Teaming up with fintech, enhancing technology and adopting AI
Last week, more than 1,500 senior bankers and industry leaders gathered in Washington D.C. to experience CBA Live 2019. At the three-day event, members of the banking community and their vendors came together to share their ideas and the challenges they face on a daily basis.
The overall buzz of the event was quite surprising, as the banking industry has come a long way since its consumer trust issues over the past decade. Bank of America (BofA) Chairman and CEO, Brian Moynihan, noted that banks were making their beds as early as 2006, which ultimately came to a head in the 2008 financial crisis, leaving a scar for many consumers in their perception of the industry as a whole.
In the past few years, the event has focused on themes of regulation, wrongdoings, branch optimizations and fighting against fintech, but this year, discussions about partnering with fintech “enemies,” technology, artificial intelligence (AI) and—above all—trust took center stage. CBA Live 2019 was all about putting competition aside for the greater good of the consumer.
Catching up to speed with technology
The banking industry has had a hard time adapting to technology. Many of the talk tracks at the conference recognized that regulation and red tape have traditionally slowed progress in this area, and old-style thinking set banks back many years.
In a panel session, Tim Spence, EVP and head of consumer banking, payments and strategy for Fifth Third Bank, said that 40% of FSI startups took less than a year to go from an idea to a product. The rest of the panel agreed that in the past, it may have taken them 2-3 years just to release a product.
This led to the entrance of fintech startups that took the industry by surprise and started solving their narrow problem with automation, technology and easy-to-use tools. However, because of M&A activity and strong digital partnerships, such as the bank-supported, person-to-person payment network Zelle, in the past year, fintech became less of a major threat and more of an industry partner to the old-school banks, not only showing them that they must change but also helping them along the way.
With the help fintech “frenemies,” traditional banks can move much faster, which is a rare pace in the banking world.
Placing bets on AI
The adoption of technology spurred many conversations about AI and how banks can (or should) use it to their benefit. The takeaway is that more banks are using machine learning (a subset or AI) to build trust with their customers.
BofA seemed to lead the way with AI. They continue to grow their investments in their “Erica” solution, which allows customers to ask hundreds of questions that normally would take 5-10 clicks or even a phone call to answer. The solution is reminiscent of Apple’s Siri, but, as with many financial services products, BofA had to take into account special privacy protections and considerations for their new roll-out. Their head of advanced solutions and digital banking, David Tyrie, took the opportunity to walk through how their solution complies with privacy concerns and regulations at the event.
In the “Taking AI to the Next Level” session, Tyrie appeared again, along with two other panelists, to share tips on how banks can get started with AI and machine learning technology by showcasing use cases and predictions for upcoming digital banking applications.
Some interesting future executions focused on predicting spends and budgeting; if a person normally spends $45 on Saturday nights for dinner, machine learning could see that spending pattern and suggest going to a cheaper place for dinner or eating in for budget-conscious consumers.
They covered the differences in deep learning and machine learning, what AI meant to them and how it has already started changing the world around us. Most importantly, they urged everyone in the industry to start exploring AI and machine-learning-led solutions as soon as possible (if they haven’t already), saying that AI is here to stay and help make customers’ lives easier.
Lessons from ad tech
With the adoption of AI comes many questions on what is right, how to use it and how bankers can stay transparent on how they use data to inform their AI and machine learning technology. In the same way that ad tech—in the form of programmatic advertising—changed the advertising world seemingly overnight, many at the conference noted that AI is poised to do the same for banking.
It was clear that bankers are learning from the ad tech industry that personalization can be a great tool for both their customer and their bottom line, if done responsibly. The introduction of ad tech and fintech into the banking world has woken a sleeping giant—banks of all sizes are moving quickly to meet consumers on their terms, on their screens and in the easiest way possible, all while building back trust with transparency.
Above all, serve the people
In the end, there were many rumblings of M&A activity from the recent SunTrust announcement, to Fifth Third Bank's even more recent acquisition of MB Financial and speculation on what will be next. As always, regulations were a major topic of conversation at the event, specifically around GDPR and the upcoming California Consumer Privacy Act (CCPA).
In a panel session, “The Treasure Hunt for Consumer Data & the Governance of Data Privacy,” Epsilon-Conversant Chief Privacy Officer, Ashlen Cherry, spoke about the impacts of both regulations on the financial industry specifically and best practices for data use. “The key is building a strong partnership with your client and not just taking something that doesn’t apply to your business at face value,” she said. “You need to dig deeper and work together.”
In the end, all themes pointed back to gaining consumers’ trust with greater transparency and respect in order to further the industry, as many people still point to the economic crash in 2008 and blame the banks for putting Wall Street first.
Hopefully, technology and partnerships will continue to grow and prevent that from happening again. And from everything we saw at CBA Live, bringing bankers together really serves the public interest.
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