WASHINGTON — After saying it has received numerous complaints from frustrated customers trying to receive timely, straightforward answers from their financial institutions or raise a concern or dispute, the Consumer Financial Protection Bureau (CFPB) has released a new issue spotlight on the expansive adoption and use of chatbots by financial institutions.
“To reduce costs, many financial institutions are integrating artificial intelligence technologies to steer people toward chatbots,” said CFPB Director Rohit Chopra. “A poorly deployed chatbot can lead to customer frustration, reduced trust, and even violations of the law.”
Use Expected to Grow
According to the CFPB, approximately 37% of the United States population is estimated to have interacted with a bank’s chatbot in 2022, a figure that is projected to grow.
“Among the top 10 commercial banks in the country, all use chatbots of varying complexity to engage with customers,” the CFPB said in releasing its new spotlight. “Financial institutions advertise that their chatbots offer a variety of features to consumers like retrieving account balances, looking up recent transactions, and paying bills. Much of the industry uses simple rule-based chatbots with either decision tree logic or databases of keywords or emojis that trigger preset, limited responses or route customers to Frequently Asked Questions (FAQs). Other institutions have built their own chatbots by training algorithms with real customer conversations and chat logs, like Capital One’s Eno and Bank of America’s Erica.”
When Not to Use Chatbots
The CFPB added that more recently, the banking industry has begun adopting advanced technologies, such as generative chatbots, to support customer service needs.
“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 response,” the Bureau said. “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.”
Risks Cited
According to the CFPB, the spotlight found the use of chatbots raised several risks, including:
- Noncompliance with federal consumer financial protection laws. “Financial institutions run the risk that when chatbots ingest customer communications and provide responses, the information chatbots provide may not be accurate, the technology may fail to recognize that a consumer is invoking their federal rights, or it may fail to protect their privacy and data.”
- Diminished customer service and trust. “When consumers require assistance from their financial institution, the circumstances could be dire and urgent. Instead of finding help, consumers can face repetitive loops of unhelpful jargon. Consumers also can struggle to get the response they need, including an inability to access a human customer service representative,” the CFPB said. “Overall, their chatbot interactions can diminish their confidence and trust in their financial institutions.”
- Harm to consumers. “When chatbots provide inaccurate information regarding a consumer financial product or service, there is potential to cause considerable harm. It could lead the consumer to select the wrong product or service that they need. There could also be an assessment of fees or other penalties should consumers receive inaccurate information on making payments.”
A Reminder
The CFPB reminded that federal consumer financial protection laws place a variety of relevant legal responsibilities on financial institutions, such as obligations to respond to consumer disputes or questions or otherwise competently interact with customers about financial products or services.
The spotlight can be found here.
Make Sure You’re Receiving CUToday.info’s Free Daily Newsletter Headlines
Are you missing out on the latest news in credit unions? Missing the trends and developments you need to be aware of? We can help. Each morning CUToday.info delivers its daily Fresh Today news update offering the latest headlines and breaking news right to your email, with the easy-to-read headlines format allowing you to click on the stories that interest you most in order to learn more.
And it’s free!
If you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time—and it’s free!
Please note that after signing up you may need to go to your Spam/Junk folder and mark the morning headlines email as safe. CUToday.info does not provide its list of readers and emails to outside parties, and we will not be contacting you to sell you an extended warranty or sending you any links so you may cash in on an inheritance you didn’t know was coming.
And did we mention it’s free?
Please note and/or make your IT department or email administrator aware the emails will be coming from the domains CUTodayinfo.com and CUTodayinfoReply.com