Listen: Chatbots evolve to be more efficient, helpful to employees

Loraine Lawson
Good day. This is Loraine Lawson, an associate editor at Bank Automation News. Recently I spoke with Likhit Wagle, IBM’s general manager for global banking and financial markets. Wagle explained that IBM works with both banks and regulators to ensure its solutions comply with regulatory requirements. I asked Wagle whether that’s led to a shift in how banks see the cloud as a solution.

Likhit Wagle
Yeah, I mean, yes, I mean, I think I think we’re seeing a lot of excitement in our clients. And the reason for that is, you know, most of our banking clients around the world are finding that they are facing the strongest competition in their industry, not so much from the other banks, but they’re facing this competition from the big tech companies. Today, you know, if you speak to a banking chief executive, you know, Jamie Dimon has talked about this a lot in the public domain, what they’re worried about is a competition from the likes of Google, not so much as I say, from Bank of America, right. And the reason why they’re really worried about that competition is because big tech is born in the cloud, it does not have legacy applications, and is able to provide a quality of customer experience at a cost point because they are cloud native in the kind of way that banks are really struggling to compete with, right, what I mean by experience, just to give you an example is experiences both convenience, you know, you and I and others, particularly in this kind of pandemic environment have not gotten used to run a lot of our lives on things like Amazon and Google. And we’re very used to, you know, achieving what we want to do within one or two clicks. And if you want to order some food, you can do it within a couple of clicks, right? And customers are looking customers are absolutely looking for that same level of convenience with their bank, they want to do it on a smartphone, and they want to be able to, you know, effect so so if you want to make a sale, if you want to transfer money right to somebody, you want to be able to effect that transfer within a couple of clicks, you don’t want to go in and you know, have to fill out, you know, very lengthy forms, and what have you. And then the other one, which is you know, making it even more difficult for the banks is they want that transaction to happen immediately. You know, you transfer that money, they want that money to be sitting with the person you’ve transferred with a straightaway that because that kind of instant fulfillment, instant gratification is what, you know, customers, consumers have got very, very useful. Now, when a bank kind of looks like how am I going to achieve that? Well, they actually recognize is that a much larger proportion of their mission critical workloads are going to have to become cloud and cloud native, so that they can have the agility, the flexibility, the ability to adapt them, adopt them, transform them to be able to achieve that experience for that particular customers. Also, cloud gives you some cost benefits. It takes about 20 to 30% of the cost base of the organization if it’s done right. That also is essential to get to the cost points, then too, in order to be able to compete with these big tech companies, what’s been holding them back so far is that is the current cloud providers are not able to meet those regulatory requirements. And therefore, the banks, as you’ve seen, have so far only been able to put about 10% of the workloads into the public cloud. Now, I think they see a way to be able to put quite a large proportion of their workloads onto the public cloud. So suddenly, the response we’re getting from our clients has been very exciting, very positive.

Loraine Lawson:
Now, I know you do quite a few chatbots with banks. Have you see of chatbots evolving in the next six months to a year or two years, whatever timeframe you think they’ll evolve on? And are there new ways in which chatbots will help with automation?

Likhit Wagle:
That’s a great, that’s a great question. I think I think the first part of what we’re starting to see on junk bots, and the way in which they are evolving, is just that pure effectiveness. So at the moment, you know, what we’re starting to see is, you know, that they are able to in some of the examples that we’ve worked on, they’re able to deflect, you know, almost 80% of the calls that are coming into a call center. So by that what I mean is that over 80% of the calls, do not have to go to a human being they’re being dealt with by the chatbot itself, which is extremely useful for the bank, both in terms of what you know what what the customer is looking for, and satisfying what the customer is looking for, and also has enormous implications as huge as you’d expect from a cost perspective. Now, the other side of it, which is also extremely important is that we’re also starting to see that not only is it deflecting 80% of the cause, but we’re starting to find that a very large percentage of the cause 60% and above, we’re not having that customer ringing back again, about the same issue within four weeks of the first four. So it started to provide satisfaction that, you know, the chatbot has actually been able to deal with the problem and has been able to deal with the problem satisfactory. Now, I think, to answer, I think to answer the second part of your question, I think what is going to happen in terms of chatbots is, they are going to progressively become available to do some of the more complicated things that customers or customers are trying to do, right like today, you know, chatbots are out there if you want to check in if you want to, if you’re having problems with your passwords, or if you want to stop your credit card, something which is relatively quite simple. But I think you are going to start to progress progressively see chatbots being able to assist, even on things that are a little bit more complicated. I mean, to give you a very real example. I mean, just literally yesterday, you know, I was seeking to work with in I used to be based out of Singapore, I was seeking to work with my bank in Singapore in order to get them to replace my Singapore mobile number with my with my us mobile number. Now that would not have been something that I would have been able to do even a few months ago off of a chalkboard now it was possible to do it completely off of a chatbot ratio progressively starting to see see that happen. I think you’re also going to start to see chatbots we use much more internally within the organization. So you look at a lot of the employee. And we do this a lot in IBM, we look at a lot of employee experiences around interactions with it, or interactions with HR, which in the past, you know, you were really struggling to do in a self service way because some of these things were quite complex, the chatbots actually out a very, very nice way to give you a step by step way through executing on those transactions, so you can kind of do them self service. The last point I would make, though, that I think so far at least I think the secret in this Lorraine is going to be can you seamlessly move from a chatbot to the human intervention, if you start to see that the person was using the chat bot is struggling, right. And this is something that we did with Cora a an implementation we did for NatWest in the, in the in the UK. And I can mention this to you because it’s in the public domain. There. What actually happens is that, you know, you’ve got a bunch of people who are in the background, the moment they start to see that somebody’s struggling with an inquiry that they’re making on the chatbot. They can seamlessly pick that inquiry up with a human intervention. And the thing that’s particularly neat is you don’t have to go in and explain what you were trying to do because They can see what it was that you were doing. You know, it’s possible for them to pick up straightaway. And it becomes a much smoother, seamless interaction between yourself and the chatbot.

Loraine Lawson:
How do you see IBM’s offerings evolving in terms of financial services? And are there other IBM technologies you might perceive opening up to banks?

Likhit Wagle:
I think a couple of things Lorraine, that that I would, I would say in this one, one is, which has already changed very substantially, literally, within the last, I would say, six months or so right, which is, you know, we have much more aggressively as a result of what we’re seeking to do with a hybrid cloud platform, and moved to create a financial services ecosystem of ISV partners that are really relevant to the industry. So the last card and this has been increasing every day, at the last time, we had 96, ISVs, these are some of the most important sales for most important to go, you know, software providers to the banking industry, that have, you know, signed partnership arrangements with IBM to work together with IBM, on, you know, IBM software, to be able to address, you know, the most important problems within within the industry, this, this goes across all of the domains, right, if you look at, if you look at, you know, front office engagement, you know, it does include even some of the global ISVs, like Salesforce and Adobe, if you’re looking, you know, you can look at payments, you can look at lending, you can look at risk, we really do now have a very powerful ecosystem of these handsfree. So I think I think that’s one aspect of an evolution of IBM is technology, we absolutely see, you know, we have, we have a massive commitment to open source, we absolutely see IBM plus these as we plus the open source capability, as as the kind of way forward to be able to, you know, solve solve the most important climate problems, in terms of where the technology will evolve, certainly where, you know, IBM will play a part, in that there are two main areas that we’re focusing on, right. The first is hybrid cloud platform, that’s very much a part of IBM’s heritage, we see that very much as the way in which platforms are going to evolve, you know, we have a very strong presence through the mainframe in terms of the bank where the banking industry requires, I mean, more than 97 98% of the banks actually run on the IBM mainframe, it says, you know, it’s a completely safe, secure environment and platform that enables them to move forward, that I think it’s going to move to hybrid cloud. And what I mean by hybrid cloud is every every bank, and this is gonna be particularly important in the bank, you know, you are going to see both on premise infrastructure, which will include mainframe and private cloud, and you’re going to see public public off premise cloud capabilities, which would involve, you know, secure public cloud in the kind of way that we’ve developed through IBM Cloud for financial services. And it will also, you know, also include what we, you know, call the hyper scalars, right, so this will include people like Microsoft and Amazon Google, right. So, so that is going to be that hybrid cloud platform is going to be a very key part of the technology. And one of the very important things that we bring to this party, you know, which which was obtained through the acquisition that we made of red hat is a state of the art capability to be able to manage across those different clouds, right? It’s now starting to become really complicated with that hybrid cloud platform, how do I manage these different providers, these this multi, multi hybrid cloud environment, and that’s what Red Hat openshift does, in a way that, you know, we think is best going forward, right? So that hybrid cloud platform, which is Red Hat, plus this multi cloud environment that I’ve just described, will be a key area priority, we will continue to evolve that going going forward. I think the other area is going to be very much around data and AI. You know, we are investing very heavily around data and AI. But you know, our previous chief executive very much said, you know, Ginni rometty often said that, you know, data was going to be the oil of the future, we’re increasingly starting to find that that is what is happening. And we see that we see that evolving enough number of ways, right. I think one of the ways which is going to be really important is this whole thing around security and privacy, right? As as customers, you know, Want and banks want more and more of this data to be used in order to help them provide a better quality experience for their customers, they also want to be want to be absolutely sure that that data is going to be secure, it’s not going to be breached, that you are going to be capable of protecting it against cybercrime, which is kind of increasing every day, right? So security of that data is going to be key, you’ll see a lot of evolution in that space.

Loraine Lawson:
you know, we wouldn’t be big automation news. So if I didn’t ask you specifically how IBM supports automation and baking processes, whether that’s through the cloud, or through your AI capabilities, or how do you how do you see IBM supporting automation.

Likhit Wagle:
So, you know, primarily, we, we are very focused on supporting automation through what we’re calling intelligent workflows. And what I mean by that is, you know, in this particular industry, we’re working very closely with our clients to be able to remap and reimagine processes, and to be able to embed AI technology into those particular processes in order to make them to make them smart to make them intelligent. So that is the core area in which, you know, we are working, you know, within IBM, you know, running around automation. And there are there are a number of places where there are some great examples of the impact that’s having, I’ve already talked about chatbots. And you know, what we’re calling conversational AI, that that is a place, that’s a really important, I think the other one which is really important is around content intelligence. And what what I mean by that is, that is where we’re using AI and machine learning basic tools in order to be able to extract information from documents, information that may be in different formats, right, it could be structured data, or unstructured data, but it extracts the information from those particular documents, and converts it into digital format, so that it could become, you know, a core part of automated processes, right? automated digitized processes, we’ve created factories, for a number of clients around the world where we are doing that particular work, there’s one in the public domain, if you wanted more information on this, which is for Standard Chartered, were for that trade finance work before, they want to do the second largest banking, trade finance in the world, a lot of their straight finance processes have been automated, fully digitized fully around the world. And it’s that content intelligence offering that enables them to do that, because it extracts the information that you require, and that you kind of require to be able to digitize it. So those are just a couple of examples of the sorts of things that we’re doing to lead the charge in automation, I would make that point on this one, this just maybe to conclude this particular point, would be in a field, if you look at, you know, the impact of AI within the banking industry, and where where are the banks getting the best, and the highest return on investment is very much through embedding AI into the automation of processes. You know, as compared to other industries, if you look at retail, where you would go in and say, Well, I’m going to use AI, in order to really understand my customer in order to predict what my customer wants to buy. And it’s around, you know, customer related activities that drive a lot of data analytics. In the banking industry, we do do a lot of that. But the bigger prices are very much around automating the processes, making those processes much more digital, and AI is fundamental to making that happen.

Loraine Lawson:
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