A Blind Spot on Chatbots

What’s the difference between a money manager and a chatbot? You can blame a money manager when things go wrong. 

Despite the long history of financial fraud, people still prefer human advisers to chatbots when it comes to money matters. In a new survey, nearly three-quarters of consumers said they didn't trust chatbots’ advice and information on finance; the only category in which consumers trusted chatbots’ guidance less was medical matters. Other studies show that upwards of 50% of consumers would rather receive investment counsel and loan approvals from a human advisor. This level of mistrust is a major concern for financial services leaders, given the industry’s aggressiveness in deploying the technology: More than 100 million people interact with financial chatbots annually.

To be sure, consumers tend to be slow adopters of new financial technology (as they were with ATMs years ago). Deepali Vyas, global head of Korn Ferry’s Fintech, Payments, and Crypto practice and global leader of its Applied Intelligence practice, says people mistrust chatbots in part because they can’t be held accountable. “You can’t take down a chatbot for fraud, and you can’t count on a chatbot to hold your hand through a financial crisis,” she says. On the other hand, she notes, bad human actors can be identified and face consequences such as fines, loss of license, and in some cases prison. A larger issue, however, is that there is a disconnect between banks’ use of chatbots and consumers' understanding of them. For instance, data shows that about 50% of banks use chatbots to adjust credit scores and predict consumer behavior. But with two-thirds of consumers claiming to not understand how AI solutions work, Vyas says it stands to reason that they would be mistrustful, especially since factors like credit scores can hugely affect their personal finances. 

Chad Astmann, co-head of global investment management at Korn Ferry, says bridging the trust gap is critical as the financial sector relies more and more on AI-driven chatbots to handle a massive number of daily customer interactions. It’s worth noting that consumers—who want and expect to be able to handle most banking interactions digitally, as Astmann points out—are driving the demand for chatbots. Last year, for instance, financial firms saw a massive increase of 3,150% in chatbot interactions. Most involved simple functions: routing calls, providing account information, and facilitating withdrawals, deposits, and other basic banking transactions. 

Banks have had trouble providing the higher-order decision-making services people seek because of the need, in a heavily regulated industry, to be conservative about their chatbots’ capabilities, Astmann says. As a result, he says financial-services chatbots often lag behind those consumers might find in other sectors like retail. “Financial-services chatbots often fall well short of expectations, which is what leads to distrust and disappointment,” says Astmann. 

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