The ways banks are kicking digital up a notch

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We’ve reached a tipping point in digital banking.

By now, most banks offer the same set of basic features on their mobile and online channels. As a result, the industry has perceived the need to kick it up a notch.

I’ve just returned from Digital Banking 2017. The conference had far more attendees than in past years. And there was a greater enthusiasm and interest in learning about and trying new technologies.

There were also more bank executives with “digital” in their title — 59, actually — than we’ve seen in past years.

Based on the speakers and attendees I talked to, the next level of digital banking will include personalized, real-time advice; streamlined, easy-to-use apps and sites; and being present where the customer is rather than expecting the customer to come to a branch or download an app.

How to get to there is a challenge for many banks, especially smaller ones with limited budgets, but a few digital banking leaders at the event shared how they're getting to the next level.

Let people access their bank accounts through Alexa

The marketplace for Amazon Skills — apps that work with Amazon's Alexa, the voice recognition engine behind Amazon Echo — includes only two financial institutions so far: American Express and Capital One.

But Gareth Gaston, executive vice president of omnichannel at U.S. Bank, said Wednesday the bank is launching voice banking with Alexa. Gaston didn’t give a timetable, but said it would be launched with employees first.

U.S. Bank wanted to move ahead on this, he said, because it believes voice banking is part of letting people live their lives and bank in the most convenient way.

"I personally find it a pain point now to have to pick up the phone and open the weather app," Gaston said. "Who would have thought that the weather app would be a pain point? Now I just say Alexa, what's the weather today? Why can't I just say Alexa, what's my balance?"

Working with Alexa is not as simple as it might seem, however.

"You think it's just voice banking, it's just asking for your account balance," Gaston said. "Which account balance? And how do you tell them that? Are your transactions labeled correctly so that as you read out transactions to the customer, they make sense? I'm sure we're going to learn a lot as we go live."

Embed within popular apps

Wells Fargo has joined institutions like TD Bank and Barclays in creating a Facebook Messenger chatbot that can communicate with the 1.2 billion consumers who use Messenger.

This is just one example of a forward direction for Wells Fargo: being wherever customers want it to be.

"Customers are not spending much time on their banking apps," Brett Pitts, executive vice president and head of digital, pointed out. "Ninety-seven percent of their digital time is spent elsewhere," for instance on Facebook, Instagram, Facebook Messenger and Gmail.

"They're finding out what's happened with their friends, communicating with other people, messaging, following the Kardashians — there's all kinds of things people want to do instead of banking," Pitts said.

"The question is, do we mind that?" he continued. "Is that something we should be trying to change? Should we be trying to come up with experiences that encourage people to spend more time with us? I'm not sure what the answer to that question is supposed to be."

Help people access bank account information from fintech apps

Wells Fargo has for some time made an effort toward data portability — letting customers access their bank account from other apps — most recently through application programming interfaces and partnerships with Xero, Intuit and Finicity.

"We're enthusiastically pushing outside of our four virtual walls to be able to support more experiences where customers are spending a whole lot more of their time," Pitts said.

Data agreements in payments are what banks need next, he said.

"I've got my Wells Fargo credit and debit card attached to iTunes, Netflix, the corner gym, bill direct sites, and I'm putting them now in a whole host of different wallets,” Pitts said. “The only way I know all the places I've connected my card is when I lose one or it’s compromised. Then I get to go on a journey of discovery over the course of the following week as all those payments break. Then I have to remediate all those and hook them up with my new card in preparation for the next time it's compromised, six to 12 months later."

Offer predictive assistance

Bank of America’s erica virtual assistant, expected to launch later this year, will make recommendations to customers based on a careful, predictive analysis of all the information the bank stores about them, said Michelle Moore, head of digital banking of the company.

Pitts at Wells Fargo shared that the bank has been working with Personetics to build an artificial intelligence foundation that it will use to provide insights about customers' behavior to them, to help them make financial decisions.

"People continue to tell us they're looking for some suggestions from us," Pitts said. The bank is in a large-scale pilot with the virtual assistant right now, he said, and will be rolling it out later this year.

One place the Personetics engine will be applied is in the savings app Daily Change, which the bank rolled out in 2016. The app lets customers link a checking account with a savings account and provide rules about how they want it to move money from checking to savings on a daily or monthly basis. In 2018, Pitts said, the bank plans to start suggesting to customers how they might time their expenditures and their bills in ways that help them become more cash-flow positive.

The AI capability will also be included in Intuitive Investor, a robo-adviser Wells Fargo plans to begin rolling out in the second half of this year through its partnership with with SigFig.

"As we talk with Wells Fargo customers, three out of four are still saying they need help," Pitts said. "They've got generalized anxiety about money, they don't feel they're making good decisions, they don't feel they have a lot of confidence in their financial knowledge. Three out of four are saying they look to their bank to be one source of that information and recommendations."

Improve authentication

U.S. Bank has set up a password and security question that works across its mobile apps, online banking, branches and contact centers.

"Someone asks you what's your favorite dog's name and you can't think of your favorite," Gaston noted. "What we heard was, don't just solve this in digital; they wanted to talk to anybody and have that password reset for them or have a new password issued."

U.S. Bank is also planning to launch a new, multichannel authentication platform.

"Passwords and usernames will go away very soon, and there's a whole range of different things that will replace it," Gaston said.

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Mobile banking Digital banking Authentication Fintech U.S. Bank Wells Fargo Bank of America