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.
8 takeaways from Digital Banking 2018
Are banks jumping into new technologies without thinking through the consequences of their use?

That question set the tone for this year's Digital Banking conference in Austin, Texas, as industry leaders sought to highlight and debate the issues underlying the innovation that is expected to transform banking over the next decade.

Artificial intelligence was at the forefront of the discussion, as speakers such as Bank of America's Cathy Bessant, pictured above with American Banker's Penny Crosman, stressed that AI will soon drive all interactions with customers and will force banks to retrain and hire employees with new skills.

There was broad discussion, too, about the industry's shift to a primarily mobile-banking environment and how a mobile-first approach demands that banks continue to re-imagine how they serve customers while remaining keenly aware of competition they are facing from technology firms.

Attendees noted that many topics of discussion at the conference were more philosophical in nature than in previous years, partly because the industry has evolved from focusing on creating and selling products to solving problems and improving the customer experience.

Indeed, some of the examples of success highlighted at the conference, such as the payments apps from Venmo and Starbucks, were developed not as products, but as solutions to unaddressed needs.

A presentation by Dominic Venturo, the chief innovation officer at U.S. Bancorp, galvanized thought around the idea that the mobile devices consumers are using today to conduct everyday banking transactions could be irrelevant tomorrow. That means app developers need be thinking beyond what works on an iPhone or iPad to how banking will be done in a world where every device in a home is connected.

Here is a look at the major themes of the conference.
estimate of job losses to AI, by bank job category
Use artificial intelligence, but don't let it use you
Cathy Bessant, Bank of America’s chief operations and technology officer, set the tone for much of the discussion on artificial intelligence.

She was concerned that financial institutions have not had a deeper discussion about the use of that and other emerging technologies, which are poised to eliminate hundreds of thousands of jobs in banking alone.

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

One prediction shared at the conference is that automated personal financial advice will hit a milestone by 2025, by which point consumers will more likely be getting their advice from an AI-enabled smart devices than human financial advisers.
To the biggest banks go the deposits...
Large banks retain firm control over much of U.S. deposits.

The four biggest banks control roughly 37% of all the country's total deposits, according to American Banker research presented at the conference.

The leader is JPMorgan Chase, with over $1.31 trillion in deposits, or roughly 11% of total U.S. deposits. The trend broadens among the top 20 U.S. banks, which collectively controlled 22% total U.S. deposits a decade ago and now control 67%.

Consolidation is the biggest reason so much of the deposit market is concentrated in so few hands, but technology is also playing a significant role. The biggest banks in particular are spending heavily on customer-facing technology, and that is giving them a leg up over smaller rivals in the competition for deposits, according to industry experts.

Recent research underscores this emerging divide between big and small banks. Between 2011 and 2016, the pace of deposit growth at industry’s three biggest banks — JPMorgan, Bank of America and Wells Fargo — was roughly double the pace at smaller banks, according to Novantas, the retail bank consulting firm.
Apple VP Jennifer Bailey walks past Apple Pay logo for speech.
...But beware the challenge from nonbanks
One onstage prediction from Moven founder Brett King got everyone's attention: By 2030, the largest bank will be a technology company.

Banks, he said, need to develop digital and mobile-first experiences, as those relying on branches alone will likely lose out to such competitors. Challengers could emerge from tech firms already involved in payments, such as Apple or China's Alibaba Group, but the field is open to disruption from others too.

Nat Cartwright, co-founder of, gave the audience another statistic to consider: 73% of consumers ages 18 to 34 would try banking with a technology firm, according to a survey by Bain & Co.
Starbucks patrons can't keep off their mobile phones.
Starbucks: A model for success in payments
The payments app Starbucks developed became a talking point among attendees, who asked what banks could learn from the coffee chain's success.

More than 40% of the 55 million U.S. smartphone users will have made an in-store mobile payment through the Starbucks app, and just over 23 million consumers over the age of 14 will use the app to make a point-of-sale purchase at least once every six months, according to research firm eMarketer. “While everyone was worrying about fintechs, Starbucks became a leader in mobile payments,” said David Gilvin, a partner and practice leader in the IBM Financial Services Consulting Practice.

David Schiff, a principal at PwC who focuses on digital transformation, said that banks can draw one big lesson from the coffee giant's successful foray into payments.

“Starbucks wasn’t doing it to become a payments player, it was because payments were an impediment to providing a service,” Schiff said. “They were trying to get the friction out of that. It is a lesson and a threat to banks. How do they enter contextual commerce without becoming an added step?”

One of the most popular payments apps today was not conceived as a banking product, but rather as a social relationship tool. Venmo co-founder Iqram Magdon-Ismail told the audience that the app was born out of a desire to make borrowing money between friends less awkward.
The Internet of Things will be all about self-driving cars to let you do things better off done at home.
Beyond the device: The internet of everywhere
We'll soon be living in a world of “ambient banking” where "Wi-Fi is arguably like air, and everything has the ability to connect,” according to Dominic Venturo, chief innovation officer for U.S. Bank.”

He envisioned a landscape where not only smart homes and cars exist, but even connected sidewalks and roads.

In such an environment, a bank will need to be able to serve customers in very personal and contextualized ways. That future will sneak up on the unprepared bank, he warned. “Over the last 10 years, we’ve seen that new technology continues to take off faster than what came before it," he said.
Stacks of paper.
Commercial clients yearn for digital services
In many ways, commercial banking is several steps behind the consumer side when it comes to digital services, and one track at the conference highlighted the work banks need to do to digitize services for commercial clients.

Many still deal with the hassle of paperwork and manual, inefficient processes, and are yearning for greater digital services from their banks, several speakers noted.

But some banks are starting to invest more in this space, and are poised to gain a competitive advantage by doing so.
Crowd of anonymous, blurred people.
Diversity will matter more than ever
How are banks adapting their workforce for the future? Adoption of more AI will bring a need for bankers with new skills, audiences were told, and retraining current employees.

It will also demand a more diverse workforce to root out inherent development biases in software.
Keep that human connection
Every application should be geared toward humanizing the banking experience, attendees were told. One key message: Consumers want banks to help them with life goals rather than just be a service to keep their money.

Rilla Delorier, executive vice president and chief strategy officer for Umpqua Holdings in Portland, Ore., noted the difference between how consumers think about banking and money. Banking is transactional, she said, whereas money matters are personal.

But banks should also be aware about customer perception. According to a survey presented by IBM, 65% of banks think they provide excellent service, but only 35% of their clients think so.