Banks are seemingly obsessed right now with how they can use artificial intelligence to do a better job serving their customers.

A digital assistant could give a young professional the same type of attention typically reserved for a wealthy retiree. A bot likely would never have a bad attitude with a disgruntled customer. And, ultimately, AI could help banks trim their expenses.

For institutions that have distinguished themselves in the market with their service, is using AI in dealing with customers a trickier play? USAA, which consistently wins praise for the way it serves its customers, is trying to answer that very question.

“When people think of USAA, it is a voice on the phone in a time of need,” said Zack Gipson, chief innovation officer for the institution, which focuses on members of the military and their families. “So how do we make our digital channels more humanlike?”

I chatted with Gipson at USAA’s expansive headquarter campus in San Antonio while in the Lone Star State for American Banker’s Digital Banking 2017 event in nearby Austin. The conversation took place a week before Amazon announced its deal to buy Whole Foods.

Zack Gipson, chief innovation officer at USAA
“Everything Amazon does they do it really well and they kill categories,” says Zack Gipson, chief innovation officer at USAA on why he worries about disintermediation by the e-commerce Goliath.

Gipson oversees innovation for all of USAA, including its banking and insurance businesses. In addition to discussing AI, Gipson touched on disintermediation, Amazon, other big banks and (wait for it) Cadillac.

The following is an edited transcript of that conversation.

What’s keeping you up at night?

ZACK GIPSON: Speed of disruption in the market, especially around the disintermediation of customer relationships. For us, our service is our distinctive play in the market. The more that new entrants or those adjacent to our markets are disintermediating direct relationships with our members, our ability to keep up to the velocity of change is what keeps me up.

Tell me more — who? Fintech? Amazon?

All of the above. It is fintech, insurtech or insert-something-tech. It is existing folks and you can’t talk about that without talking about Amazon. At times, Google — and, look, I love Google, we work with them — gets a bit more press, but Amazon is the one who worries me because everything they do is really awesome. I was going to say "wicked awesome," but a New Yorker might not appreciate the Bostonian slang. But again, everything Amazon does they do it really well and they kill categories. Once they set their sights on something.

They are probably also the most natural of the big tech companies to enter banking given their payments systems.

Right, they’ve got the rails. They’ve got a business sense because they’ve been running businesses. Google has been [about] technology and services. Amazon seems a bit more comfortable in the pure business space.

Also, I would have said differently coming out of 2008 through 2010 when they were back on their heels, but now core banks, asset managers and insurance companies — our traditional competitor base — is embracing technology at a much faster pace in the last couple of years.

You’re talking about companies like JPMorgan Chase?

I’m talking about companies like Chase, Vanguard, Schwab. The robo-advice thing came in with startups, but there was always a risk that the big low-cost providers would jump in the market and they did. That is interesting — for new entrants, what’s viable over time versus what creates an impetus for the big players to change and change quickly.

What are the projects that get you going?

Linking back to service, it is our work with — and I hate buzzwords, but I’ll use it — artificial intelligence. Specifically, it is how we recreate the caring and the empathy that our service reps have on the phone. When people think of USAA, it is a voice on the phone in a time of need. Humans just naturally have emotion, empathy and caring and that comes through if you talk to our service reps. I called one after I got hit by a bus — I was in a vehicle, so I wasn’t actually hit by a bus — but I don’t remember what was said but I remember the warmth coming through on the phone. So how do we make our digital channels more humanlike? How do you bring emotion and empathy into those channels? And how do you use artificial intelligence to recreate that?

That’s a very specific USAA challenge. Other banks can create a very service-oriented chatbot, but like you said, service is your differentiator. So how do you do it?

We haven’t figured it out yet. It does pose unique challenges. A lot of times when we sit down with existing partners or new partners, we are asking for things three or four steps ahead of where they are. It is a balance of what do we want to do incrementally and what do we want to do to jump the curve. Those are trade-offs we make all the time. I sit more in the jump-the-curve area, so my conversations with Chris Cox, our chief digital officer, are often about “Do we keep doing the incremental work around this thing? Or do we double down on the new thing?”

Could one potential answer for the empathy-in-AI question be not doing it? I mean, could you end up using AI in a lot of places in a way that makes your existing agents even more present for members?

We put a high value on when customers want a human interaction. Let’s not force you to call because there is something you’re uncomfortable doing in the digital channel. For us, it is the shared experience of, hey, I’m interacting in a digital channel, and there comes a point when you want to bring in a human. How do you do that seamlessly and move in and out as needed?

Also, a lot of times AI is translated down into the just the digital world, but it also provides tremendous opportunities to make our reps smarter and more capable — a dashboard of tools, a better sense of information on the back end. The human is given the right information at the right time.

What short-term plans can you share for your existing digital assistant?

From my perspective, it is how do we start building in more natural language understanding? You don’t have to say “cash,” you can say “money” or any derivation of that and still get a response back. It is very much like Google Home, which is learning, versus Alexa. If you don’t say something exactly so, Alexa doesn’t understand the question. Google has some of that AI built into it, while Alexa just has all these skills.

What else is front-of-mind for you?

From an insurance perspective, what is going on with autonomous vehicles as well as car technology and what that will do to property and casualty insurance. There are also some new models, like what Cadillac is doing with the car: insurance, gas and everything in one price. Talking about disintermediation — what happens when the manufacturer gives you this whole package?