Finance chatbots: a comprehensive guide

Finance chatbots are already transforming the financial services industry, by making finance management simpler and more efficient than ever before. Conversing with a bot on budget planning or making savings as if you were talking to a friend is no longer a futuristic concept but a present-day reality, assisting millions globally.

According to a recent study by Next Move Strategy Consulting, the global chatbot market in the BFSI sector is set for significant expansion. The market, worth USD 890 million in 2022, is projected to reach USD 6,170 million by 2030, growing at an impressive compound annual growth rate (CAGR) of 27.4% between 2023 and 2030.

In this article, we will explore the intricacies of finance chatbots, examine how they function, the problems they solve, popular solutions available in the market, and when it might be more beneficial to invest in a custom solution despite the larger initial investment.

What are finance chatbots?

Chatbots in finance, often called fintech bots, are automated, intelligent systems designed to interact with consumers in the financial services sector. They utilize artificial intelligence (AI) to simulate human conversation on the one hand and execute tasks related to banking and finance management.

Chatbots in finance are integrated into websites, mobile apps, and messaging platforms to provide immediate, on-demand services.

The primary role of finance chatbots is to enhance the customer experience. This is achieved by offering a quick way to solicit responses to inquiries, facilitating transactions such as transfers or bill payments, and providing personalized financial advice.

For instance, a chatbot for finance can help users check their account balances, suggest budgeting tips, or even alert them about unusual spending patterns.

Key functionalities of finance chatbots include:

• Customer support – handling basic customer queries regarding account details, transaction histories, and product information.
• Transactional support – assisting users in executing financial operations like setting up payments or configuring alerts for account activities.
• Financial advisory – offering customized advice based on user-specific data to help with investment choices, savings, and budgeting strategies.

Finance chatbots can be broadly categorized into two types:

• Rule-based chatbots: these operate on predefined rules and are limited to specific responses based on certain inputs. They are simpler and cost-effective but lack flexibility.
• AI-powered chatbots: these bots use machine learning (ML) and natural language processing (NLP) to understand and respond to queries with greater context and accuracy. An AI-based chatbot for financial advice, just like any bot designed for other sectors, learn from interactions to improve their responses over time.

Finance chatbots not only streamline operations but also free up human resources to focus on more complex customer needs, thereby improving overall service efficiency and satisfaction.

How finance chatbots work

A chatbot for financial services is powered by sophisticated technology that enables it to understand and respond to user queries with a high degree of accuracy. The core technologies that enable this functionality are AI, ML and NLP. Here’s a closer look at how these technologies come together to make finance chatbots effective:

Natural Language Processing

This technology is at the heart of a finance chatbot's ability to interpret human language. NLP allows chatbots to parse the text input from users, understand the context and sentiment, and generate responses that are coherent and contextually appropriate. This involves processes such as speech recognition, natural language understanding, and natural language generation.

Machine Learning

ML enables finance chatbots to learn from data and improve over time without being explicitly programmed. By analyzing vast amounts of interactions, ML algorithms can identify patterns and refine the chatbot’s responses, making them more accurate and helpful with each interaction. This adaptability is crucial in the dynamic field of finance, where customer preferences and behaviors can change rapidly.

AI Algorithms

These algorithms are used to manage the decision-making processes within chatbots. They help in predicting user needs based on past interactions and can proactively offer relevant financial advice or reminders, enhancing personalized user experiences.

Problems solved by finance chatbots

Finance chatbots address several key challenges in the financial services industry by enhancing efficiency, accessibility, and customer satisfaction. Here are some of the primary issues these automated solutions help to solve:

• Enhancing customer service – finance chatbots are available 24/7, eliminating wait times for customers who need immediate assistance outside of normal banking hours. They can handle thousands of interactions simultaneously, ensuring that customer inquiries are resolved quickly and efficiently. This capability is particularly valuable during high-volume periods or for banks with a large customer base.
• Streamlining operations – by automating routine inquiries such as balance checks, transaction histories, and account updates, finance chatbots free up human agents to focus on more complex customer needs. This not only speeds up the response time for customer service queries but also reduces operational costs by decreasing the need for a large customer service staff.
• Improving financial management for customers – finance chatbots can provide personalized financial advice based on user data and behavior. They can assist with budgeting, recommend savings plans, and alert users to potential fraudulent activity. This proactive approach helps customers manage their finances more effectively, enhancing their overall banking experience.
• Increasing sales and marketing opportunities – a chatbot for financial services can capitalize on cross-selling and upselling opportunities by analyzing customer profiles and interaction histories. For example, it can suggest relevant financial products like loans or credit cards to customers who may benefit from them, based on their financial behavior.
• Ensuring compliance and security – in the heavily regulated financial industry, maintaining compliance is critical. Finance chatbots can be programmed to adhere to regulatory standards, reducing the risk of human error. They also use secure protocols to handle sensitive financial data, which helps in safeguarding customer information against breaches.
• Facilitating digital transformation – as financial institutions strive to modernize their services, finance chatbots play a crucial role in their digital strategy. They act as an entry point for customers transitioning from traditional banking channels to digital platforms, helping users navigate these services with ease.

By addressing the above challenges, finance chatbots not only improve the operational aspects of financial services but also enhance the overall customer experience. Their ability to integrate seamlessly into existing digital infrastructures makes them an indispensable asset for financial institutions looking to innovate, digitally-transform and improve their service delivery.

Popular finance chatbots 

With the growing demand for digital financial solutions, it’s no wonder several finance chatbots have already gained popularity – customers appreciated their efficiency and comprehensive service offering. Below is an overview of five notable finance chatbots, along with their advantages, disadvantages, and best use cases.

What are you looking for specifically when considering looking for a personal finance tool? Check which one meets your requirements.

KAI by Kasisto: a versatile, go-to financial advisor chatbot

KAI is a leading digital platform for the finance industry, built by Kasisto, a company born at Stanford Research Institute. The company is committed to transforming the way financial institutions interact with people and it certainly delivers on its promises.

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Kai is your go-to assistant for managing finances, tracking expenses, and making payments—all seamlessly integrated into messaging platforms like Facebook Messenger, SMS, or Slack. Unlike typical bots, Kai excels at natural, conversational language and brings in-depth banking expertise (it claims to know 20k US banks!). 

• Pros: highly customizable, supports a wide range of financial services, and integrates deep learning to understand and process user requests more accurately. Also, Venmo account holders will be able to make payments directly through Kai.
• Cons: can be resource-intensive to implement, requiring significant setup and maintenance.
• Top use cases: ideal for large banks and financial institutions looking to provide an extensive array of services, including personal banking assistance, financial insights, and customer engagement.

Cleo: likely the coolest of the chatbots in finance

Cleo is an AI-powered chatbot that helps users manage their finances with a friendly and engaging tone that certainly distinguishes the app from its market competitors. With over 5 million subscribers in the U.S. alone, it already revolutionizes how people approach money management.

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Touted by Forbes as the next billion dollar startup, Cleo is becoming a favorite among users looking for practical financial solutions with a touch of personality. The personal finance bot securely connects to bank accounts and analyzes spending patterns, helps create personalized budgets, and offers actionable insights to keep your finances on track.

• Pros: the interface is very much on the user-friendly side, it’s highly engaging, with humorous communication that actually feels relatable, it’s excellent for budgeting and saving.
• Cons: less focused on traditional banking tasks and more on personal finance management, which might not suit all users.
• Top use cases: best for younger audiences or those new to managing their personal finances who might benefit from a less formal approach to financial advice.

Eno by Capital One:

Eno is Capital One’s AI based chatbot for financial advice, designed to simplify how you manage your credit cards and bank accounts. Using natural language text interactions, Eno makes banking as easy as sending a message. Whether you need help tracking your spending, checking your account balances, paying bills, or spotting unusual charges, Eno has your back.

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Built with advanced AI and a focus on customer convenience, Eno is more than just a chatbot – it’s a proactive assistant that sends helpful insights and alerts, such as notifications about duplicate charges or subscription increases. Like other financial advisor chatbots on our list, Eno is available 24/7, ensuring users always have a tool at hand to manage money effortlessly.

• Pros: provides real-time alerts, fraud notifications, and can answer financial queries. It is integrated directly with Capital One’s banking services.
• Cons: limited to Capital One customers and services, not as versatile for non-Capital One users.
• Top use cases: ideal for Capital One customers looking to manage credit card transactions, monitor fraudulent activity, and receive proactive financial advice.

Erica: the personal banking assistant from Bank of America

Erica is Bank of America’s innovative AI-powered assistant, designed to make managing your finances easier, smarter, and more convenient. Whether you prefer voice or text interactions, Erica is equipped to provide personalized financial guidance and support whenever you need it.

As a virtual assistant, Erica helps clients handle everyday banking tasks effortlessly, from checking account balances and tracking spending to finding savings opportunities and answering common financial questions. Beyond basic support, Erica also delivers proactive insights, like notifying you of unusual account activity, upcoming bill payments, or ways to improve your financial health.

• Pros: it offers proactive updates, credit report changes, and tailored financial advice. Seamless integration with Bank of America’s mobile apps enhances user experience.
• Cons: only available to Bank of America customers; features and functionality are limited to the services offered by the bank.
• Top use cases: suited for Bank of America customers needing comprehensive account management, spending tracking, and financial suggestions based on their banking activity.

Plum: simplified savings and investments advisor

Plum is an intelligent financial assistant powered by AI, designed to help users take control of their finances effortlessly. It automates savings by analyzing your income and spending habits, ensuring you set aside the right amount without overthinking. Plum also offers smart investment options, allowing you to grow your wealth with tailored strategies that match your financial goals and risk tolerance.

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In addition to savings and investments, Plum provides insightful spending analysis, helping you understand where your money goes and identifying opportunities for smarter financial choices. The platform goes a step further by suggesting personalized budget adjustments, ensuring you're always on track to achieve your financial objectives.

• Pros: it supports automatic savings, offers investment options, and includes features like bill analysis to suggest cost-saving alternatives.
• Cons: primarily focuses on savings and investments, with less emphasis on comprehensive banking services.
• Top use cases: great for individuals looking to save money effortlessly, invest small amounts, and manage monthly budgets through intelligent insights.

These finance chatbots showcase the versatility and range of AI-driven tools available in the market, each serving distinct customer needs and preferences. Whether for comprehensive banking services or personal finance management, these chatbots enhance user experiences and streamline financial operations.

Custom vs. off-the-shelf finance chatbots

When considering the implementation of a finance chatbot, you may also consider custom-built solutions vs. off-the-shelf options. Each approach offers distinct advantages and challenges, and the choice depends largely on specific business needs, budget constraints, and long-term digital strategy goals.

Off-the-shelf chatbots for finance

A pre-built chatbot for financial services enables quicker deployment, as it requires minimal customization before integration. Unlike custom-built financial AI bots, which involve extensive development cycles and testing phases, pre-built options are often ready to use out of the box. This streamlined setup process means businesses can get their financial chatbot operational within days or weeks rather than months, allowing them to address immediate needs or market demands more effectively.

Cost-effectiveness is another significant advantage of pre-built chatbots, especially for organizations with limited budgets. These solutions typically have a lower upfront investment compared to custom-built alternatives, which require dedicated development teams and resources. Furthermore, many pre-built chatbots operate on subscription-based models, allowing businesses to manage costs predictably while accessing essential features and regular updates.

Another key benefit is that pre-built chatbots are proven solutions, having been tested extensively in real-world scenarios. These chatbots come with predefined functionalities that have demonstrated their reliability and performance across various industries and use cases. This established track record reduces the risk of technical glitches or feature gaps, giving businesses confidence that the chatbot will meet their needs without the need for exhaustive testing or debugging.

Cons:

• Limited customization: while some level of customization is possible, these solutions may not fully align with every organization’s unique requirements or existing systems.
• Generic UX: they may not offer the unique brand experience that firms want to provide their customers, potentially leading to a less personalized service.

Top use cases: 

Off-the-shelf finance chatbots are ideal for SMEs that require standard features like customer support, FAQ automation, and basic transaction handling without the need for deep integration into unique financial systems.

Custom chatbots for finance

Custom chatbots address the specific needs of a business, ensuring they align perfectly with its operational processes and customer interaction strategies. Unlike generic options, these bots are designed to reflect the company's unique goals and challenges, enabling more efficient workflows and providing a personalized experience for customers. This customization enhances customer satisfaction and optimizes business operations, creating a tool that feels like a natural extension of the company.

Another significant advantage is their scalability and ease of integration. As businesses grow and adopt new technologies, custom chatbots can adapt and evolve alongside them. They can accommodate increased user demands, new functionalities, and integration with advanced backend systems or third-party applications. This flexibility ensures the chatbot remains a valuable asset even as the business landscape shifts, reducing the need for frequent overhauls or replacements.

Custom chatbots also deliver a user experience that sets a business apart. A well-designed chatbot reinforces the brand's identity, creating consistent and meaningful interactions that build customer trust and loyalty. Offering unique features or superior engagement compared to competitors can differentiate a business on the market, attract more customers, and cultivate long-term relationships.

Cons:

• Higher initial investment: custom solutions are more costly upfront due to the development time, resources, and expertise required.
• Longer development time: the time from concept to deployment is longer, which might be a critical factor for businesses needing immediate solutions.

Best use cases: custom finance chatbots are best for large financial institutions or businesses with specific needs that cannot be met by standard products. They are also ideal for those aiming to leverage advanced AI capabilities to enhance customer service, operational efficiency, or compliance adherence in unique ways.

When to invest in a custom finance chatbot

Investing in a custom finance chatbot can be a game-changer for any financial institution, but it’s not a decision to take lightly. To get the most out of it, you’ll want to make sure it lines up with your long-term goals and delivers the value you’re looking for. Here’s a rundown of the key situations where building a custom finance chatbot could be the smartest move:

When you have very specific business needs

If your business requires functionalities that cannot be adequately addressed by off-the-shelf chatbots, such as complex customer service tasks, specialized financial advising, or unique compliance needs, you may have to build a custom chatbot for finance to meet those needs.

Financial institutions often operate with legacy systems that might not be readily compatible with generic chatbots. Custom solutions can be tailored to integrate seamlessly with these existing systems, ensuring smooth operations and data consistency.

When scalability and flexibility are a must

As your business grows, your chatbot should be able to scale accordingly. Custom chatbots are designed with scalability in mind, capable of expanding in functionality and handling increased volumes of interactions without a drop in performance.

The ability to update and adapt your chatbot as technology evolves or as your business needs change is crucial. Custom chatbots offer the flexibility to modify and extend capabilities, unlike off-the-shelf options which might be limited in this regard.

When branding and customer experience matter

A chatbot often acts as the first point of contact with your customers. Custom chatbots can be designed to fully represent your brand, delivering a consistent and personalized user experience that aligns with your brand identity and values. A custom financial AI bot will do wonders for brand representation.

What’s more, in the competitive financial services market, offering a unique customer experience can be a significant differentiator (just look at Cleo!). A custom chatbot can provide services that are distinct from those offered by competitors, setting your business apart and actually giving you a significant competitive advantage.

Long-term cost efficiency

While custom chatbots for finance require a higher initial investment, they can be more cost-effective in the long run. Automating more processes can help reduce operational costs, while providing high-quality interactions increases customer satisfaction and retention in the long run.

Custom functionalities also impact the overall cost. Advanced features provided by a custom chatbot for finance can translate to tangible returns through increased sales, higher customer retention, and reduced customer service costs. Enhanced capabilities that off-the-shelf solutions don’t provide can bring a significant ROI if they’re well-matched with the market needs.

Regulatory compliance

Finance is a highly regulated industry, and ensuring compliance through every customer interaction is critical. Custom chatbots can be specifically programmed to adhere to the latest regulations and standards, reducing the risk of non-compliance and associated penalties. Meeting regulatory demands shall never be overlooked in the financial industry.

How much does it cost to build a custom fintech bot?

The cost of building a fintech bot can vary significantly, and providing an exact estimate is nearly impossible without a detailed understanding of your specific project requirements. The final cost depends on several factors that influence both the scope of work and the resources required. Here's what you need to consider when estimating the cost:

• Discovery and planning (defining requirements, target audience, and functionalities for the bot): $5,000–$15,000 
• Design (creating the chatbot’s conversational flow, UI, UX): $10,000–$20,000
• Development (building the financial AI bot, integration with banking systems, and AI training): $50,000–$150,000
• Testing (ensuring the finance chatbot performs well in real-world scenarios): $10,000–$25,000
• Deployment (launching the bot on selected platforms (e.g., web, mobile, messaging apps): $5,000–$15,000
• Maintenance and updates: (keeping the bot up-to-date, secure, and functional post-launch): $2,000–$10,000/month

Additional costs

• Hosting and Infrastructure (cloud services for hosting and AI processing): $1,000–$5,000/month depending on usage.
• Third-party APIs (for account connectivity or payment gateways): $500–$2,000/month depending on API usage.
• Compliance and security (meeting financial industry regulations, e.g., PCI DSS, GDPR): $10,000–$30,000 upfront for certifications and audits.

When estimating the cost of building a fintech bot, it’s essential to account for the scope of work, technical requirements, and ongoing needs. A rough range for building a basic personal finance bot might be $75,000–$150,000, while a sophisticated, enterprise-grade solution could cost $500,000 or more. Engaging in detailed planning, prioritizing features, and consulting with experienced developers will give you a more accurate idea of the investment required.

The below factors will have an impact on the overall cost:

• Complexity of the bot: more complex bots that require advanced AI capabilities, such as natural language understanding (NLU), machine learning, or proactive analytics, will require more development time and specialized expertise.
• Features and functionalities: The number and type of features directly impact costs. Basic features like transaction tracking are less expensive than advanced functionalities like predictive analytics, cross-platform integration, or voice-based interactions. Features such as secure payment gateways, multi-language support, and robust compliance mechanisms add complexity and cost.
• Development approach: the choice between building the bot from scratch, using a pre-built framework, or a hybrid approach can drastically change the costs. Custom development provides complete control but is more expensive. Using third-party solutions can reduce costs but might limit flexibility and scalability.
• Geographic location of the development team: developer rates vary widely by region. Teams in North America or Western Europe typically charge higher hourly rates, while developers in Central and Eastern Europe, Asia, or Latin America offer competitive pricing.

• Hidden costs: while lower rates might seem attractive, factors like quality, experience, and communication efficiency also play a critical role.
• Security and compliance: chatbots in finance handle sensitive data, so meeting regulatory standards (e.g., PCI DSS, GDPR) is non-negotiable. The cost of achieving compliance includes certifications, audits, and legal consultations.
• Design and UX: a well-designed chatbot for financial services with intuitive conversational flows and visually appealing interfaces enhances user adoption but requires specialized design expertise.

Drive growth with a finance chatbot: next step

Investing in a custom finance chatbot is ideal when off-the-shelf solutions fall short of your business goals or when the long-term benefits outweigh the initial cost. By analyzing operational needs, growth projections, and customer service objectives, businesses can determine if a tailored chatbot aligns with their strategy. Custom chatbots enhance efficiency, improve customer engagement, and position companies as leaders in financial services.

Finance chatbots are revolutionizing customer interactions by combining efficiency, accessibility, and personalization. Whether choosing a ready-made solution or a custom-built option, the right chatbot can boost customer satisfaction and operational performance. For financial institutions, adopting chatbots is no longer optional—it’s a strategic necessity to stay competitive and meet the expectations of digital-savvy customers.

Are you ready to transform your financial services with a powerful chatbot solution? Our experts specialize in creating AI-driven chatbots tailored to the unique needs of the financial industry. Reach out to us today through this form for a quick consultation and take the first step toward elevating your customer engagement and streamlining operations.