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Digital Banking

Beyond Texting – Augmented Chat for Banks and Credit Unions

Joshua Jordan
Sep 23, 2021

Text messaging is one of the most popular ways for users to reach friends and family. With its immediacy and simplicity, it seems like an obvious way for banks and credit unions to send alerts, updates, and more. And yet, text messaging has relatively few viable use cases in financial services today. Instead, authenticated, augmented chat has taken center stage as a way for institutions to connect with accountholders quickly and easily.

Consumers Prefer Texting

Texting has already been adopted by almost all consumers because it’s simple and fast. In fact, the average time it takes for someone to respond to a text is a mere 90 seconds. For comparison, it takes an average of 90 minutes to get a response to an email. Additionally, many consumers simply prefer the experience of text messaging over phone calls or email. According to a Facebook-commissioned study by Nielsen, over half of people would rather message a business than call customer service.

Speed is important to banks and credit unions. For one, consumer expectations have been set by the Amazons of the world – we’re annoyed when we have to wait more than a day for a package, even though we used to wait at least a week without complaint. Secondly, accountholders are not likely to wait around for very long when they need help. The average session length for a mobile banking app is just under five minutes, as compared to an average of 19 minutes across all verticals. In contrast to most apps, short sessions are generally a good thing for institutions. It indicates that your accountholder opened the app with a purpose and found what they needed quickly. It’s our job to make completing digital banking tasks quick and easy.

Why Banks and Credit Unions Aren’t Leveraging Text Messaging

So, if consumers love texting, why aren’t banks and credit unions using it to have two-way conversations with customers and members? We see institutions using SMS to send balance alerts, marketing messages, and for two-factor authentication (2FA). Accountholders may even be able to text in specific keywords, like “Balance,” to receive an automated response. But this isn’t a viable platform they can turn to when they have a problem. It’s just a convenient way to get updates or confirm their identity for login.

The downsides of text messaging have prevented it from becoming a true conversational platform for banks and credit unions. For one, text messaging has some significant security flaws. In fact, the National Institute of Standards and Technology (NIST) deprecated two-factor text authentication in 2016. It’s relatively easy to obtain a phone number without providing very much personal information and start texting consumers, which makes SMS a tool of choice for criminals. In fact, phishing attacks via text are so prevalent that the practice even has its own name – smishing. Smishing attacks rose 328% in 2020 alone.

I’ve experienced the shortcomings of texting myself when a big bank sent me a fraud alert. The text came from a short code (a string of five to six numbers used when brands send a text), which of course I didn’t recognize or have saved in my phone. It informed me that there was a suspected fraudulent charge, named the amount and merchant, and told me to reply “NO” if it wasn’t me. After replying “NO,” I received an automated response telling me to check my account for other charges that weren’t me and call if I need more help. The number to call was not included.

This left me to open the app myself and look for more questionable charges, all while feeling less than confident that the situation was taken care of. I suppose if I needed additional help, I could have Googled the customer help line and waited on hold until someone could direct me to the fraud help line, where I would undoubtedly wait on hold again. Not only does this create a drag on efficiency by forcing me through various forms of communication to have questions answered, it also brings up security issues. Customers and members are just as concerned about fraud as the institutions that serve them are. What comfort do I derive from an automated text that claims to be my bank but could really be anyone?

This process took me through three different communication channels in a time-sensitive situation. Texting, while the preferred channel for consumers, was a short-term solution for banks and credit unions before smartphones and banking apps became commonplace. Activities like checking your balance, which requires typing up a text, making sure you spelled “balance” correctly, and waiting for the automated response, can be accomplished faster through an app. There is a more secure, efficient, and engaging way for customers to get quick updates, and financial institutions are already reaping the benefits.

Enter Augmented Chat

Augmented, authenticated chat gives customers and members the ability to quickly reach their institution with time-sensitive concerns or questions on a platform they can trust. Augmented chat is built directly into the mobile and online banking experience, allowing users to easily start a dialog with a real person at their bank or credit union. For example, if a customer or member sees a fraudulent charge, they can simply attach that charge to a conversation in the chat, and the institution can automatically route it to someone who can help.

This experience is both convenient and highly personal, a combination that is rare in banking today. It’s also convenient for the institution’s staff. Managing conversations is easier than managing your email inbox. Plus, unlike email, you can automatically or manually route conversations to the correct person. They can set up automated responses and templates to acknowledge the problem instantly, rather than making accountholders wait on hold. Everything is documented, making audits easier than ever. Banks and credit unions are already seeing incredible results and high adoption of this channel.

Texting has its limitations, but that doesn’t mean banks and credit unions should be limited in how they connect with customers and members. Text messaging is the preferred channel of communication for consumers today. Why shouldn’t institutions be able to offer them the same convenience and immediacy without exposing them to security risks? Augmented chat embedded directly in the digital banking experience solves for convenience while simultaneously addressing any concerns about fraud and mutual verification.

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