Trust as the Currency of Digital Banking: KeyBank's Path to Cognitive Banking

In this detailed session, KeyBank and Personetics explore how "Cognitive Banking" is reshaping the industry, and how KeyBank is building trust through tailored guidance, turning mobile interactions into meaningful relationships that drive mutual value. Learn what KeyBank's financial mobility survey revealed customers expect: They don't just want transactions, they want trusted guidance that improves their financial well-being and daily decisions. For banks, gain insight from KeyBank into how robust data cleansing and enrichment can deliver value for both customers and the bank. By improving transaction descriptions and accuracy, banks can enjoy substantial benefits in call center inquiries, saving millions while automating customer service in a mobile-first world where 90% of traffic comes through digital channels. The benefit to shareholders? Measurable impact of targeted engagement on cross-selling, upselling, and customer retention, creating lasting value through deeper relationships rather than transactional interactions.


Transcription:

Jody Bhagat (00:11):

Hello everybody, I'm Jody Bhagat. I'm the President of Global Banking at Personetics and I'm so pleased today to be joined by Emily Gessner, who is the Head of Consumer Digital at KeyBank. And just so we can all embarrass Emily in a positive way. Last week, women we admire nominated Emily as one of the top 50 women leaders in Ohio. I think that deserves a round of applause. No, and she's probably number one in her household, but top 50 in Ohio. I'm not even number one in my household. I don't think so. Our vision is democratizing financial wellness for all people worldwide and we're making some headway. We actually serve over 150 million end customers over 1.2 billion insights every month, and almost half of the top 40 banks in North America. So the biggest banks in North America. With the rapid advancements of AI and analytics, it's really happening at breakneck speed.

(01:16):

Frankly, it's hard to predict what's going to happen next week. So I have the unenviable task to talk about some seismic shifts that are occurring in banking. I want to talk about six seismic shifts. So starting with ubiquitous banking or embedded banking becoming more ubiquitous, this is becoming more pronounced and more prominent. Banking solutions are now being offered contextually rather than through primary banking attacker. Fintechs are picking off specific profit pools, particularly where there's vulnerability in terms of transparency or value, and this is happening in a much more prominent way. Second one is the rise of empathic banking. So the digital channels and the virtual channels or the banker channels have grown and adopted differently over the past decade. Each has made tremendous progress. We will see a confluence of the two you're all familiar with B of A's Erica. It now serves one and a half million interactions every day, every month, I should say Wells Fargo, not to be outdone is launching, has launched Fargo and is trying to make that a more intelligent virtual agent. What we will see is the confluence of these two phenomena where the intelligence of the digital channel and the empathy of the banking channel will come together to deliver more valuable interactions to customers. The third one is the emergence of life journey banking. So Emily will talk about KeyBank and some other leading banks across North America that are really leaning in around delivering intelligent personalized insights.

(03:01):

Customers have interest not just in what they have to do right now, but they have what's called jobs to be done. That means that they may have to save or manage their spending over the course of months or years. Let's say they want to want to save for an auto payment. Well, I've got to raise my credit score. I've got to save for the down payment, and I need an auto loan as well. So it transcends a particular product. It's a combination of insights, tools, content, products, and also even progress. New age of marketing offers the days of the banal marketing banner saying You're pre-approved for a credit card. I know you'll all be disappointed. It'll soon be dead. That'll be replaced by contextual insights and advice that shows a customer evidence of personal benefit. Now, today's personalization techniques, they're fairly sophisticated. You have propensity modeling, content optimization, segmentation data, browsing behavior. We believe that transaction intelligence that is really understanding what that customer is experiencing will be the unlock to deliver evidence of personal benefit.

(04:17):

You see today many banks starting to compete around ecosystems, internal ecosystems to start. For instance, capital One is leveraging their credit-wise capability along with their banking and card capability to deliver an ecosystem of solutions for different kinds of customers. US Bank has delivered a solution called Bank Smartly, which is an integrated proposition across checking card savings where you benefit from doing more with each product. Soon we will start to see competing not just on internal ecosystems but on external ecosystems, particularly with the advent of open banking where the proposition of the customer will be the bank system plus third party solutions. That'll be part of the proposition. And lastly, banking will become much more predictive. We already have the capabilities, data analytics, AI to be much more predictive as an example. You now can better understand and help your customers better anticipate when they may have a cashflow issue or if they've got excess liquidity that they should put away. Those tools are available where you can preempt and proactively reach out to customers and inform them this money you can set aside. Now, we don't know the pace of change around some of these trends, but one thing that we can say for sure is that there'll be greater separation between the leaders in the industry and the laggards in the industry.

(05:51):

And this means that customers will have more control and they have higher expectations. So this is putting more raising at stakes, if you will, for banks to really up their game as well. And this is borne out by the data as well. So some research that we've done shows that 59% of customers have acquired a product from a non-current financial services provider. By the way, that's much higher for Gen Z. It's over 80% for Gen Z, and JD Power suggests that 13% of customers are likely to switch their primary banking relationship over the next 12 months. Now that's much higher than the traditional change rate, which is more around seven or 8%. We also conducted research with 5,000 customers global, and we found that 84% of customers would consider switching for more personalized services. So how are we doing around these personalized services? Well, there's two ways, primary ways that banks have of engaging customers today. One is you may be delivering some kind of financial wellness content tools capabilities, and there's some well-known providers in this space. And the second is reaching out to customers with promotional activity. Let's say some kind of needs-based sales, hopefully well modeled as well.

(07:19):

So let's take a look at how we are performing around this. So while the digital channel has the lion's share of activity and interactions, the cross-sell rate in banners in digital is still around 1%. Matter of fact, the only reason it makes sense economically is that you can do it at scale, at a lower cost. And in the banker channel, the banker asset is one of the most valuable assets that at least traditional banks enjoy. Part of the challenge is that the average tenure might only be 20 months and the tools that you're providing to bankers, maybe some combination of a marketing lead list, maybe a next best action if you're more sophisticated. So the outreach that bankers are doing still has low conversion rates despite being such a valuable asset. So our belief is the confluence of these two is where the opportunity for greater performance and greater customer satisfaction lies.

(08:24):

We call this cognitive banking, and this is an end-to-end process from analyzing customer transactions, recognizing customer's needs both implicit and explicit needs, being able to interpret those needs, identifying what's the appropriate action for customers to take, and then optimizing and enhancing because this should be a learning and growing platform. And if done well, banks will not only engage and embrace trust with customers, but they will achieve and we will achieve a status that is not unlike some of these prominent brands that frankly are delighting customers. And since we're dealing with customers most valuable aspect, which is their financial habits and their financial life, why shouldn't we have the same level of prominence and delight as some of these leading brands? So let's talk about cognitive banking in action. So traditional app, you have a good display of the accounts, perhaps this banner around loan cognitive banking, though it helps consumers understand better where they are today, not just historically but also forward-looking.

(09:42):

So you can see here a forward-looking cashflow tracker in terms of where you may have either issues or opportunities to set aside money. Beyond that, it's also identifying what should you be aware of or take action on right now, reinforcing this element of looking out for customers and building the trust as a result. So now let's look at this nice very conspicuous and colorful banner. So even though it looks very conspicuous, we know from research that the science behind this is that mostly customers are tuning out that banner. And by the way, that banner typically has a lot of analytical modeling behind it, very sophisticated. It doesn't really come across that way to the customer, but it's quite sophisticated. Our belief is that based on the transaction data and using the intelligence from that, that you can much more intelligently interact and deliver that kind of an offer, but deliver it in context.

(10:45):

In this case, we're saying, Mr. Customer, we think that you're going to have a cashflow issue in two weeks and that you may be negative around $1,500. So we've pre-approved you for an unsecured line for $3,000. That's called evidence of personal benefit. Now, I know intuitively you'll say that it makes sense, but empirically it also makes sense. It's higher satisfaction for the customer and you see a two to three x conversion rate. So the benefits here are trying to create this win-win based on a foundation of trust, a win for the bank in terms of driving higher digital engagement or customer engagement, driving additional and deeper relationships and the win for customers because through this kind of a capability and interaction, they see that the bank is really looking out for them and driving higher satisfaction. So I'm so pleased to welcome up Emily, who will talk about the journey that KeyBank is going through today.

Emily Gessner (11:55):

Thank you all. Thanks Jody. For those who haven't checked the news this morning, it's been a busy morning, but we did formally announce our partnership with the press release this morning, KeyBank and Personetics, and we are very excited about that. It's been several years in the works and the work is well underway. And so I'd like to maybe talk about how that partnership came to be and what we really feel like that's going to be able to deliver for our customers and for the bank as a whole. And before I get into the partnership though, I do want to kind of orient the audience around Key Bank, who we are, key Bank, a 200 year old financial institution, regional bank. We have about a thousand branches. Think of us along the upper US from Portland, Maine to Portland, Oregon, and really trying to serve our customer base within footprint in those strategic markets.

(12:48):

My team specifically is focused on all of our account opening experiences and mobile app and online banking experiences. So my team is really thinking about that end-to-end experience of all of our consumer and small business clients. When I think about some of just the critical components or guiding principles of how my team thinks about ensuring that we're delivering the right things for customers, you can see some of those things up here, the seamless experiences, secure banking, ensuring we have complimentary channels. And that's really thinking about digital branch and contact center and that critical three legged stool and how they're all operating together to ensure our customers are banking how they want, where they want when they want. We think about obviously reliable platforms and then that personalized guidance there at the bottom. We're going to dig into a lot of that here. But again, if assuming we're delivering on all of those five things in a very solid way for our customers, that's really when those trusted banking relationships come to be where we have that customer loyalty because we're keeping that customer forefront at every single point of every decision that my team is making.

(14:08):

So the state of our clients, and before I share some of the great research that our teams do, I also just want to take a moment to just talk about maybe the complexity of the landscape that regional banks are in today. We don't have the large balance sheets that the Trillionaire banks do, and we don't have the nimbleness and the easier infrastructure backend tech stack that the neobanks do who are newer on the scene. And so we're really in this very competitive space currently where every single bet that we make, it has to be very strategic and we have to feel very confident about where we're putting our money and ensuring that it's going to make the most of that investment for not just the bank, but also our customers and our shareholders. So some of the research that we did and we continue to do always is just making sure we keep our clients again at the forefront of everything we do.

(15:04):

So at the end of 2024, we released our six consecutive proprietary survey. We call it the Financial Mobility Survey. And really what that survey is intended for is really trying to understand how our customers are feeling about their financial situation, how banks are helping them wherever they're at on their financial journey, and really trying to understand what it might take for them to feel like they're moving up on their financial journey in that upward trajectory again, wherever they might be on that journey. And so I'll share some findings with you here, but no, but this shouldn't be a surprise to anybody, but our customers are financially stressed, right? You think about inflation, you think about wages not moving at the same rate that inflation is. You think about just the complex financial landscape that they have to navigate. I have seven different financial apps on my phone of which I am all la carte kind of picking and choosing what I want from all of them.

(16:05):

It is not easy to manage your money in today's landscape, but when you start to peel back the layer, the onion, so to speak, the different layers of the onion of our customers, and not to minimize what they're feeling by any means, but when you start to look at those dollar amounts that they feel like would actually start to push them on that upward trajectory of their financial journey, we KeyBank believe that those dollar amounts or stepping from step A to step B, that's very attainable with strategic through strategic incremental steps, assuming that you're banking with a financial institution that is providing you with information, real time, valuable actionable information, and then giving you the tools to also make good on those specific actions.

(16:58):

And again, I mentioned some of the things, right, but financial information, digital banking tools, advice coming from a financial advisor, any of our customers, I'm sorry that didn't show up. I think it says 37% there at the bottom, it's kind of light. But all of those different enablers are really helping our customers feel more financially resilient. Now, obviously, oh, obviously those are gaps that KeyBank has today, especially those top two. So as we talk about the strategic partnership with person attics and solving for some unique gaps that we have today, that is really where person attics comes in and starts to fill in some of those gaps that we have.

(17:49):

Now, Gen Z, I'm not sure a bank who isn't trying to solve for Gen Z currently, and I think the ever complex problem of Gen Z being that they want different things than maybe your current portfolio customers want. And today maybe they're not as profitable as you would like them to be or we would like them to be. That doesn't mean that they're any less worthy of trying to solve for their needs now because eventually they will become the majority of your client base. And I think as you think about Gen Z in the ability to acquire them early and keep them long in their tenure as their banking needs evolve and become more complex, making sure you capture that relationship early and do it through trust and providing them exactly what they're looking for. And also it's likely going to need to be in a digital savvy way, right?

(18:44):

These Gen Z customers are growing up in a very digital friendly world. This is second nature for them. And you think about FinTech and you think about all of the things that they are trying to better themselves and they're going to go out and find that information. They're going to choose financial institutions who are providing those things or tools for them. I also think just as a whole, and maybe Gen Z is a really good example of this, but expectations across consumers are very high today and they continue to grow. And if banks, especially regional banks are not keeping up with those expectations, it is very easy to switch. Today, you heard Jody talk about the willingness of customers to leave. If they're not getting those financial tools or things that they want out of their financial institution, it is easy to switch. And so we KeyBank needs to do a better job of providing those capabilities that acquire Gen Z sooner, but also are going to keep our strong longer tenured portfolio customers around because we're giving them something that adds value in their lives.

(19:54):

So again, I talked about just some of the research that we've done. We published that study annually and we'll continue to do that. But again, you can just see what our customers are telling us is that there's a gap from where they are today to where they want to be, and they're willing to bank with financial institutions that they trust who are going to provide them with those capabilities to help them take whatever next step it might be on their journey. So I'm really excited to be able to go on this journey with person attics. I think about companies with shared values. I think about companies who, both of us, we share a vision and a passion for financial wellness as a whole. And the ability for us to partner to make that happen for key bank's, 3.5 million customers is something that we are very excited about.

(20:47):

All right, so let's talk about the value. I'm an executioner at heart, so I'd love to maybe get into the sausage making here. So I want to talk about the value that we believe we're going to be able to unlock with some of the persone solutions. I know there's a lot of, or a couple of folks here from Key, you guys know how I think about things, but I always talk to my team about, okay, when we make a strategic decision, again, I talked about those strategic bets that we're making. We need to make sure that they're actually going to pay off in the long run. And so I really think about it in three ways. How is this going to impact our clients? How is this going to impact the bank and how is this going to impact our shareholder? And as we make those strategic bets, this is more of a Venn diagram.

(21:28):

There's definite overlap between these three areas, but we need to make sure that our strategic bets are going to be worthwhile in the long run. So I think about the client outcomes. We talked about what our customers are looking for. Assuming we're able to provide those capabilities in the channels of preference for them, that means that we're going to be able to see a positive improvement in NPS digital enrollment engagement and time and app from a bank perspective. Jody talked about the enriched transactions, an interesting statistic for key and for those in the audience who think about customer problems or how are you listening to your customers or how do you know when a pain point is truly a pain point? Our number one contact center call driver is transaction inquiry. I don't know what this transaction is. Can you please explain it to me?

(22:25):

So we have millions of calls coming into the contact center every year asking what is this transaction? So as you start to think about cleansing or enriching those transactions and making sure you're providing that clarity right in the app, we're going to start to see a significant reduction in the contact center volume. What's also interesting about our contact center calls, a lot of those transaction inquiries, the customer still isn't clear, and those become dispute calls. So we transfer the call from a transaction inquiry to a dispute call and disputes are our number two contact center call driver. So again, as you start to think about the value that this is going to bring for the bank, ensuring that our contact center is operating in a much more efficient way, this is the partnership pays for itself. If we can just make good on these contact center calls, which is very exciting for us, and the customer is going to be much happier, right?

(23:24):

Nobody wants to call the contact center. As I think about the shareholder outcomes, obviously if you start providing these things that customers want, I just went through things that our customers are asking for. Their expectations are higher and evolving at a very rapid pace. If we can deliver on those things, help them move upward in that financial wellness or their financial trajectory, customers are going to want to stay with us longer, they're going to want to do more with us. It's just like that osmosis. And we're excited about what that's going to be able to do.

(24:02):

Okay. So a lot of exciting things to come. We've been underway here for a couple of months with our tech teams and persons, tech teams. We will be launching enriched transactions here any day now. I think my compliance partners that I can say any day now that will come soon with our insights are a fast follower to that. And I do want to take a second before I flip it back over to Jody to just say, when you partner with a institution that has such a broad range of capabilities, I think it's an opportunity not just to provide capabilities that our customers are asking for, but it also kind of upends how we think about things as a bank. And that's probably a big statement, but as I think about our current mobile app experience, if we were to just take person attics capabilities and slap them into our mobile app, probably wouldn't do much good just as it is today.

(25:07):

And so I think when you partner with a company that has such a wide range of products that can really transform a customer's experience, this is now giving us the opportunity to think about an entire mobile UI refresh. And again, as we think about those insights, the last thing Jody showed you, the heat maps, the last thing we want to do is again, put things in the app where customers aren't going to see them or they're going to be disregarded. And so what better way to think about launching those experiences than in a mobile app that's completely refreshed, that can make those insights prominent, actionable, and personalized for the customer. So this partnership is going to do a lot of things for our clients and for the bank, and I couldn't be more excited about that opportunity. I'll hand it over to Jody.

Jody Bhagat (25:55):

Thank you, Emily. Fantastic. So while Emily's talked about all the exciting things that are to come for KeyBank, why don't we all just take a moment to zoom out even further and let's try and look around the corner. So again, in the interest of predictions, we will see if you guys hold me to these and next year and the year after. But in the next year, we think that basic personalized insights will become table stakes. Now it'll still become a key point of differentiator, but this will be part of customer expectations as early as over the next 12 to 18 months. Horizon 2 is where you'll start to see this empathic banking, this combination of digital plus human interactions, more intelligence infused in the banker channel and more empathy infused in the digital channel. Embedded banking and open banking are going to change the landscape in terms of new players, new services being offered, different distribution points.

(26:50):

And then we think that banks will get much more capable and facile around these end-to-end journeys, not just helping with setting up a savings, but actually helping for that journey around I need to better manage my spending, or I want to buy that car in two years. And then lastly, horizon three. It's so hard to tell where we're going to go with AI and everything, but I do think that the marketing banner will soon be dead in the next five years for sure, and we'll start to see this growth around agentic agents, not just for the bank, but also in service of the customer. So with this austere group, it'd be great to just open it up for any questions we might have just one or two minutes. Let's see. We've got two minutes. Yes.

Audience Member 1 (27:51):

This is not the only partnership that the bank has. The bank has several partnerships. It just had an investment on call technologies. And so how do you think about this? Do you try to bring partners for product lines or you actually bring partners to change the banking you are doing right now because you're going to be facing competition that comes from real native financial investors and financial actors that are totally new?

Emily Gessner (28:38):

Sure. Yeah. So for those who didn't hear, I think your question was just around how do we think about making third party investments or how do we think about partnerships and where do we choose to do that and product lines or experiences. And so what I would say a couple of things. One, I think it depends on the problem that we're trying to solve. And can we think about doing an internal assessment of should we build something in-house versus should we buy or partner to get that capability? I think you think about the time horizon. How much time do you have to get that solution out in market? What resources is it going to take? Do you even have those resources in the bank to be able to support that? Are you willing to move resources off of current priorities and put them on something net new?

(29:25):

Or is that where you think about a strategic partnership that you kind of outsource some of that knowledge, that expertise, those actual tech experts who can come in and help build an experience with you? The timing piece is critical. I think if you are under a severe time crunch, that's where a partnership can be really helpful. I also think not every bank wants to be the best at all, the same things that the other banks do. So I think it's about picking your spots. So where do you want to be really good and do you want to be known for having that capability be built in-house and being really good at it? Or are you okay with partnering with a company who again, already does that really well today? And maybe you put your specific spin on it, but you have to really pick your spots.

(30:12):

You have to understand your time horizons. You also have to just be really mindful of what tech investment dollars do you have at your disposal to make these decisions. Candidly, I think when we're strapped from a tech dollar perspective, we make a lot of internal, we go internal a lot, right? Because costly sometimes to go external or to partner, not always, but it can be. But on the flip side, those internal builds are going to take a lot longer usually than what it would take to partner, again with proven capabilities at scale. So there's a lot to that. So I'd love to talk more if you don't mind. But yeah, there's a lot to that. Thank you.

Jody Bhagat (30:49):

Wise words, and that's why she's a woman we admire. Thank you all for your time and your attention. Have a great rest of your day.