Forget Self-Driving Cars, Get Ready for Self-<i>Banking</i> Cars

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Mobile banking could, in the not-too-distant-future, include motor banking.

As manufacturers increasingly equip automobiles with Internet access, financial institutions are closely studying connected cars to understand what a future saturated with such vehicles could mean for their business.

FIS, the largest fintech vendor in the world, has been researching ways for people to do tasks like check bank balances with their voices, according to company spokesman Brad Fennessy. It's also looking at more complicated scenarios, such as turning the car into a wallet so when someone pulls up to the gas station, the pump is turned on and authorized because the vehicle is identified as belonging to an accountholder.

U.S. Bank posted a YouTube video in June that documented its vision to potentially let consumers use technology to order and send oil when the vehicle is need of a change. Most recently, USAA led the investing round for the company selling the device featured in U.S. Bank' video, Automatic Labs.

The San Francisco startup sells a device that can be plugged into a car to share relevant data – such as engine diagnostics or where a car is parked – with its smartphone app and other apps. USAA is investing in Automatic to see how the technology could help its members.

While the company originally called United Services Automobile Association is currently focused on the implications of connected cars for its flagship auto insurance business, it also owns a $70 billion-asset bank known for innovative uses of technology. So it's not a stretch to imagine the company incorporating car-related banking features into its mobile app, which serves as members' portal to insurance and banking. Automatic's app gallery includes expense report and car cost management apps, for instance, that could conceivably be linked to bank accounts.

In recent weeks, Fjord, a design and innovation firm, published a report that shined a spotlight on the possibilities of connected cars. These go well beyond obvious uses cases like insurance providers using the sensors to monitor customers' driving to adjust premiums based on how well they drive.

"The car is part of the constellation of different devices — probably with the phone at the center," said Andy Goodman, a group director of design strategy at Fjord, which is owned by Accenture. "Think of a car as a remote device for the phone."

Goodman imagines a world where cars can be used to pay for things so the driver doesn't have to fumble with a credit card or cash at a drive-up. He could see a car serving as an ATM card when someone arrives at an institution's cash machine. Goodman also sees banks partnering with car sharing technology companies (not the same thing as ridesharing firms) which facilitate car owners renting their assets to others, to vie for more loan business from auto dealer partnerships. He could even see a day when the car prompts the person with a grocery list based on the driver's usual shopping habits; then the retailer could have those items ready for pick up upon arrival.

USAA sees the investment in the Automatic Labs as a way to test and learn what services could add value into the lives of its military members down the road.

Through its investment in Automatic, USAA is exploring how the tech could help its members in situations like emergencies. Automatic can place an emergency call when it detects a collision, in addition to contacting family members and emergency contacts.

USAA, based in San Antonio, already markets services like roadside assistance from inside its mobile app, but that experience requires members to reach out to USAA. In the connected car experience, the automobile itself could tell the driver's insurance provider and loved ones there's been an accident.

The World Economic Forum published a report Tuesday that discusses the many ways in which the financial services industry is and will continue to be disrupted – including insurance. Insurers, which already gather data like the make of the car, will be able to track behavioral information in connected cars so they can predict, say, erosion of tires and then offer drivers discount offers to troubleshoot the looming problem. Insurance providers might be able to continuously refine individual risk profiles in a bid for more accurate underwriting if consumers are willing to share their information.

"Connected devices have the potential to have significant impact on the way in which insurers interact," said R. Jesse McWaters, lead author of the World Economic Forum report.

More broadly, the research also highlighted how firms are increasingly feeling the heat from would-be disruptors and are realizing there's an imperative to collaborate with new entrants.

"There is a recognition on the part of many large financial institutions that … doing everything and being a universal bank that provides all aspects of finances isn't really within their capabilities anymore if they want to meet changing and increasing expectations of their customers," said McWaters.

USAA reckons the connected car could help cut down on driving-related fatalities in addition to simplifying peoples' lives by, for instance, reminding them their battery is about to die.

"The first thing we are focused on is how to help members stay safer," said Jon-Michael Kowall, assistant vice president of innovation for USAA Property and Casualty Insurance Group. "Right now, we are doing the iterative testing," he said.

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