Bank Technology News  |  May 2008

By Michael Sisk

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Since 1985, the MIT Media Lab has gained renown for its research projects on the convergence of multimedia and technology, partnering through sponsorships with corporations such as Motorola and Nortel. Now, the Media Lab has linked up with Bank of America to create the Center for Future Banking, a partnership that MIT officials say is unprecedented in terms of a sponsor's commitment of time and resources.

BofA has agreed to a five-year collaboration and committed $3 million to $5 million annually to the center. With that kind of money on the line, BofA will not be an armchair observer. This summer the bank will send the first of its "executives in residence" to work daily alongside the MIT researchers. "We've always tried to be innovative. And we see customer trends and preferences changing and we want to see how we can respond," says Susan Faulkner, deposits and student lending executive at Bank of America. "MIT will help us see the industry through a different lens."

Frank Moss, the director of the Media Lab, says the goal of the lab has always been to understand the impact of technology on people and society and how lives and lifestyles will change. "The future of society, individuals and businesses are more intimately tied together than ever before, and we want to explore the future of industries given all the changes in society."

With the creation of the Center for Future Banking, MIT will bring that curiosity to the banking industry. The Center will explore new ideas in banking by inventing technologies that reveal and leverage insights across a wide range of physical and social scales, from one-on-one customer interactions to global interactions. Moss says that the Center is based on the premise that banking behavior will change considerably in the future. "How will people interact with banks in the future?" he asks. "How will they use mobile phones, social networks and mobile applications? Will service in banking centers be different? Because banks occupy prime real estate in communities, might they become centers of social interaction?"

Critically, the lab is more than a think tank; it's a place to build actual prototype solutions to deploy in the MIT community, the Boston area and then, hopefully, a BofA test market. "Our saying is 'demo or die,'" says Moss, a take-off on the old scholarly imperative "publish or perish."

"We want to see how these technologies play out when you put them in the hands of people. As early as possible we want to get the bank to put solutions into a test market," he says.

Deb Roy, who will head the Center, says, "The center sets the stage for potentially path-breaking research that will tap into core Media Lab capabilities and extend them in exciting new directions. We will create a focus of intellectual energy that brings together researchers with radically different perspectives, including behavioral economists, social scientists, computer scientists, psychologists, designers and others who share a passion for invention. It's a recipe for producing unexpected new ideas that will trigger significant innovations in the world of banking."

In particular, BofA wants to better understand customer behavior, as opposed to what customers say, says Faulkner. Three areas the bank hopes to explore are: how to bring the physical and virtual worlds together; how to allow consumers to manage their finances on a real-time dynamic basis; and how the bank can customize the experience. Ultimately the question that needs asking, she says, is "How do we respond?"

To illustrate the kind of unconventional direction research could go, Moss cites so-called "affective computing." Developed for autistic children to understand the expressions of people and thus to better connect and communicate, affective computing could also be applied to banks' customer service initiatives, Moss says. "It could be a technology to understand the customer. Are they disinterested? Are they satisfied?"

It's hoped the collaboration between the lab and BofA executives will yield results not just in the lab, but will influence the culture of BofA more generally, Moss says. By cycling executives through the lab, the idea is to "help the bank accelerate the process of making people more innovative, to understand risk taking and creativity. By having employees immersed, they can take those seeds back to Bank of America."

The timing of all this could not be better, in Moss' opinion. He says the Center for Future Banking represents a powerful new model by which academia and business will partner to invent the future of entire industries. His goal is not timid: "To revolutionize the customer experience in banking of the future. This is just the right time to reinvent around the customer, and the amount of money and time [the bank is] committing shows tremendous foresight on the part of Bank of America executives."

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