Conversational banking is in the spotlight.

Google’s recent voice demo with Google Assistant has led many to look for — or create — an equivalent in the banking industry. Some larger banks are trying. Bank of America is in the middle of rolling out its AI-driven virtual assistant Erica in stages across the country; Capital One has its own virtual assistant, Eno, and the Royal Bank of Canada has Nomi. The list goes on.

While some banks have an in-house innovation team that’s equipped to handle building such a virtual assistant with conversational banking capabilities, the majority of banks rely on third parties to develop such platforms. That’s where artificial intelligence company Kasisto and its CEO Zor Gorelov see an opportunity.

It’s important to note that conversational banking is not the same as voice banking. Although voice banking can be part of conversational banking, the latter also includes text-based conversation.

With a number of banking customers like Standard Chartered Bank, TD Bank and Wells Fargo under its belt, Kasisto is working on bringing conversational banking to forefront for many banks this year.  And indeed, this year has already been buzzing with use cases for artificial intelligence in chatbots as way to provide customer service, conduct transactions, and even help with customer acquisition. This doesn’t surprise Gorelov, who began creating Kasisto’s chatbot KAI in 2013, first under SRI International and then as a standalone company. (The name KAI is deliberately gender-neutral.)

“I understood early on that AI would be very important to financial services companies, especially banks,” Gorelov told Bank Innovation. “AI helps banks simplify their customers’ lives, which obviously helps the FIs… think Siri’s cousin with a degree in finance.”

An AI-powered chatbot has benefits for both the customer and the bank: the customer receives the digital service that is becoming more popular, while banks can grow their user base and reduce costs. Ideally, an AI-powered chatbot allows the bank to give its customer the type of digital service they have become accustomed to in other aspects of their lives.

A Crowded Field

Kasisto is not alone in this field. Cleo, Digit, Penny (acquired by Credit Karma), and Active.Ai, a company in INV Fintech, this site’s sister accelerator, are just a few others. But Kasisto is notable for its success in obtaining FI clients.

Take Singapore’s DBS Bank, for example, which worked with Kasisto on its mobile-only Digibank. 

Tom McCabe, global business executive & country head at DBS Bank, told Bank Innovation: “The approach to using Kasisto is not ‘How do we reduce costs?’ but how do we want to transform our business using this technology?”

Nevertheless, DBS was able to lower its efficiency ratio and increase shareholder value, “without having to change anything in our product line,” McCabe said. Launched only a year ago in India, DBS’s Digibank already has 1.8 million customers in India. “About 82% of our customers have been onboarded without a human being involved,” McCabe told Bank Innovation.

But fintech’s chatbots still have a long way to go before they can be compared to Alexa or Google Assistant in terms of understanding human language, spoken or written. Gorelov sees that changing soon, at least in regards to texting.

Kasisto’s KAI and Active.Ai’s bot can understand commands and requests conveyed in natural language, so when a user asks “Hey, how much do I have?” the chatbot knows that it being asked the account’s balance.

AI-driven chatbots, such as Ann Arbor, Mich.-based Clinc have advanced to understanding languages in the way it is spoken, and is also available in multiple languages. Many chatbots can also be integrated into other messaging platforms, such as Facebook Messenger or WhatsApp.

“We believe that conversational interface will be the way consumers interact,” Gorelov said. “It is the most important and most intuitive way for a customer to interact with their bank.”