Branches, Bots and Beyond: How AI Changes Customer Engagement

This summer we hosted the first ever virtual AI in Banking Summit focused on bringing together the industry’s leading experts in artificial intelligence and banking. One of our many featured speakers was Jim Marous, co-publisher of The Financial Brand and The Digital Banking Report. Jim’s session titled, Branches, Bots and Beyond: How AI Changes Customer Engagement highlighted the connection between the consumer and their personalized experience with AI.

Watch our featured interview with Jim Marous 

Listen to the podcast: 

View the full transcript below

Keith: Hey everybody, welcome to the AI in Banking Summit. Today we’re joined by a very special guest, Jim Marous. Jim Marous is an internationally recognized speaker, author, and expert on the disruption of the financial services industry. He is the co-publisher of The Financial Brand and owner and publisher of The Digital Banking Report. Today we will be talking about Branches, Bots and Beyond: How AI changes customer engagement. Jim, big thanks for joining us today. How are you doing?

Jim: I’m doing great! Great to be here with you!

Keith: Great! Jim has prepared a special presentation for us today. We are going to turn it over to him and then follow it up with some Q&A. Jim, I’ll let you take it away.

Jim: You know it’s great to be here. What a great time to be involved in the whole technology space, banking space and talking about what’s going on with regards to technology overall.

You know when we look at what is going on right now, it is clear that financial technology more than anything else is increasing and that change is happening at a fast pace.

In the past, the consumer was at the mercy of what the financial institutions and even the government had to do with providing what we had out there. Today more than ever before the consumers ahead of the curve. They are demanding things of us that we are not able to provide in many cases and are not fulfilling our promises. The best example is probably personalization. We’ve done research for the Digital Banking Report that shows that the consumer and the financial industry want to have a high level of personalization and unfortunately the banking industry is falling short. There’s really a personalization paradox to a degree where they have a desire for that personalization, but we don’t even have the knowledge provide that. Unfortunately, right now we are in a situation where we don’t have the insight, we don’t have the processing power and we are not moving it forward in front of the customer to provide that.

The power of data and cognitive learning is really setting the pace for everything we are doing. We did a report this year that looked at the top ten trends and predictions in the financial services industry. We found that every one of those trends, at the foundation of it, was big data.

Not big data for the sake of getting great reports, but really big data for the sake of developing great experiences. This is where we are falling short as an industry. Wells Fargo is one of my banks and if you ask them, “What do you know about Jim Marous?” There’s a massive amount of data they have and a massive amount of insight. The problem is I never feel like they know me.

#Banks have all this #data about me and it still feels like they don't even know me. @JimMarous Click To Tweet

In fact, they’ve had a fifteen-year relationship with me and it feels like the relationship started yesterday. If this is a personal relationship without the challenge of a switch, then you have a situation where I would divorce the organization. They aren’t meeting the guide of what I require from a data personalization standpoint.

The financial industry needs to respond to the changing digital consumer. That change may be to millennials, but the reality is while most millennial consumers are digital, not all digital consumers are millennials.

While most millennial consumers are #digital, not all digital consumers are millennials. @JimMarous #fintech #AI Click To Tweet

I am far from being a millennial, but I consider myself a heavy digital user and what I expect from my financial institution is the same type of expectation that I have for Amazon, Google, Apple, and Facebook. So the challenge is, how do we meet the expectations of an increasingly demanding digital consumer.

One way this has come about is with fintechs. I think if you look at the competition we have in the marketplace right now you’ll see that most of it has been driven by the great use of data and great use of digital technology.

We’re seeing in the industry now that a lot of organizations are partnering with Fintechs as opposed to seeing them as competition. I think that’s a good place to be, but when you look at the power of this, it’s really the power of big data, AI, and digital technology. Bringing these three together to say, “How can we meet the customer’s demands on a personalized level using data?” The overall goal in this whole process is simple: to make banking and life simpler. A consumer does not want to go from app to app to try and address their daily needs. What they are looking for is an organization that can provide an extraordinary customer experience and brings these all together.

Ron Shevlin, who you’ll be hearing from, believes in the term platformification. This is when the banking industry is able to bring together a lot of the technologies, services, and solutions to one overall platform with a banking organization being in the center. The key here is that it doesn’t have to be banking. There is no reason why the banks can’t be the owner of the relationship for Uber, the airlines, entertainment, restaurants and go to one place to provide all these solutions. By doing so, they’ll build a much better experience for the consumer, while making their life easier. Now we have a choice, does a bank need someone to do this? Does the individual want this? Or do we have a situation where Facebook, Apple, and Amazon becomes not the banks of the future but becomes the experience of the future providing financial services.

The key is to remove friction from the customer journey. How do we make it so that there are fewer tasks on the screen to get where you want to go.

A good example is my next door neighbor. A fourteen-year-old, young man who came up to me initially and said, “Mr. Marous have you heard of Square Cash?” I laughed and I said, “Not only do I know about it, I use it, I speak to it.” He goes, “Will you be willing to pay me for cutting your lawn on Square Cash it?” I took the opportunity to say, “Yea I will do that, but why?” He responds, “In the past, you’ve paid me with cash or checks and that was good, but I had to go the bank and I don’t want to go to the bank.” That’s a whole generation of people that feel going to a facility is cumbersome, it’s friction and it creates anxiety. On the other hand, we both understand that Square Cash, Venmo, PayPal are a one-click experience. When is banking going to be able to provide that one click experience knowing immediately what I’m probably going to want to do in the app, as opposed to making me search around the app to get there.

They key is to remove friction from the customer journey. @JimMarous @FinancialBrand #fintech #AI Click To Tweet

All the data we have allows us to personalize and bring sources to add loyalty. So as we know more about the consumer, about where they go, what they do and how they interact, the amount of data that we have makes it so, unlike a branch, you can be in contact with a consumer every day with everything they do. This then increases loyalty. If I have a banking app that also includes all my loyalty cards, all the places where I shop, and knows where I am, you can then provide a better experience and a better value.

When will banks provide a one-click experience, knowing immediately what it is the user wants to do? @JimMarous #fintech #AI Click To Tweet

The key is, how can you provide an optichannel delivery? This doesn’t mean omnichannel where you provide a lot of different channels you can use, and not multichannel where you pick which ones you want to go to, but how does the financial institution understand the way I want to interact given different scenarios? If I have a complaint, they should be able to get me immediately to the channel that I feel most comfortable with for complaining. It’s a different challenge if I’m saying an ATM is down versus my debit card has been hacked.

So what’s the optimum channel? Big data, insight, longevity, and trust provides financial institutions the ability to think ahead. I like to consider it as a GPS of financial services.

Here’s an example: In January my son got into a car accident and he is okay, the passenger is okay, but he hit the back of a semi-truck with a 2006 Toyota, that totaled the car. The difference between the 2006 Toyota and a 2016 Toyota is exactly what we should be thinking about in the banking industry. In the 2006 Toyota, he knew he got into an accident the second it happened. While the 2016 Toyota would have been able to warn him ahead of time and tell him to change his path to avoid an accident.

It should be the same with financial institutions. I now have enough information, data, and interactions to be able to help the consumer avoid financial mishaps and provide them with better financial recommendations. As opposed to simply notifying the consumer that they have an outstanding fee, or waiting for them to make the transaction. These are interactions the consumer is looking for in their Amazon, Facebook, and Apple driven world.

One of the key points is the interaction of voice. The application of voice is something I believe is going to grow very fast. A couple of days ago we had Amazon Prime Day and the biggest seller was voice devices. We’re talking about interaction’s aren’t simply ask a question and get an answer, find out the news, play music and so forth. This may actually be proactive information.

Here’s an example of what it could look like in the future:

The application of voice is something that's going to be growing very fast. @JimMarous @FinancialBrand #fintech #AI Click To Tweet

Jim: What you just heard wasn’t me interacting with Alexa or Siri, it was Siri interacting with me based on the information that can be captured in a lot of different ways around the internet and things I teach my device to do. It’s important because every single interaction that we had, involved a financial transaction, payments or whatever it may be. Is a financial institution at the center of that? Is it going to be able to use all the data and knowledge that financial institutions have to make a better consumer experience? Or will all this be provided through Amazon, Facebook, and Google?

This is an example of payment process by Alibaba. If you’re not familiar, I recommend you research them because they are going to be a front and center competitor for every bank in the world soon. Alibaba tested a virtual shopping mall. This woman is walking through a mall using virtual reality and she can make purchases simply by nodding. Now, it’s a little scary when you think about the ease of purchase, but the ability to do this in banking is also there. You could walk into a virtual branch, or the virtual branch can come into your house and providing interactions with employees, the same way they do with the facility. We have to remember when consumers answers to these surveys are they want branches, it doesn’t necessarily mean they want branches. They do want to walk into a physical facility, but they do want a personalized, one-on-one experience that the branch provides. There are a lot of ways to do this. It can be done through VR, video screens, or with holograms where the personal banker sits with you in your house and has interactions with you.

Why would a bank want to do this? Efficiency. Your personal bankers only have so much capacity, but if they don’t have to leave their desk and instead visit houses a meet with someone in person, they can make a lot more calls. You can even get a specialized banker. I have a small business that’s mostly into publishing. I’m dealing with a small business banker who’s nice and does an okay job but certainly, does not understand my business. There is probably somebody within the bank that does. Wouldn’t it be great for me to have that personal banker available to me on call, visual or in my house.

Wouldn’t it be great for me to have that personal banker available to me on call, visual or in my house. @JimMarous @FinancialBrand #fintech #AI Click To Tweet

The key also is third-party integration. This is where a financial institution needs to be able to provide integration of different products, different services that allow us to be more in front of the customer making their life easier.

Hilton has done this with Uber. They contacted me when I was in a conference in New Orleans earlier this year and they wanted to know if I wanted to interact with them using their mobile device. I agreed and he also asked if I wanted them to connect to Uber to have them waiting for me. I agreed. It was interesting that they provided that service, and what happened was when I landed from my flight my Uber was there. It wasn’t a whole lot different than my normal experience, except it was there ahead of me. I got in the car and as soon as the car was moving I receive a text from Hilton telling me to push a button that would be my mobile key card. I didn’t have to check in or check out. It was my access to my room. We drove another ten miles down the road and UberEats recommended three restaurants near the hotel I was staying and gave me the option to make a reservation. On my visit, I had my driver, restaurant options, my keycard all from transactions that took money to be able to pay for these things.

In the future we won’t be talking about devices as in phones or watches, we may just be talking about devices in the digital world. This type of technology, the ability to interact without the device, may be done in the future. It makes more sense to prepare for a digital future, than a mobile future or a wearable future.

It makes more sense to prepare for a digital future, than a mobile future or a wearable future. @JimMarous @FinancialBrand #fintech #AI Click To Tweet

The first call to action is customer-centricity. Being able to use AI, big data, technology, internet of things and make it so the customer feels like they are at the center of your attention. Second is data-driven. Everything that has to do with data and anything that happens in the future will be determined not by those with most data, but by those who can apply the data the best from the consumer’s point of view. Again remembering it’s not great reports, it’s great experiences we are working for. Next is contextual engagement. The ability to move from talking to a person and not knowing where they are, to talking to a person based on where they are, what they are doing and what they want to do.

The fourth is that the design matters. Banks need to make things simpler as opposed to just adding things. We need to be looking at the design overall. We need to build digital-first and know that the platform and device may change. Every organization from the biggest to the smallest are partnering with leaders to be able to bring technology and other experiences in a personalized and specific way. You want to find somebody that understands the financial service industry and understands where you wants to go. Finally, we need to rethink distribution. It’s not about branches, mobile or online. It’s about connecting with the consumer where and when they want in the channel that they want in a personalized way.

It’s about connecting the consumer where and when they want in the channel that they want in a personalized way. @JimMarous @FinancialBrand #fintech #AI Click To Tweet

Q&A

Keith: Jim that was fantastic! Thank you for that excellent presentation. I feel like most bankers will say, “Yes. I want to operate more efficiently, I want to have a better relationship with my customer. I want to be able to meet them where they are and provide these channels of choice at their convenience, but where do I begin as a bank?’ What are some of the big challenges to overcome? You talked a lot about data as a matter of getting the data house in order and leadership. What are some of the biggest challenges to banks leveraging some of the AI technologies?

Jim: I was in a conversation with some friends and talking about fours years ago and where we thought we would be today and we are not there, especially in the United States. It’s so much better overseas with regard to government regulations and we have a lot of challenges. I think one of them is that the government is not caught up to where we are technology wise. From a financial institution we need to understand what we can do for the consumer, but let’s take that off the table because I won’t be able to change the government’s perspective on things.

I think it comes down to two things. Number one being culture. We cannot underestimate the fact that most banks are run by people that came into the banking industry at a time when the core systems in place haven’t changed. Most importantly we have a situation where most of them came into the bank as a conservative industry that would have longevity and would provide a good career path with very little disruptions. That would not be the person you’d hire today to fulfill the needs that they have with regards to moving forward. I think if you look into innovative organizations like BBVA and banks in Singapore, what was different wasn’t the way they looked at data, but more so the culture. When you talk to their leaders you see them speak there is a passion for what’s going on and support from the highest level to deliver on that. That said we also have to move our whole data perspective from developing tremendous insight internally to provide it so that it works well for the consumer.

We have to move data perspective from developing tremendous insight internally to provide it so that it works well for the consumer. @JimMarous @FinancialBrand #fintech #AI Click To Tweet

As I mentioned earlier, we did a research project in the Digital Bank Report on personalization and also customer experience. We saw a huge disconnect between what we’re doing today and what consumers really want. When we asked what is the key to providing a high level of satisfaction the first thing said was responding quickly to problems. It’s a great thought, however when you ask a group of people from a hundred to two hundred, how many of them had a problem with their bank in the last year, one or two people raise their hands. So while that’s a great goal, the reality is it touches a small portion of your customer database.

The second was thing was a great branch experience. Now, again you need to have a great branch experience. However, 60% fewer customers are coming to the branch. What it really gets down to is the digital experience. In the most recent analysis report, we found that consumers today are considering convenience to be based more on their digital experience and how good their mobile apps are than the location of their branch. Take that a step further, when people looked at what will make you a trite being customer service, fees, and a bad mobile app ranked higher than closing my branch. We have to change complete mindsets from both a cultural perspective and the application of data to bring an experience that’s similar to what I’m getting from other high tech companies. Again, the winners are going to be those who provide that experience as opposed to those that provide the products without error. I think we are really going to be moving from banks no longer being important, but banking being important.

I think we are really going to be moving from banks no longer being important, but banking being important. @JimMarous @FinancialBrand #fintech #AI Click To Tweet

Do I want to make sure I can access my financial institution? Yes. But I’ve kept my relationship with Wells Fargo now for eight years, after moving from California because I didn’t want to switch. They’ve messed up a lot of times, but as much as they don’t know me, they probably know me better than some of my other banks. However, I’m still writing checks twice a month from my PNC accounts, taking a picture and depositing it into my Wells Fargo account because the process of transferring money between two institutions is so broken.

Consumers consider convenience based more on digital experience & app quality than the location of their branch. @JimMarous @FinancialBrand #fintech #AI Click To Tweet

I would like an organization that understands the problem and says they want to fix that. Or my business bank, a PNC in Cleveland, asking me why I don’t just deposit in the bank after noticing all the transfers I’m making. The thing is they’ve limited what I can deposit electronically. I’m forced to go to another branch. How many times do I want to go to the branch versus how many times do I have to go to branch?

Keith: That’s an interesting concept there. This notion of the banks not understanding you and really investing in the relationship. I think there’s huge potential for institutions to actually act like a financial ally to their customers by taking on a proactive role in the financial lives of their members and investing in that relationship. It’s just so surprising to me the number of institutions that don’t put their customer at the center and take time to really understand some of these little nuances. I think there’s an incredible opportunity for banks to be more proactive by being a financial ally to their customers.

Jim: I think it’s interesting because when you look at it you realize that everything happening to do with digital banking up to now have had to do with reducing the cost to the financial institutions. This is not because the consumers want mobile banking, but because they saw the advantage of mobile banking. Taking financial transactions out of branches and putting them on a mobile phone.

Time to take financial transactions out of branches and put them on a mobile phone. @JimMarous @FinancialBrand #fintech #AI Click To Tweet

Overall we’ve seen that the customer experience has suffered because we haven’t looked at their perspective. The reality is, customers are making decisions as to who they want to bank with based on how good the mobile apps are. The highest ranking banks are now the largest. It’s not that they are providing better services or fees, but because of their digital capabilities and deliver a really good digital experience. So what happens is we’ve had conversations with young people starting their banking relationship and they have a choice. These young people are people who want to buy local, want to support the local communities and businesses, but where do they choose to do banking? At Chase, Wells Fargo, Bank of America, Citibank. They do this because as much as they want to work locally, they like the digital components that these banks provide. You might not be losing customers right now from the banking community, but new consumers are making decisions based on their digital engagement. I’m not good at saying that those major banks are providing great services, but they are going to get better. I think when they look at things like Capital One providing the beginning of voice banking, those banks are getting the ear of the newest consumers that want to have a better banking experience.

New banking customers are making decisions based on their digital engagement. @JimMarous @FinancialBrand #fintech #AI Click To Tweet

Keith: Absolutely one of the institutions we work with asked, “How can I demonstrate that I can still bring to market the best in class technology. The same type of stuff that you’re seeing with Bank of America.This technology can be made available to some of the smaller institutions who want to use it as a customer acquisition and showing that they can keep up with technology and won’t open fake accounts for you. I think one way to really stand out is by being more of a participatory role in their financial lives.

Jim: We have to start somewhere. We just finished a report this month on digital account opening and onboarding and we find that right now it’s a broken process. Online account opening can be done by 47% of financial institutions, but in more than half those you have to come into the branch to finish it. You have to come to provide customer proof or to deposit funds and it doesn’t have to be done that way. On the mobile site, it’s even worse. 20% of the organizations can provide a mobile opening process on a mobile device and of those again less than 50% allows you to do it from front to back, and end to end and on a mobile device. The consumer is shopping for the product online on a mobile device or on their computer. You do all your shopping online, figure out where you want to go. You spend all this time trying to set it up online and then you get a message saying that you cannot continue the process online and you’ve wasted all this time.  

We are breaking the promise that we set the customer up for.  90% of organizations are given an incentive to restart the process registration so that they get the credit as opposed to the mobile or digital bank, then forcing the customer to come into the branch. Therefore when banks say customers don’t want mobile and online opening that isn’t really the case. A research report done by Novartis, that shows that almost 50% of consumers want to open an account digitally because they started there. They aren’t walking from branch to branch to find out which is the best. Again, we are breaking the promise to our consumers by making them think we’re going to be digital, and then not doing it.

We are breaking the promise to our consumers by making them think we’re going to be digital, and then not doing it. @JimMarous @FinancialBrand #fintech #AI Click To Tweet

Keith: This was super valuable conversation for me and hopefully for our listeners out there. Thank you for your time and participating in the first virtual AI in Banking Summit.

Jim: I appreciate it. Good to see you bye bye!

Get in touch with Jim!

Twitter: @jimmarous

Email: jmarous@thefinancialbrand.com