Are Chatbots Pushing Away Asian Consumers?

August 10, 2017

When we think about AI developments, there’s a trend towards making machine learning as human as possible, from emotive search engines that want to be your friend to smart home gadgets that act as personal shoppers. But what is the impact of chatbots in Asia, where chatting online to small retailers over messaging apps like Wechat is the norm? Is switching over from a human relationship (known as guanxi in Chinese) to conversing with a machine going to have a long-term negative impact on Asian consumers?

We have seen scenarios where chatbot-like services have failed Asian customers. The self-service kiosks at KFC in Hong Kong have not been perceived as a step forward in convenience and efficiency as they had hoped, which were then replaced swiftly with ‘smart’ ordering machines that run on big data and claim to have a 80% accuracy rate and the ability to understand Cantonese. The problem here could be as simple as technology not living up to the expectations of an impatient clientele, which is something that AI could certainly address. However, consumers across all Asian markets place great value on human relationships in commercial transactions and this poses a challenge to chatbots.


Web and social media usage in Asia


Our data reports that 58% of web traffic in Asia comes from smartphones, which is consistent across age groups. The same percentage of people use their phones to stay updated with social media accounts. However, when it comes to which social media site they use, it varies quite dramatically across certain countries. The Great Firewall of China, for example, prohibits Facebook and instead, 91% of mainland Chinese use WeChat with 86% claiming that this is their primary social networking app. Then there are the consumers in Japan, South Korea, Thailand and India who predominantly prefer YouTube, Line, Kakao and WhatsApp respectively.


Chatbots in Asia


In Singapore, some of the first chatbots have emerged in the financial services sector where DBS, a retail bank with over nearly 5 million clients released a chatbot via Facebook Messenger that allows customers to ask about a range of subjects from branch locations and their account balance to making card payments. Part of the strategy is to increase customer engagement with the brand. Our trend The Warming Web sees that human interaction is highly valued and by bringing a human touch to chatbots with AI, brands can tailor their message or services to consumers on their preferred instant messaging platforms.

OCBC bank launched a mortgage advisor by the name of Emma, equipped with the knowledge of a loans advisor and the skills of a mathematician (she can make calculations to tell you if you’ll be approved or not). The bank’s goal is to make this conversational AI the front line of customer service. Conversational Commerce has been a trend established in Asia, which really grew in 2013 with the launch of Official Accounts on WeChat.

The same bank is known for their internal HR AI-enabled app, which is fully integrated with the existing department (in the real world) and can be personalised to make leave applications or searching for job postings more efficient. Driving this is the Mobile First consumer, where in South East Asia, China and India, mobile commerce is at its highest with an average of 52% buying products and services through their phones. In contrast, this number falls to 31% in the USA and 23% across Europe.


Challenges for chatbots


A reason for the popularity of chatbots is how they bring ‘warmth’ to transactions through natural conversation. Consumers have been reacting to unwanted calls from brands with the rise of ad blocking. This is most prevalent in Asia where according to Pagefair’s Global Adblock Report, 94% of software users are based in this region. Moreover, 73% are concerned about the way companies store their personal information. A challenge for chatbots would how they protect the vast amounts of data they gain from interactions and maintain their role as a ‘friendly’ and empathetic face of a brand rather than just a sales strategy.

Chatbots are already facing obstacles in Europe. In fact, in our trend Conversational Commerce, Foresight Factory charted a slight decline in the likelihood of purchase resulting from web chats. Part of the failure of chatbots can be attributed to customer demands that were unmet as they were unable to replace human service representatives.  Social messaging app Line introduced a competition with the prize fund of £75,000 for the best chatbot innovation, challenging brands and businesses to use their API tool to keep creating better user experiences. Perhaps funds like these will encourage constant honing of chatbots so that they are used not just for facilitating sales that might affect its success with consumers in the long run but to strengthen brand recognition, trust and engagement.



Written by Michael Agnew

Michael leads FF's APAC business from Singapore - home to world leading innovation. When he's not marveling at the smart city initiatives of the Little Red Dot, he's travelling to speak at industry events, tracking regional trend movements and working with our APAC clients.

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