The pandemic has readied the runway for chat banking’s takeoff

Banking across Africa and South America is faster and more convenient than it is for many people in the United States. For instance, one of the largest bank in Lagos, Nigeria can request a statement, transfer funds and pay bills in less time than it takes most Americans to even find and open their bank’s smartphone app.

These international customers are using chat banking, a secure and convenient way to bank that’s been steadily gaining popularity globally. With chat banking, people turn to their favorite chat apps—like WhatsApp or Facebook Messenger—to complete routine banking tasks. Chat banking first arrived in emerging markets, where many customers are mobile-only and mobile-first digital experiences are the priority.

Simple and engaging, chat banking offers a new way to reach and retain mobile-first consumers, especially younger ones. A study found that 61 percent of teens preferred chatting to face-to-face communication with their friends. While teens are not a top audience for banking, their preference for chat over other types of engagement is likely to continue as they get older and shop for more banking services.

Favoring chat isn’t age-specific. Another study found that Americans across age groups prefer messaging to talking on the phone. And recently improved business access to chat apps makes it easier than ever to empower customers with chat banking.

A closer look at how chat banking works at a leading African bank demonstrates its convenience. The bank offers chat banking through WhatsApp and Facebook Messenger. Customers initiate a chat interaction through their preferred app. Automated menus guide the customers through common banking tasks, such as paying bills, transferring funds, finding branches and viewing a full or mini statement.

As noted earlier, chat banking delivers convenience and security in the familiar environment of a favorite chat app, where most consumers now spend their time. Most interactions are 100 percent automated, but customers also have a live chat option with an agent in a contact center.

Is chat banking secure? Short answer: yes. The long answer requires that we look more closely at specific chat apps. Take WhatsApp, which includes end-to-end encryption and protects user privacy. Just as important, WhatsApp enables two-factor authentication to ensure the identity of chat banking users. Chat interactions also provide for enhanced digital behavior tracking, taking security to the next level.

App fatigue hampers digital banking

In the U.S., apps have been the primary digital banking innovation of the past decade, so innovating beyond apps is the next seismic shift in retail banking. Customers have accelerated their attention to digital channels outside of apps. Recent research from BAI documents the trend. The study found that half of consumers have increased their use of digital channels since the pandemic began, and 87 percent expect to keep doing so after the pandemic ends.

When it comes to mobile channels, there’s a barrier to growth—app fatigue. That’s the feeling of being overloaded by too many apps. Consumers may not want to download or learn to use your app, and at the same time, many people with app fatigue actually prefer well-designed mobile experiences to other digital channels.

For the bank in Lagos, it took 20 days to launch chat banking in Nigeria—the expansion of chat banking to other countries began within 90 days. Customers get 24/7 digital engagement with their banks in a mobile-first experience within the same app they use to connect with friends and family. Their banks become valued contacts—not just another app.

Chat banking overcomes app fatigue by opening a digital banking channel within apps that billions of people already use every day.

Your customers don’t have to download or learn a new app. They contact you through their favorite chat apps, verify their identities, and chat. Customers type what they want to do and select options from simple menus. The chat interface walks them through tasks quickly. Your bank becomes part of your customers’ contact list—ready to help or offer expanded services, and with the user experience that customers already know and love.

Hannes Van Rensburg is chief commercial officer at Clickatell.

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