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The evolving interface



The evolving interface

-banking on conversational AI  –

 By Cathal McGloin

Rise of the conversational interface

 When it comes to customer service, consumers drive the conversation. Adoption of household gadgets such as Amazon Echo, Apple Siri and Google’s artificial intelligence (AI) voice assistant, which is embedded into billions of smartphones, have created a new voice-activated interface where customers can engage and interact via chat.

Add to this the move that consumers have already made to communicating via messaging apps, from Facebook Messenger to WhatsApp, Slack and SMS, and we can see that the age of  conversational user interfaces is upon us.

Using natural language as a means of engagement, customers will be able to transact, interact, purchase, and make requests across multiple channels and consumer touchpoints, with less need for a human to be involved. This conversational AI represents a whole new opportunity for consumer-facing industries to create memorable experiences, strengthen brand loyalty, and lower delivery costs.

 From ATM to AI

We believe that the integration of conversational AI will be the next banking interface. The move to automated banking began almost half a century ago with the introduction of ATMs. For routine transactions, customers got used to interacting with screens rather than bank employees. But that interface is rapidly changing as consumers look to voice-activated devices and messaging as a convenient form of engagement. They won’t want to have to sift through their bank’s website to try and find where and how to report fraud on their credit card, or apply for an increase on their credit card limit, or get a breakdown of their recent transactions. Instead, they will be able to ask their banking bot, via the chat interface, to get them the information or execute the necessary tasks to fulfil their particular banking need.

 While convenient, the ATM and other banking innovations have often made the banking experience more impersonal. With conversational AI, banks can bring chat back into the banking relationship and really understand what their customers want. Rather than second guessing them, they can allow the customer to quickly find what they are looking for themselves, or bring them through a series of pre-configured menus or forms.

Mobile banking overtaking online transactions

Just eight years after the iPhone was launched, Ofcom declared, ‘The UK is now a smartphone society.’ Mobile transformed the way that consumers engage with high street banks and lowered the barrier to entry for challenger banks and payment providers. Now, the increased use of voice-activated interfaces and messaging apps is leading to the importance of smart conversations as the next competitive battleground for customer engagement.

Mobile ubiquity has enabled a slew of new business models that are built around customers’ lifestyles. The ING International Survey Mobile Banking 2018 polled 15,000 people in 15 countries and found that 61% of European smartphone users use their mobile device to do their banking: a 13% increase in since 2017. Two thirds (66%) have made a mobile payment in the past year, up from 58% in 2015. Banking consumers are tech-savvy and have demonstrated their readiness for better and more convenient ways to get things done.

The millennial generation, which has grown up with digital technology, has different customer service expectations and tends to be less loyal to financial service providers. Banks continue to be under pressure to retain and grow their customer base, upsell and cross-sell different products and services and engage across multiple communication channels, as preferred by their customers. They have to continuously innovate to build strong brand relationships and customer conversations are at the heart of this.

Traditional banks have faced new competition from start-up ventures such as Starling and completely new sectors, including technology vendors like Google, Apple and Facebook; mobile network operators including Orange; and retailers such as Tesco and Amazon. The race will continue as banks and other new entrants to the financial services market innovate using conversational AI.

 Convenience is king 

Owing to cloud computing technology, higher data processing power, and open sourcing by organisations such as Google and Amazon, artificial intelligence is now more accessible. As a result, we believe that conversational AI-based solutions will be fundamental to the next wave of banking innovation around customer engagement.

Consider the case of a payment card provider being able to provide immediate service to customers who request an increase in their credit card limit via a chatbot, allowing them to make a purchase while avoiding extra charges. The same chatbot platform can offer another customer the option to convert an agreed amount into the currency of the country that they are visiting on a weekend break.

Or think of an insurance provider that is able to make the customer onboarding process transparent and efficient: requesting necessary documents and providing approvals, all within a single conversation. Customers like frictionless processes. A chatbot can reduce multiple interactions to one seamless conversation that can execute the necessary business tasks required to complete the customer journey successfully. This is why conversational user interfaces, powered by AI, will be so powerful in financial services.

Digital consumers drive expectations 

The growth of mobile and messaging apps has created consumers who are used to having everything connected 24/7 and interacting via swipes. This generates increasing volumes of customer interactions that need to be handled, as well as higher user expectations for service delivery. Without modern technology and approaches, the operational costs associated with servicing the new digital customer are prohibitive. Bots are enabling banks to surmount this challenge.

However, no matter how intelligent bots may be, they are still prone to a lack of emotion or personality and a degree of error and confusion that can result in customer dissatisfaction. This begs the support of an agent-assist model where bots can hand off to a human agent when necessary.

Augmented customer service 

The Bank of England’s chief economist recently warned that the rise of AI could lead to a ‘hollowing out’ of parts of the jobs market, with manual, repetitive roles particularly vulnerable to automation. However, he countered this by stating that “jobs focused on skills of human interaction, face-to-face conversation, and negotiation, would be likely to flourish.”

Where customers need counselling, or comforting, empathic employees must be available to them. 

Whenever automation and AI are mentioned, the obvious question is what is the human cost?

A study conducted by London Goldsmiths University found that organisations that continue to invest in development of employees’ skills, alongside their automation strategies and implementation, are around 30 per cent more productive than those that concentrate on automation at the expense of human resources.

Whereas some customer interactions, such as requesting an account balance, can be very basic and lend themselves to complete automation, 24/7 self-serve business processes often require complex rules-based workflows. While some of the tasks in these workflows may lend themselves to automation via AI or bots, there will also be the need for services to be delivered by specialists and for sensitive or complex interactions to be handled by experienced customer service agents. We believe that financial services employees will come to the fore managing the tasks that cannot be trusted to a bot and adding value to interactions, such as identifying upselling or cross-selling opportunities, or tracking engagement analytics and stepping in where needed.

To engage with their bank, customers used to push oak panel doors, now they push smartphone buttons, within five years they’ll simply chat via the nearest gadget.


SoftBank Vision Fund set for new portfolio champion with Coupang IPO



SoftBank Vision Fund set for new portfolio champion with Coupang IPO 1

By Sam Nussey and Joyce Lee

TOKYO/SEOUL (Reuters) – SoftBank’s $100 billion Vision Fund is poised to have a new number-one asset in its portfolio with the upcoming floatation of top South Korean e-tailer Coupang, furthering a turnaround that has seen the fund yo-yo from huge losses to record profit.

The $50 billion target valuation that Reuters reported this month would likely see the decade-old firm surpass recently listed U.S. food deliverer DoorDash Inc on a roster of assets that also includes stakes in TikTok parent ByteDance and ride-hailers Grab and Didi.

The Vision Fund built up its 37% stake in Coupang for $2.7 billion, mostly at an $8.7 billion post-money valuation, a person familiar with the matter said. The fund is not expected to sell shares in the initial public offering (IPO) that Coupang filed for in New York, the person said, declining to be identified as the information was not public.

SoftBank Group Corp and Coupang declined to comment.

Achieving a $50 billion valuation would add to good news for the fund which is bouncing back from an annual loss in March. This month, it announced record quarterly profit, driven by the listings of DoorDash and home seller Opendoor Technologies Inc and share price rise of ride-hailer Uber Technologies Inc.


The fund has written big cheques for late-stage startups to fuel rapid growth, with two-thirds of the value of its portfolio concentrated in 10 assets including Coupang.

The 10 include 25% of British chip designer Arm – to be sold to Nvidia Corp pending regulatory approval – but not stakes in high-profile stumbles like office-sharing firm WeWork.

The fund’s largest assets include its 22% stake in DoorDash, whose share price has doubled since the firm’s December IPO, sending its market capitalisation to $65 billion.

FACTBOX: Vision Fund’s investment hit parade

SoftBank initially invested in Coupang in 2015, adding it to a stable of e-commerce hits that included 25% of China’s Alibaba Group Holding Ltd, before placing it under the fund.

The e-tailer has grown rapidly during stay-home policies while the COVID-19 pandemic has forced other portfolio firms like Indian hotel chain Oyo to scramble to preserve cash.

Analysts see Coupang’s $50 billion valuation as feasible given its first-mover status and as it expands beyond replacing brick-and-mortar retail with a rising number of online channels.

It is the biggest e-tailer in South Korea that directly handles inventory, with 2020 purchases at about 21.7 trillion won ($19.62 billion), showed data from WiseApp.

“The market’s assessment isn’t exaggerated,” said analyst Park Eun-kyung at Samsung Securities. “Coupang’s market leadership is a premium factor.”

($1 = 1,106.1800 won)

(Reporting by Sam Nussey in Tokyo and Joyce Lee in Seoul; Editing by Christopher Cushing)

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Five things to look out for in HSBC strategy update



Five things to look out for in HSBC strategy update 2

By Alun John

HONG KONG (Reuters) – HSBC Holdings PLC will update its “transformation” plan announced a year ago on Tuesday, when the Asia-focussed lender also reports annual results.

As part of its latest strategy, the bank said in February last year it would shrink its investment banking operations and revamp its businesses in the United States and Europe resulting in 35,000 jobs being cut.

HSBC’s pretax profits for 2020 is expected to fall 38% to $8.3 billion, according to analysts’ estimates compiled by the bank, because of the impact of the COVID-19 pandemic.

Here are five key things to look out for in the new plan to revive its growth —

1. How will HSBC boost fee income?

The bank has promised details of its plans to make more money from the fees it earns from selling products to customers than it does by pocketing the difference between the interest rates it offers savers and charges borrowers.

This could involve selling more products to wealth management clients, charging corporate clients in different ways, and maybe even charging retail clients for basic banking services.

2. What do the plans to double down on China and Asia mean?

HSBC intends to refocus resources from elsewhere on what it calls its “high returning Asia business”, but investors want to know what this means in practice for markets and business lines.

Politics could make this harder. HSBC has been attacked by British lawmakers for assisting Hong Kong police with investigations into pro-democracy activists, including freezing some bank accounts.

CEO Noel Quinn said last month the bank had to comply with police requests and he could not “cherry-pick which laws to follow”.

3. Will HSBC resume paying a dividend?

HSBC has not announced a dividend since the third quarter of 2019, on instructions from the Bank of England. This angered retail investors in Hong Kong who tried unsuccessfully to have the policy changed.

The regulator has since lifted the ban, and British rival Barclays said Thursday it would pay a dividend of one pence a share. However, despite beating analyst expectations with its 2020 results, Barclays shares fell as a vague outlook without profit targets left investors underwhelmed.

HSBC investors will be looking beyond the day’s numbers for concrete commitments towards improved returns and a more positive outlook for key economies.

4. How will HSBC shrink its U.S. and European footprint?

HSBC’s French high street banking operations are up for sale, but it has had trouble finding a buyer.

The market is due an update on whether HSBC has managed to find a buyer on terms it will accept, or whether it will seek to wind the business down more gradually.

HSBC will also give details of how it will accelerate its existing efforts to shrink assets, staff and branches in the U.S., which accounted for 0.5% of the group’s pre-tax profit in the first half of last year.

5. More job cuts on the way?

HSBC employed 307,000 people at the end of 2010. The bank’s management said last year it was aiming to reduce the headcount of 235,000 closer to 200,000 by 2023. Investors want to know whether the new plan will mean deeper cuts. Nearly every new strategy launched by HSBC in the past decade has resulted in fewer people being employed by the bank.

(Reporting by Alun John; Editing by Sumeet Chatterjee & Shri Navaratnam)

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Commerzbank to lose 1.7 million clients by 2024 – Welt am Sonntag



Commerzbank to lose 1.7 million clients by 2024 - Welt am Sonntag 3

FRANKFURT (Reuters) – Commerzbank expects to lose 1.7 million customers by 2024 as part of its current restructuring, resulting in a 300 million euro ($364 million) hit to revenue, weekly Welt am Sonntag reported, citing sources close to the bank.

The lender hopes to offset the drop by growing its loan business as well as by expanding its business with corporate and very wealthy clients, the report said, without giving any further detail of why customer numbers were expected to decline.

It also didn’t say if any specific category of client was most likely to be lost.

Commerzbank declined to comment.

According to the bank’s website it serves around 11.6 million private and small-business customers in Germany and more than 70,000 corporate and other institutional clients worldwide, so the reported loss of customers would suggest a drop of around 15%.

The bank earlier this month reported a $3.3 billion fourth-quarter loss, sinking further into the red as it continued a major restructuring and dealt with the fallout of the COVID-19 pandemic.

The bank’s restructuring plan involves cutting 10,000 jobs and closing hundreds of branches in the hope it can remain independent.

($1 = 0.8253 euros)

(Reporting by Christoph Steitz and Tom Sims; Editing by David Holmes)

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