Beyond the Bot: Why Embedded Conversational AI Is Banking’s Next Strategic Advantage

The next chapter of digital banking won’t be built on websites or apps. It will be built on conversations.

Not the ones customers dread: those frustrating exchanges with chatbots that never quite understand what they’re asking. The future of banking depends on conversations that are responsive, intelligent and personal. Ones that solve problems in real time and feel more like speaking to a trusted financial adviser than interacting with a search engine.

Conversational artificial intelligence (AI) makes that future possible. When fully embedded across the digital banking experience, it stops being a customer support overlay and becomes part of how banks engage, retain and grow relationships.

Banks that get this right don’t just improve service. They increase satisfaction, reduce costs, drive loyalty and unlock new revenue opportunities.

Chatbots Promised Convenience. They Delivered Frustration.

For years, banks invested in basic chatbots with the promise of saving money and reducing call volume. But those bots were built on rigid rule-based systems, designed to handle routine tasks with limited ability to adapt or personalize.

Customers noticed.

Chatbots consistently score the lowest in customer satisfaction across banking channels. Just 29% of users are satisfied with chatbot support, compared to 60% for mobile apps and 57% for ATMs. Even email and call centers rate higher.

29%

of customers are satisfied with customer support chatbots, compared to a high of 60% with apps.

Why? Because these bots can’t understand context. They don’t know who the customer is or what they’ve asked before. Instead, they match keywords to generic responses, often leading users in circles rather than offering solutions.

Even tech-forward companies have struggled. Klarna aimed to replace 75% of its support interactions with a chatbot. But after millions of conversations that failed to resolve issues, the company paused the initiative and returned to hiring human agents.

This is the challenge facing banks that rely on first-generation bots. They not only frustrate customers but also erode trust.

From Helpdesk to Core Strategy

Modern conversational AI is a different proposition entirely. Intelligent digital assistants (IDAs) are trained on structured data and designed to simulate nuanced, humanlike conversation.

Powered by machine learning, natural language processing and, increasingly, generative AI, these systems understand not only what a customer says but also what they mean. They interpret voice and text, detect emotional tone and decide when to route a query to a human.

72%

of customers say personalization influences their choice of FI.

This level of sophistication creates a new type of engagement. Customers want online interactions that are as personalized and intuitive as their branch experiences. In fact, 72% say personalization influences where they bank.

IDAs can deliver on that expectation. They anticipate needs, recognize patterns, and surface the right messages or products at the right time. These are the micro-moments that define a positive customer experience.

Voice AI, in particular, is evolving rapidly. OpenAI’s latest models support real-time voice response, handle interruptions and modulate tone to reflect emotion. According to Andreessen Horowitz, “Conversational quality is now largely a solved problem.”

Funding is following the trend. Voice AI investment surged eightfold in 2024, while model costs dropped, enabling banks to scale more affordably than ever.

Real Results. Measurable Impact.

Early adopters are already proving that conversational AI drives performance.

At SoFi, the deployment of Galileo’s Cyberbank Konecta platform cut chat abandonment in half and reduced average response times by 65%. That translates to better service and higher satisfaction.

Bank of America’s digital assistant, Erica, now handles billions of interactions. It helps users manage their finances with tailored advice and automation. In 2024, the bank posted its highest-ever customer satisfaction scores and linked a 19% earnings boost in part to Erica’s success in cross-selling and operational efficiency.

These aren’t pilot results. They’re business outcomes that speak to the strategic value of embedding conversational AI.

How Voice Changes Everything

The shift to voice is one of the most transformative developments in conversational AI.

Customers increasingly expect natural, spoken interactions. The technology has evolved to meet that expectation with stunning accuracy and emotional nuance. It’s fast, intuitive and accessible across devices.

Banks that embrace voice AI not only increase convenience but also expand their reach. Voice interfaces support a broader user base, including individuals with visual or physical impairments. They also lower barriers to engagement for customers who prefer speaking over typing.

Voice isn’t just an alternative channel. It’s the next interface of banking.

Trust Isn’t a Barrier. It’s the Blueprint.

As the technology matures, one factor remains critical: trust. Consumers are still wary of AI, especially when it seems to limit access to human support.

According to Gartner, 64% of consumers prefer that companies avoid using AI in customer service. More than half would consider switching providers if AI made it harder to reach a person.

The biggest concern? Being trapped in an automated loop with no clear way to speak to a human—even after dozens of “press zero” attempts.

64%

of consumers prefer that companies avoid using AI in customer service.

Banks must address this head-on. That means clearly signaling when AI is in use, offering immediate escalation paths, and ensuring smooth transitions between digital and human agents.

At the same time, regulators are stepping in. The Consumer Financial Protection Bureau (CFPB) has raised flags about data privacy, bias and the transparency of AI decision-making. Only 10% of executives say they feel prepared to meet these challenges.

Building trust into AI systems isn’t optional. It’s essential. That includes embedding compliance from the start, designing explainable models, and being transparent with customers about how AI supports their experience.

The Revenue Model Is Changing

Conversational AI isn’t just a cost reducer. It’s a growth engine.

When integrated across the banking ecosystem, these systems enhance onboarding, increase product adoption and encourage deeper engagement. They respond to real-time needs, identify opportunities and guide users toward actions that drive value.

Think of it as a new digital front door. Not just to service, but to sales, advice and long-term loyalty.

Customers are more likely to stick with banks that understand them. They act more frequently when experiences feel personal and helpful. When interactions are timely and relevant, conversion rates climb.

This is how AI becomes more than a tool. It becomes a revenue strategy.

Conclusion: The Conversation Starts Here

The future of banking will be powered by dialogue.

Not static menus or impersonal interfaces, but responsive, intelligent, emotionally aware interactions that meet customers in the moment.

Banks that invest in embedded conversational AI now are laying the groundwork for lasting relationships. They are modernizing the customer experience in ways that improve satisfaction, build trust and unlock entirely new sources of value.

It starts with listening. Then learning. Then responding.

That’s the power of a better conversation.

We’ve learned that customers don’t hate automation—they hate bad automation. The difference between a chatbot that frustrates and conversational AI that delights comes down to intelligence and empathy. Can it understand context? Can it recognize when someone is stressed about their finances? Can it seamlessly hand off to a human when needed? Get these fundamentals right, and you’re not just improving customer service—you’re reimagining how banks build relationships in a digital world.”

Ritesh Rihani
Global Vice President of Enterprise Banking, Galileo