share your information with third parties or use it for targeted advertising or marketing without your consent. Therefore, it's crucial to be aware of the risks and limitations of chatbots and take appropriate measures to protect your identity and privacy.

Poor customer service

Chatbots are only as accurate as the data and algorithms that power them. If your bank's chatbot doesn't have the latest information or updates on your account, you may receive wrong or outdated answers.

Additionally, chatbots can't always give personalized recommendations based on your profile or history, as human agents can. Therefore, you may miss out on valuable services or features that could benefit you in the long run.

What should you do?

As technology continues to advance, it is evident that chatbots are here to stay. These artificially intelligent systems have revolutionized the way we interact with businesses and streamline their processes. With their ability to handle basic tasks and queries, many companies are adopting the technology to reduce workload and improve productivity.

However, for more complicated problems and security concerns, it may be best to work with a human. A chatbot-human hybrid approach is most ideal, as it allows for the best of both worlds. Humans are complex beings and require a level of reasoning and empathy that bots are not yet able to provide.

With continued advancements in AI and machine learning, the future of chatbots looks bright, and we can expect more innovation and improvement in the years to come.

Chatbots should not be viewed as a stand-alone technology, but rather as a complementary tool that should work in conjunction with human employees. Financial institutions should prioritize a customer-centric approach that leverages both technological and human resources to ensure that customers are adequately served. Additionally, banks must also make sure that their chatbots have adequate security features, are backed by robust regulations, and are user-friendly. If used correctly, chatbots can help boost engagement and efficiency while improving the overall customer experience.