ChatGPT for banks: How artificial intelligence is improving customer service in banking
In today’s world, where digital innovation is fundamentally changing the financial sector, it is crucial that banks keep pace with the needs and expectations of their customers. ChatGPT, a pioneering AI technology, has the potential to revolutionize the way banks interact with their customers.
Today’s customers are demanding and want convenient and efficient ways to carry out their banking transactions. Bank customers expect the same fast service that they are used to from other, sometimes destructive, business models such as Airbnb.
Chatbots and virtual assistants have become increasingly indispensable tools in recent years to help banks improve customer service and provide a seamless experience for customers. However, ChatGPT goes one step further and enables a human-like interaction that makes customers feel like they are talking to a real bank employee.
What is ChatGPT?
ChatGPT is a chatbot, a piece of software that simulates a human conversation. On the ChatGPT website you will find a simple input window, just like a search engine. Anyone who registers on the site can type in any question free of charge.
ChatGPT comes from the US company OpenAI, which specializes in research into artificial intelligence. More precisely, ChatGPT originally comes from the non-profit parent company OpenAI Inc. The for-profit subsidiary that belongs to it is called OpenAI LP. The organization’s main financial backers were the entrepreneur Elon Musk (known for Tesla and SpaceX) and the company Microsoft. Microsoft has since become one of the largest investors in ChatGPT and its parent company OpenAI. Microsoft only confirmed its support at the beginning of 2023 and announced further investments in OpenAI. According to rumors, the current investment is said to be worth a full 10 billion dollars.
You can find out more about “What is ChatGPT?” in one of my last blog posts.
How does ChatGPT work?
ChatGPT is an advanced AI model designed to have human-like conversations with users. It is based on the GPT (Generative Pre-trained Transformer) architecture from OpenAI. GPT works by analyzing large amounts of text data and recognizing patterns. It learns by using these patterns to make predictions about the next word or phrase in a text.
ChatGPT uses its ability to understand natural language to analyze the user’s input and generate an appropriate response based on it. It takes into account the context of the previous messages and attempts to provide a meaningful and relevant response.
The result is an advanced chatbot that offers users a seamless and interactive experience, simulating human-like conversations.
What is the difference between ChatGPT and GPT?
The difference between ChatGPT and GPT is that ChatGPT was developed specifically for interactions with users. It has been trained to respond to questions, provide information and offer support in a similar way to a human conversation partner.
GPT is “only” the underlying language model. In other words, the way ChatGPT can communicate.
You can read more about the differences between ChatGPT and GPT in one of my last posts.
When banks talk about wanting to benefit from the advantages of ChatGPT, they are usually talking about the advantages of “GPT”. It is therefore important that banks also use the GPT language model in their chatbot services.
Advantages of ChatGPT or GPT compared to conventional chatbots
More natural conversations
Compared to conventional chatbots, which are often based on predefined responses, ChatGPT is able to conduct human-like conversations. It understands the context and can respond to complex questions and concerns, resulting in a more natural and enjoyable user experience. If banks use GPT in their chatbot services, they benefit precisely from these human-like conversations.
Flexibility and adaptability
ChatGPT can be customized for different industries and use cases. It can acquire specific expertise and adapt to the specific needs of a bank or financial institution. This enables it to provide personalized and tailored support for customers. If banks integrate GPT into their chatbot, it can conduct individual dialogs and adapt very precisely to the needs and tonalities of individual users.
Human interaction experience
ChatGPT simulates human conversations and offers users an interactive experience similar to talking to a real employee. This creates trust, improves customer satisfaction and increases customer loyalty to the company.
Faster implementation
With conventional chatbots, all intents, i.e. all requests that a user could make to the chatbot, had to be defined manually in advance. These intents had to be “taught” to the chatbot. At least one answer had to be given for each intent. Chatbots that use GPT can assign the users’ intents to suitable answers themselves. All the bots need is an extensive source of knowledge. This can be a bank’s website, for example. Helvetia was the first Swiss insurance company to put such a chatbot online with GPT. You can read more about the Helvetia experiment with chatbots in one of my last posts.
Scalability and round-the-clock support
ChatGPT can process several requests simultaneously and is available around the clock. This enables banks to handle a large number of customer inquiries efficiently and offer their services on different channels and at any time of day. Chatbots with GPT cover a much wider range of applications than conventional chatbots. This means you can really answer customer inquiries more fully and automatically outside traditional service hours.
Conclusion: Advantages of ChatGPT over chatbots
Overall, ChatGPT offers a more advanced and interactive solution compared to traditional chatbots, resulting in an improved customer experience, greater efficiency and stronger customer loyalty. The way they communicate is much more human-like. And the implementation of such GPT bots is much faster and requires fewer human resources than classic chatbots. You can find an example of a simple FAQ bot from a Swiss bank here on the Paretolabs.ch website. This chatbot simply uses the freely available information on the UBS website (fully compliant with data protection regulations).
ChatGPT in banking
Here are some examples of how ChatGPT can be used by banks today or in the future.
Answer customer inquiries
ChatGPT can answer frequently asked questions about account balances, transfers, credit cards, interest rates and other banking services. It can also provide information on store locations, opening hours and other general inquiries. It is also possible that ChatGPT will ask questions about money laundering, onboarding or KYC.
Transaction support
ChatGPT can assist customers with transactions such as transfers between accounts, payments to third parties or requesting account statements. It can provide instructions, check the status of transactions and offer assistance if problems arise.
Product and service recommendations
Based on the customer’s preferences and behavior, ChatGPT can provide personalized product and service recommendations. For example, it can suggest which account or credit card best suits the customer’s individual needs. ChatGPT can also adapt the tone of voice to each individual customer.
Support for technical questions
If customers have technical issues with online banking platforms or mobile applications, ChatGPT can provide support and guidance. It can help with troubleshooting, solve login problems and answer basic technical questions.
The advantages of ChatGPT for banks
Increase customer satisfaction
ChatGPT enables banks to offer their customers personalized support. It can answer individual questions, provide information on accounts and products and assist with transactions. This personalized approach makes customers more satisfied and makes them feel valued.
Increase efficiency
Banks are often confronted with a high workload and a large number of customer inquiries. This is where ChatGPT comes into play by automating repetitive tasks and processing multiple requests simultaneously. This optimizes customer service, shortens waiting times and allows employees to concentrate on more complex issues.
Being available around the clock
One of ChatGPT’s great strengths is its ability to support customers around the clock. No matter what time of day or day of the week, customers can access the service and get their questions answered at any time. This creates real added value for banks that want to offer their customers 24/7 support.
Improved scalability
With the growing number of customers and the need for fast customer service, it is crucial for banks to have a scalable solution. ChatGPT can be easily integrated into various channels, be it via websites, mobile applications or messaging platforms. This allows banks to expand their reach and offer their services on multiple platforms.
How secure is the use of ChatGPT in banking?
Data protection and data security
The media repeatedly report on the dangers of ChatGPT. Especially in the context of banks, where very sensitive data is often involved, data protection should of course be a top priority.
To this end, it is important that banks have precise control over which data is processed by which services in the chatbot. Furthermore, sensitive or confidential data must of course never fall into the “wrong” hands or be processed outside the bank servers.
For banks, this means that GPT may only be used for certain requests or the API calls to OpenAI, i.e. to ChatGPT, must take place in a separate area.
The following is an example of how banks can benefit from all the advantages of ChatGPT while maintaining the security of customer data.
The architecture shown was developed and technically tested by Partolabs, a Swiss start-up. Paretolabs adds its “own” AI mid-layer in addition to the classic ChatGPT API call. This additional AI layer contains the components necessary for financial service providers. Banks can then train the prefabricated model with a company-specific context (e.g. their own website) and have it work within predefined limits. The mid-layer has the following three main functions.
- “Alignment” control – additional control of the desired behavior of the chatbot (thematic, semantic, etc.)
- Data cleansing – personal or other customer-identifying data is anonymized before being passed on and remains in the midlayer. They are added again when you reply.
- Context – the midlayer takes over the main function of identifying the correct text modules so that ChatGPT can form a response from them.
Potential ethical problems
The use of artificial intelligence (AI) repeatedly raises ethical concerns among companies and customers. The best way to overcome these concerns is for companies to communicate transparently. The use of ChatGPT should always be made clear to customers. Banks should also explain to their customers what the use of GPT and co. means and how these models work.
Conclusion: The future of customer service – ChatGPT in banking is on the rise
This article shows that ChatGPT brings a lot of added value for banks. Under no circumstances should banks close their eyes or hide behind supposed data protection hurdles. Instead, banks should start experimenting with ChatGPT and other Large Language Models (LLMs) today and gather their first experiences.
A good first use case could be, for example, an intelligent FAQ assistant that can hold natural conversations with bank customers and answer their general questions about banking, accounts and cards. All a bank has to do is combine its website content with the GPT language model and not forget the fine-tuning. As a reminder, here is the example from Paretolabs with the information from UBS.
Ultimately, however, every company has to find its own use cases. I will be happy to advise you on this. Here is my ChatGPT consulting offer.
Outlook for the future of ChatGPT in banking
I’m sure ChatGPT has come to stay. Chatbots with GPT will be able to handle more and more simple and repetitive customer queries in the future. Bank advisors and other employees then have time again for more valuable discussions and actively invest in relationship management. We would be happy to discuss this together. Get in touch with me via WhatsApp message or email.
By the way, there is also a ChatGPT Prompt list especially for employees of financial companies. All information incl. You can find ordering options on the ChatGPT Prompts for Finance page.
ChatGPT in banking – Frequently asked questions & answers
What is ChatGPT?
ChatGPT is the use of OpenAI’s artificial intelligence, especially for automated customer interactions, analytics and other banking-related tasks.
How can ChatGPT be used in banking?
ChatGPT can act as a virtual assistant to answer customer questions, process payments or check credit applications. It can also be used for fraud detection and data analysis.
What are the advantages of ChatGPT for banks?
ChatGPT can help banks increase efficiency, reduce costs and improve customer service by being available around the clock and minimizing human error.
How secure is the use of ChatGPT in banking?
While ChatGPT offers secure encryption and data protection measures, security also depends on the implementation and security measures of the respective bank. In principle, it is possible to use ChatGPT completely securely and in compliance with data protection regulations.
What are the challenges of implementing ChatGPT in banking?
The challenges include technical aspects such as integration into existing systems, training the model on bank-specific data and the issue of data protection and compliance.
To what extent can ChatGPT replace human bank employees?
While ChatGPT can automate many routine tasks, it does not replace the need for human expertise, especially for complex tasks and decisions.
Can ChatGPT be used for financial advice?
Yes, ChatGPT can be used to provide basic financial information and recommendations, but should not be considered a substitute for professional financial advice.
