As digital channels continue to increase and customer expectations rise, financial institutions are confronted with the daunting task of delivering seamless, customized, and efficient experiences, all while keeping expenses in check.
The financial and banking sectors are using AI-powered technologies to tackle these challenges. According to recent reports, the global AI in the banking ecosystem was valued at $3.88 billion in 2020 and is expected to reach $64.03 billion by 2030, witnessing a CAGR of 32.6% from 2021 to 2030.
The integration of conversational AI in financial services can create promising opportunities to enhance customer experiences, streamline operations, and offer innovative services. Conversational banking software allows customers to interact with AI-powered bots to access their accounts, transfer funds, and make payments.
One of the major advantages of incorporating this technology in the banking sector is reduced customer support costs, as routine tasks are automated while personalized assistance is handled effectively. By leveraging conversational AI, financial institutions can deliver seamless and efficient services while optimizing their resources.
Several reports also suggest that certain banking hot-shots like Citigroup, Bank of America, JPMorgan Chase & Co., and American Express are changing the way they conduct businesses and manage their call centers. With over 3.3 million call center employees in the US, these companies are now investing in AI development services to create AI-chatbot-centric solutions to automate most customer requests and reduce customer support costs. This significant shift in how these companies are investing in AI technology effectively is allowing them to streamline operations and cut expenses.
If these statistics can drive your incremental shift towards incorporating conversational AI software in your business, now is the right time to leverage the growing market share. This article will help you understand the cost of conversational AI development in the banking system in 2023 and the factors that affect it.
How Much Does It Cost to Develop Conversational AI Software for Banking Systems in 2023?
To give you a rough idea, developing a conversational AI platform can cost from $45,000 to $300,000, or more. There are several factors that impact the overall development budget, including the type of software to be developed, the complexity of features and functionalities to be incorporated, the location of the software development company, UI/UX design of the platform, hourly rates of developers, etc.
In other words, the overall complexity of the software is the deciding factor that impacts its cost of development. For instance, highly complex conversational AI software with an extensive feature list and functionalities will cost you more than a simple AI-based conversational chatbot with minimum functionality. Let us look at the factors that impact the development cost in detail below:
The extent of personalization and customization required to align the chatbot with the specific needs and branding of the financial institution can affect the development expenses. Adapting the chatbot to handle industry-specific inquiries, comply with regulatory requirements, and reflect the company’s distinct identity may result in added costs.
Location of the Software Development Agency
The location of the hired software development team can directly impact the overall cost of developing conversational AI software. For instance, the hourly rate of development in regions like Asia varies from $30-$40. On the other hand, the hourly development rates in the regions like the US and the UK are extremely high and vary from $100 to $120.
Integration with Backend Systems
Integrating the AI-based conversational chatbot with backend systems, such as CRM or banking databases, can be complex and time-consuming. This process can add to the overall development cost. Thus, one should factor in this while deciding the budget for the project.
Natural Language Processing (NLP) Capabilities
The intricacy and precision of the Natural Language Processing (NLP) algorithms and models utilized in conversational AI software can significantly impact the development cost. The advanced NLP capabilities necessitate extensive training data, algorithm optimization, and continual enhancement, all of which can have a considerable effect on the overall budget.
UI/UX Design of the Software
Incorporating an interface design that is both user-friendly and intuitive, along with creating an uninterrupted user experience, can directly impact the development cost. Additionally, including advanced features such as voice recognition, multilingual support, or visual elements may necessitate extra resources and specialized expertise.
It’s vital to keep in mind that ongoing maintenance and updates are crucial for the chatbot software to gain instant traction and align with the user’s interests. It’s essential to allocate a budget for continuous improvement, bug fixes, security enhancements, and future upgrades so as to keep the chatbot running smoothly and efficiently.
Team Size and Expertise
The cost of development can vary based on the size and expertise of the hired software development team. For instance, one can choose between hiring freelancers or simply outsourcing their project to a dedicated software development agency. Hiring freelancers can reduce the overall cost, but it may also have an adverse impact on the overall quality of the software, considering the lack of expertise and resources. On the other hand, outsourcing your conversational AI software development project to a dedicated team can help you leverage their exceptional expertise and host of resources while at the same time optimizing overall costs.
The features integrated into conversational AI software directly impact the overall development budget. For an app to gain instant traction in the market, it is vital to implement an extensive feature set that is convenient to use while enhancing the user experience and streamlining the banking process.
Features to Be Integrated in a Robust Conversational AI Software for the Banking Industry
Account Information: A well-designed AI-based conversational chatbot must be able to offer the users a real-time update on their account balance, recent transaction history, etc.
Fund Transfers and Payments: The users should be capable of initiating fund transfers between multiple accounts, getting digital transfer receipts, paying bills, and executing other financial queries, etc., through an interactive chatbot interface.
Product Recommendations: The chatbot must be able to evaluate customer preferences, financial objectives, and risk profiles and provide tailored product recommendations, including investment opportunities, insurance policies, etc.
Fraud Detection: The AI-based conversation chatbot must be capable of identifying suspicious transactions while at the same time helping in reporting fraudulent activities and offering security tips to facilitate a safe banking experience.
24X7 Customer Support: The chatbots must have the ability to efficiently manage and respond to a broad spectrum of customer queries, ranging from account management to card services, interest rates, and other commonly asked questions, any time of the day.
Language and Channel Support: An AI-based conversational chatbot must be able to accommodate customer queries in multiple languages and through various platforms such as websites, mobile apps, and social media so as to ensure a smooth and consistent user experience.
Data Analysis: Chatbots must be capable of collecting important customer data, allowing businesses to analyze trends, preferences, and behavior. This information can be used to inform business strategies and create personalized offerings.
To successfully implement conversational AI software, organizations must carefully evaluate their requirements, collaborate with experienced developers, and balance cost and functionality. By recognizing the key cost drivers and making informed decisions, financial companies can leverage conversational AI to revolutionize customer interactions and elevate their digital presence in the constantly evolving financial landscape.
Hiring one of the top artificial intelligence companies can help offer you a headstart to leverage this competitive market space while prioritizing personalization and customization for your business.