Numerous reports indicate that messaging has overtaken social media in popularity, with the combined users of the top four chat apps outnumbering the combined users of the top four social networks. WhatsApp alone reports that users send 65 billion messages per day.
Yet despite the continued growth of messaging apps and changing user behaviour, very little has been done to integrate financial services into the messaging experience. This is partly because WhatsApp has not provided a developer API – but that will likely change in the coming months (more on this below). There’s a vast opportunity for integrating financial services (eg: banking, payments, mobile money, etc.) into messaging apps, and that now is the time to invest in this integration.
What is ‘Chat Banking’?
Imagine you are chatting with your friend William on WhatsApp and planning a weekend trip together in Kenya. You wonder how much the trip would cost and whether you have enough in your current account to cover the expenses. Instead of going through a USSD menu or opening your bank’s app (if you even have that installed), you simply find your bank as another contact in WhatsApp and type “Balance” as a text message. The bank immediately texts you your current balance – which is enough to cover your share of the hotel reservations William is making. Next, you find your mobile money company on WhatsApp and text them “Pay Ksh 5000 to William.” Later that day, you get a WhatsApp message from the mobile network operator, asking if you want to top-up your account. It takes you a second to respond “Yes” – you’ve now covered both your travel arrangements and airtime for your trip, all through WhatsApp.
The key innovation in the preceding paragraph is not the technical integration necessary to connect these various providers, but rather the seamless user experience of never having to leave your favourite apps. When financial service providers put users at the centre, they can offer these enabling services without requiring complex interactions or transactions.
Customers will love this approach for several reasons:
- It’s fast – it connects banking to the services they are already using.
- It’s easy – there is no learning curve, since the services plug into the messaging
channels that everyone already knows how to use.
- It’s personalised – financial institutions can factor user preferences into the chat and
create a personalised experience.
How Close is Chat Banking to Becoming Reality?
While the idea for chat banking (also referred to as ‘chatbots’) is still in its early stages, the
technology to build this experience has already been in the market for years. A few banks in
Africa have started to explore how they might integrate their services with messaging apps,
- ABSA Chat Banking (South Africa) – ABSA customers can use Facebook Messenger
and Twitter to check their account balances, view their past transactions, and make
payments to approved contacts.
- Leo by United Bank Africa (Nigeria) – United Bank Africa has unveiled an interactive
chat banker that enables customers to make use of their social media accounts to carry
out transactions. Leo has had over 35 million conversations and processed over 500,000
- MoMo by Orange Money (Madagascar) – Orange Money Madagascar was the first
mobile money company to build and launch a chatbot to help onboard users, answer
basic customer service questions, and provide helpful tips about the service. (Disclaimer:
this is a project that my startup worked on.)
How Should a Financial Institution Get Started?
Any organisation thinking about launching a chatbot must answer several questions, such as:
- Do we want to treat messaging as another channel or a new experience?
- What channels do we want to support?
- How does this change our customer service experience?
- What kind of budget do we have to support this project?
Numerous banks and mobile money companies are interested in working on a small proof-of-concept (POC) or a limited pilot with Teller. A POC or pilot would allow them to see how the technology
works, get feedback from internal and external stakeholders, and also get buy-in from decision
makers. And working with a fintech partner would allow a bank to do this without investing too
many resources up front.
Many potential clients are also interested in exploring this space to prepare their business for
the eventual launch of a WhatsApp developer API. Preparing their back-end chatbot
infrastructure now could help them avoid spending 6-12 months catching up to competitors once
WhatsApp allows integration. It’s clear from my conversations with players in this space that
these developments are coming: It’s only a matter of time.
By Sidharth Garg, Founder of Teller
This post was originally published on NextBillion.