These days, nearly every bank has an innovation agenda, but many struggle to translate that initiative into results. A big hurdle is the difficulty in promoting the atmosphere of innovation-specific arms of the bank across the wider enterprise.
That’s partly why in May, TD Bank established its Innovation Centre of Excellence, which acts as an umbrella organization aimed at connecting the Toronto-based bank’s innovation initiatives with each other and the larger bank environment, as well as fostering partnerships.
TD describes the center “a combination of lab and startup engagement teams” tasked with reducing complexity in banking and improving the customer experience. It’s part of the bank’s overall tech strategy to become a “bank of the future.”
American Banker recently spoke with Tim Hogarth, vice president of innovation framework and strategies at TD Bank who also runs the innovation center. Hogarth outlined the bank’s innovation strategy for 2018, and discussed the impact on banking of popular technologies such as Amazon’s Alexa.
An edited transcript of the conversation follows.
We are already seeing some banks experiment with voice interaction technology, such as Amazon’s Alexa. How does TD Bank view this technology?
TIM HOGARTH: We were one of the first banks to offer Alexa support for banking. Initially, we have put together something with just the very basic capabilities because we wanted to get to market quickly to get a learning experience with the technology. It’s the perfect example of disruption.
And no one knows how the customer will use voice technology in the future. Probably in a smart car and inside a smart home. We are testing and learning how customers might use this technology in the future so we can be prepared.
There are also possibilities with the branch and contact center with voice recognition technology. At this stage we don’t really have concrete plans in this area, but are thinking about the possibilities. For example, using this technology to recognize sentiment in what people are saying when they call the contact center and using that to help make the experience better.
In general, artificial intelligence and machine learning seem to be hot topics in banking right now.
Lots of people are looking at machine learning; it’s a valuable technology to mine through large data sets. That can be very effective in discovering patterns to uncover fraud, rather than using predefined, static rules.
There’s a lot of opportunity to use AI technology in creating chatbots that better serve the customer. Chatbots that sense what the customer is trying to achieve. I think personalization of the customer experience is the most underutilized area of AI. So, for example AI can detect if a customer hasn’t paid a bill and send a helpful reminder. It can help branch employees better understand why a customer has come into a branch; what were they doing online or on mobile before that led to this interaction?
There's clearly many new technologies that we need to explore — the one with the most promise right now is clearly AI. It's already here, and we have teams exploring and using AI right now.
What are some other innovative technologies TD Bank is currently exploring?
One area is augmented reality. We're piloting one idea where a customer and an adviser each put on a pair of augmented reality headsets and visualize and discuss the elements of the customer's portfolio as three-dimensional objects. Perhaps one day your financial adviser or customer service representative will have contextually relevant financial details floating in front of them as they talk with you.
There’s a lot of talk now about nudging banks to be more open with sharing data with third parties if it benefits customers, such as with budgeting tools. Where does TD Bank stand on this topic?
Obviously it is not something banks have traditionally done much of. Banks have always treated data very carefully for a variety of reasons. There are increasing calls in the industry to think about how data sharing could work in a safe manner. We’ve been consistent in our approach to make sure we are not putting any customer data at risk. But this conversation is not going away anytime soon.
What was the driving impetus behind creating the Innovation Centre of Excellence?
The bank has been going through a transformation when it comes to innovation for a number of years. Now we’re starting to build out our ability to innovate and thinking about what the bank of the future looks like. So we’ve set ourselves up well, but we don’t want to rest on our laurels; we’re not saying, "mission accomplished." Now we’re trying to take what we’ve done so far and see how we can take that across the organization. How can we embrace an experimentation culture and attitude? We’re trying to create an innovation spirit across the organization, and not just to create a culture, but to capitalize on that and create value.
How has that mission statement been playing out so far across the bank?
We've created some significant momentum within our TD Lab ecosystem and in different pockets throughout the bank where we've been focused on building test apps and piloting new technologies. TD's Innovation Centre of Excellence is tasked with both capitalizing on our existing innovation investments and fostering an enterprisewide culture of experimentation to allow us to quickly test and learn before creating full-scale customer solutions. This is a big shift in how we've traditionally operated and focuses more on iterative learning than on big, upfront design.
We have a number of partnerships with fintechs, we see a lot of inspiring ideas coming from them. They are often small teams with that culture that is prepared to challenge norms. Sometimes those ideas can be a really good fit for us — both for customer-facing as well as internal solutions — and it’s a way for us to think a bit differently. We think of it less as about bringing fintech into the bank and more about bringing the bank to fintech.
And it’s not just fintechs; there are many different types of organizations out there to partner with. Some academic institutions, for example, have finance innovation initiatives. We’re looking for partners that can help us position for the future.