Anne Gabriel_resized
Anne Rawland Gabriel Feb 27, 2017

AI gathering steam in mainstream banking

Not long ago, mobile phones served a simple purpose: to talk to other people. Now we routinely talk to Siri, Cortana and other digital assistants. More significantly, they talk back to us (and not, mind you, the way upset humans do).

Jabbering with artificial intelligence (AI) personas may help with routine tasks such as finding the nearest Thai restaurant, or the phone number of your favorite shoe store. But for retail banking, the implications are profound: moving us swiftly beyond static self-service into smart interactivity whenever it’s needed, day or night.

As with many a disruptive technology trend, AI is gathering steam in the mainstream. Witness Bank of America’s recent unveiling of the virtual assistant “Erica,” projected for customer use sometime in 2017. Also known as “chatbots,” virtual assistant software solutions simulate human interaction—by text or voice—and serve as digital customer service agents.

Experts agree that the advent of the banking chatbot heralds exciting, inviting times for consumers and financial executives alike.

“We’re seeing strong interest in chatbots and other forms of AI,” says industry veteran Daniel Latimore, senior vice president of banking at Celent. “We recommend banks experiment to gain experience over their competitors. Further, they can even leverage pilots to their advantage by targeting specific segments and positioning the pilots as customer perks.”

Yet the enthusiasm hasn’t—and perhaps shouldn’t—spark a Rush for the Robot. In August, Forrester Research issued a widely referenced missive, “Bots Aren’t Ready to be Bankers,” that suggests most banks wait “2-3 years” before adopting the specific type of AI that BoA just unveiled.

Consider, though, that if you read Forrester’s advice closer, talk to other industry experts or even look at what’s happening in the market, you’ll discover any lack of enthusiasm for deploying chatbots doesn’t mean retail bankers should dismiss them, or other AI projects, in 2017.

Giving chatbots a voice everywhere

Other analyst predictions back this up. For example, IDC Financial Insights forecasts 2017 will see 15 percent of banks offering cognitive “voice banking” options. Additionally cognitive/AI, robotic process automation and blockchain will spread to 50 percent of banks worldwide by 2020.

Indeed, various innovators are already atop the AI voice banking wave, with Ally and Capital One leveraging various forms of AI to serve their retail customers. Additionally, USAA is expanding the abilities of its existing virtual assistant. Even BoA has more AI in the pipeline, in addition to its previously announced Facebook Messenger collaboration.

Yet virtual assistants represent only part of the story for the New Year. AI applications in the front, middle and back office will fundamentally change how bankers and customers interact.

Take the sales cycle, where Joseph Walent says one trend involves what he calls “smart marketing” AIs. This solution uses various mechanisms to recognize or anticipate customer needs and then offer them solutions or hand them off to a human.

“Some applications in this category take a big data approach,” says Walent, associated director for customer interaction advisory service at the Mercator Advisory Group. “They take what a bank already knows about a customer and combine it with third-party intelligence to present relevant offers. For example, a customer looking at cars online starts receiving personalized loan offers via text, email or whatever channel they previously opted into for bank promotions.”

Another smart marketing variation monitors email inquiries for bank-established keywords about products or services. Then, the AI engages prospects in an automated exchange. It not only teases out a prospect’s level of interest by asking questions but also gathers contact information: It requests availabilities for a meeting. It cannot go out with you for coffee, alas—but all this information gets passed along to a human to follow up.

See bot run: banker’s best e-friend

From the middle and back office perspective, leading banks across the size spectrum are also working on AI deployments to make their personal bankers more nimble and successful.

“In 2017 some banks will begin introducing cognitive AI to help guide employees to interact with customers in a best-of-breed manner,” says Marc DeCastro, research director for consumer banking at IDC Financial Insights.

“In other words,” he continues, “when a customer asks questions during an exchange with a banker, an AI solution will suggest responses. During the conversation, the AI will ‘listen’ to customer reactions in order to detect patterns and build the institution’s interaction best practices.” (Maybe the next wave of AI will listen better than some spouses do.)

As DeCastro points out, customer needs run so diverse that cognitive, middle-office AI solutions will significantly improve the likelihood bankers will offer the right option at the right time. What’s more, DeCastro says that failing to act can put your institution at risk: “The majority of banks should, at minimum, begin exploring this type of AI in the coming year to stay competitive with their peers.”

AI’s turnaround proposition: From reactive to proactive

Changing retail banking mindsets, and cultures to match, remains paramount in adjusting to the new technology. Consider your current digital channels as they relate to mortgage loans. A customer self-directs through static content to learn about financial products, consider the options and fill out applications—but this doesn’t consider their life stage, goals, spending patterns and budget.

Moreover, “Few people ask Siri ‘what’s the best price on a fixed-rate, 30-year mortgage with 10 percent down and a monthly payment of $2000,’” says Tiffani Montez, a senior analyst with the Aite Group. “Rather, they say ‘I need help buying a home, where can I get a loan?’” By the way, we tried this. Siri said, “Hmmm” and, bless her heart, pulled up a few web websites—but with general rate information only. Nice try.

“Bankers need to breathe life into their customer interactions and using AI, guide that customer—whether in person or via voice recognition—to narrow down the options to the one most appropriate,” Montez notes. “It’s critical to look at customer interactions holistically.”

She advises that financial services companies “move from a reactive model to proactively anticipating needs.”

Celent’s Latimore agrees: “Customer experience is rapidly becoming not just a differentiator, but the differentiator. In turn, experiences contribute to the three fundamentals of successful retail institutions: increasing revenue, reducing costs and mitigating risks.”

To hear Latimore tell it, “AI deserves attention during the coming year for the role it will play in enhancing customer experiences to benefit bottom lines.” Given their programmed nature, the chatbots of banking may or may not agree with this assessment. But at least they stand ready to lead the way.

Anne Rawland Gabriel is a contributing writer to BAI Banking Strategies She is based in Minneapolis/St. Paul, Minn.

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