AUSTIN, Tex. — For all the benefits promoted about artificial intelligence in banking, financial institutions need to have a deeper discussion about the use of that and other emerging technologies, according to Cathy Bessant, Bank of America’s chief operations and technology officer.

Speaking at American Banker’s Digital Banking conference here, Bessant warned that banks which neglect to contemplate the consequences of adopting AI, such as recognizing inherent biases in algorithms, will likely face real operating issues in the future.

“It’s not about what can AI do, but what should AI do,” Bessant said. “We need to find the balance between how we use AI and how it uses us.”

Bessant was not alone in grappling with the rapid pace of change and the philosophical challenges they present. Brett King, author and founder of budgeting app Moven, predicted that within several years, AI-enabled services will become consumers' primary source for financial guidance. "The best advice will come from data," he said.

At American Banker’s Digital Banking conference, American Banker Editor At Large Penny Crosman (l.) hosted a discussion with Cathy Bessant, Bank of America’s chief technology and operations officer.
At American Banker’s Digital Banking conference, Cathy Bessant, Bank of America’s chief technology and operations officer (r.) said there was a need to balance the use of artificial intelligence in banking.

Unlike in the past, when customers may have chosen a bank based on branch locations or relationships, King said digital capabilities are becoming the main factor in how customers choose their institution.

“Digital utility is becoming the new foundation for trust,” he said.

But customers' expectations are evolving. Access to digital products and services is expected; banks must now focus on creating personalized, contextual experiences. “It’s a behavioral approach, not a product-based approach,” King said. “It’s putting the bank in people’s lives, not just creating another product to sell them.”

Innovation must be driven by what customers want, not by what banks think they want, Bessant said. That mindset informs how Bank of America pursues change. The bank employs roughly 4,500 “inventors” around the world that create and file patents on behalf of the bank, she added.

“These are people that are close to the customers on the ground, and the customer needs to drive innovation,” she said.

King argued that banks too often fall back on simply layering digital services over existing products, as opposed to creating something new.

He noted that when Apple created the iPhone, it didn’t seek to incrementally improve on what mobile phones could already do at the time, but created a new experience entirely from scratch. Sometimes digital banking “is an iteration on the existing bank model; like let’s put a plastic card in the phone,” he added. Instead King said it should be about offering “real-time, instant capabilities where banking is embedded in your life.”

This shift in bank innovation is producing positive results, said Rizwan Khalfan, chief digital and payments officer at TD Bank.

“It’s a great time to be a consumer; as a consumer I have never felt more empowered in my life,” Khalfan said. “Customers have big expectations, and we should be able to create a highly personalized experience for them.”

As an example, Khalfan showed a demo where he opened up the TD mobile app and contemplated a suggestion of how much money he could transfer to a savings account, based on how the bank tracked his spending habits. The app also noted he crossed the border and offered to put his U.S. dollar card on top of his mobile wallet.

TD has been at the forefront of investing in technology to power such experiences. Its Canadian customers have access to the “TD for Me” digital service, which serves up offers, helpful tips and details about events based on their location. It also partnered with Moven to offer the app’s MySpend money management tool to customers. Branded as TD Myspend, it is a companion app to the TD mobile banking app and allows users to track their spending habits and receive notifications in real time.

“In the banking industry we have a lot of data, and we should be able to give customers one overall financial picture to help them live their lives,” Khalfan said.