Banking customers regularly turn to their financial institutions for assistance with products and services and in doing so, rightfully expect to receive timely, straightforward answers. Enter chatbot technology.
Need to Know
- Banks are rapidly adopting AI-powered chatbots as a lower-cost alternative to human customer service, with usage expected to continue growing significantly.
- While chatbots can effectively handle simple tasks like balance inquiries and payments, they often struggle with complex customer issues and nuanced conversations.
- Banks are realizing major financial benefits from chatbot technology, including reduced operating costs and lower inbound call volumes.
- Customers and regulators, including the CFPB (Consumer Financial Protection Bureau), are raising concerns about inaccurate responses, unresolved disputes, lack of empathy, and difficulty reaching a live person.
As this technology has evolved, so has the banking industry’s use of it. As we’ve all learned over the past few years, sometimes quite painfully, chatbots are nearly everywhere in the financial services space; on websites, mobile applications, and social media accounts. Four years ago, over 98 million users (approximately 37 percent of the U.S. population) had engaged with a bank’s chatbot. This number is projected to grow to 110.9 million users by the end of this year.
Chatbot technology continues to evolve at a rapid pace, with banks seeing chatbot customer engagement as an increasingly cost-effective alternative to interacting with a human being. But chatbots are still far from the perfect personal assistant. Deloitte, in “From frustration to delight: Designing the next generation of AI-powered banking chatbots,” paints this picture of what a banking chatbot might someday do for us:
“Imagine it’s 2030. You’re ready to upgrade to a sleek new electric vehicle. You open your bank’s app and ask, “What’s the best car loan I can get?” Your personalized banking assistant, an intelligent, voice-enabled avatar, replies instantly: “Great idea. Based on your budget, driving habits, and family size, here are the top five EVs for you.” Immersive cards appear; photos, prices, monthly payments, and loan preapprovals all customized to your credit, cash flow, and goals. You tweak filters, compare insurance, or apply on the spot. Here in 2025, we’re not quite there yet.”
A bit of chatbot history
With their ability to simulate human-like responses, chatbots can do a fair job as customer service agents. Though they can vary substantially in terms of sophistication, automation, and features, they all ingest a user’s input and use programming to produce an output.
Much of the industry uses simple rule-based chatbots, which use either decision tree logic or a database of keywords to trigger preset, limited responses or to route customers to Frequently Asked Questions (FAQs). These chatbots may present the user with a set menu of options to select from or navigate the user between options based on a set of keywords, then generate replies using predetermined rules. As a result, the user is typically limited to predefined possible inputs. For example, a bank chatbot may list a set number of options for the consumer to choose from, such as checking their account balance or making a payment.
More complex chatbots use additional technologies to generate responses. Recently, financial institutions have begun experimenting with generative machine learning and other technologies, such as neural networks and Natural Language Processing (NLP). Other complex chatbots use Large Language Models (LLMs) to analyze the patterns between words in large datasets and predict what text should follow in response to a person’s question.
So, are they working?
Chatbots may be useful for resolving basic inquiries, but their effectiveness wanes as the challenges it faces become more complex. The negative outcomes for the customer are numerous; wasted time, feeling stuck and frustrated, and receiving inaccurate information, to name a few. On the flip side, the incentives for banks to use chatbots cannot be ignored. According to CoinLaw’s “Banking Chatbot Adoption Statistics 2026:”
- Banks saved an estimated $7.3 billion globally in 2025 through chatbot-related efficiencies
- Chatbots reduced inbound call volumes by 42%
- Customer service operating costs dropped by an average of 29% per bank
The CFPB is weighing in
With the growing use of chatbots by banks are growing complaints from the public. Issues range from a chatbot's inability to answer a question correctly or resolve a dispute, to providing inaccurate or insufficient information. In some cases, these shortcomings raise questions about regulatory agency compliance.
The CFPB cites this example in “Chatbots in Consumer Finance”:
"I engaged their chat service for help and was told that a dispute would be open and that I would receive conditional credit within 48 hours. The following Tuesday I had still not received credit and in their online banking site the dispute is nowhere to be found. I contacted them again…to advise them that the dispute was not opened. The chat agent confirmed that the agent from the prior week did NOT open a dispute and said that they would get it opened. When asked for a case ID they were not able to give me one but told me that I would again receive conditional credit and the dispute would appear online within 48 hours. It is now 48 hours later, the dispute has not appeared, and I am chatting with a third agent who I have no doubt will fail in the same way…What is worse is there is not a way to contact a person who can actually resolve the situation."
Sound familiar? I’ve been there. It’s frustrating. Especially that last part about “not a way to contact a person who can actually resolve the issue.” You’ve probably been there, too.
Is it worth it?
Banks may be saving billions by replacing customer service agents with chatbots, but a growing number of consumers are no longer feeling the trust and empathy they’ve come to expect from their bank...and bankers.
As they continue to integrate artificial intelligence into their customer service operations, banks will, more than likely, continue to realize significant financial gains by moving away from in-person, over the phone, and live chat customer service. Depriving customers of dependable and timely customer service, however, will almost inevitably lead to greater customer dissatisfaction, possible compliance risks, and perhaps customer attrition. Will the shift away from relationship banking to “algorithmic banking” continue to make sense for banks? We’ll see. The CFPB offers this advice on the matter:
"Financial products and services can be complex, and the information being sought by people shopping for or using those products and services may not be easily retrievable or effectively reduced to an FAQ (Frequently Asked Questions) response. Financial institutions should avoid using chatbots as their primary customer service delivery channel when it is reasonably clear that the chatbot is unable to meet customer needs."
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