This Week in Engagement Banking there’s an article highlighting how Artificial Intelligence is being used by some banks to better understand customers, as well as the slightly less sexy, but still useful, report that Wells Fargo is now issuing e-receipts in its branches. As you can see, there’s quite a distance between vision and reality in Fintech these days. Also this week TechCrunch posts an interesting look at the ‘race to the bottom’ for the tablet industry. Could it be history repeating itself?!
How Banks Can Preemptively ‘Figure Out’ a Customer’s Problems
Unless you’re in my inner circle or are Amazon, you probably won’t anticipate my needs. That’s because I’m reticent to talk about what I want — part confusion, part insecurity, part growing up on a dirt road in the Midwest. But even with my lips usually locked, banks and card issuers have my transaction data to help determine what I’m seeking, even when I’m not articulating those needs. That’s power. Identifying that FI consumer insight advantage, technology companies have been sprouting services that aim to preemptively help customers do banking-related stuff. Digital wallets, for example, promise to trigger a barista to make a consumer’s latte before he enters a store as a way to incentivize usage. But there’s another opportunity for banks that has been hiding behind the limelight of pre-ordering services which deserves attention: Provide ways to resolve customers’ banking woes as soon as they reach out. In other words, banks should anticipate what customers need before they connect with their FIs, via phone, online or mobile. In turn, banks, with the help of voice technology, can preemptively offer their customers ways to remedy their banking plights. Perhaps a consumer logs into a mobile banking app, for example, and is greeted with: “Are you concerned with overdraft fees? Can I help you with that?” or maybe the consumer asks the mobile app “Did I pay my cellphone bill?” and the technology provides the customer with follow-up information he might want to ascertain. And that’s just the beginning. More. . .
Bank Technology News
Banks Deploy Artificial Intelligence to Deepen Understanding of Customers
As BBVA Compass was tinkering with its retail banking pricing strategies last fall, robots were scraping the web behind the scenes. Like its peers, the Birmingham, Ala. bank needed to adapt to caps on interchange fees. It had to decide which benefits its retail customers would keep and which would get the axe. On a hunch, the bank decided to drop its $25 checking anniversary bonus, while keeping its debit rewards and other features. The computers confirmed that people were upset, but prodded executives to tell customer service reps and tellers to explain that BBVA Compass had decided to keep its other perks. Those robots, really snippets of code dipping and diving into paragraphs and sentences across the internet, gave the bank what focus groups and pollsters would have taken months to confirm. The reports the bank receives from the machines give BBVA daily insights into consumer reaction to the bank and its competitors. “We look at our own [bank]. We look at our major competitors,” says John Wessman, BBVA Compass’ executive vice president and chief marketing officer. “You tend to get a little bit different perspective from consumers. They will be much more open and sharing on their Facebook accounts than they would be if they called a call center.” The technology BBVA used is an outgrowth of sentiment analysis – the same type of study researchers conduct when polling an audience. A computer program, instead of asking people questions, surveys the Web on a large scale. Technology giants such as IBM and SAS offer clients software packages that comb the Web for clues to consumer sentiment. Those programs parse language and attempt to understand the meaning of words, pairs of words or phrases, in context. This has become ever more important as banks move their customers out of branches and toward the Web. Those customers are less likely to walk into a brick-and-mortar building or chat directly with a teller. More. . .
NYTImes Bucks Blog
Wells Fargo Offers E-Receipts to Branch Customers
Receipt option screen at a Wells Fargo ATM.Courtesy Wells FargoReceipt option screen at a Wells Fargo A.T.M. Lots of retailers — the online kind and the brick-and-mortar version — have begun offering electronic receipts for purchases to help cut down on paper clutter in your wallet. So why shouldn’t banks get into the act, too? Wells Fargo & Company, which has been offering e-mail receipts at its A.T.M.’s for two years, is now offering the option to its online customers who visit its bank branches to make deposits or withdrawals with the help of a teller. Currently, about 12 percent of all A.T.M. transactions generate an e-receipt, a bank spokeswoman, Richele Messick, said. The bank has about 12,000 A.T.M.’s and 6,000 branches. She said she wasn’t aware of any other banks that offer the option. The electronic receipt feature is available to online banking customers, who may have the receipt sent to their online banking inbox or to another personal e-mail account they designate. (The service will probably be made available eventually to all customers, even if they don’t use online banking, Ms. Messick said.) More. . .
Diagnosing the mobile money innovation deficit: it’s genetic
It has become a mantra in financial inclusion circles that innovation in mobile financial services has stalled. Especially when it comes to products, there is a growing frustration about the fact that new offerings have failed to emerge. It remains the case that most new services look dispiritingly like M-PESA in Kenya—and that M-PESA looks dispiritingly like it did five years ago. What explains the mobile money innovation deficit? I think it’s pretty simple. In most places mobile money is run by MNOs. And by and large, MNOs are not distinguished by their capacity for innovation. At their core, MNOs offer the same services everywhere in the world: voice, SMS, and data connectivity. Mobile operators think they’re in the business of innovation, of course. First and most obviously, they are constantly upgrading their networks to offer more capacity and better data speeds. But mobile operators don’t drive this innovation agenda; their suppliers, like Huawei and Ericsson, do. (You can measure this investment by the magnitude of these firms’ R&D budgets. MNO’s don’t have R&D budgets.) Some of my readers might protest that MNOs have big product teams that are endlessly churning out new services. This is true, but when you evaluate the relative importance of these services (on the basis, for example, of revenue contribution), you’ll find that they pale in comparison to the old workhorses of voice, SMS, and data. More. . .
Tablets Join the Long Race To the Bottom
Remember netbooks? Exactly. Two years ago netbooks could do no wrong. They were the future, a way to get work done on the go on a laptop the size of a paperback book. In the end, manufacturers saw them as a great way to squeeze profit out of a moribund product line. Sadly, I fear that’s where we’re headed in the tablet market. For a long time it was a few horse race. Motorola, Apple, and Samsung were pumping out top-of-the-line tablets and selling them at a premium, because that’s what the market could support. However, with the launch of the $199 Kindle Fire, and more recently the Nexus 7, the floodgates will soon open, driving down prices, quality, and value. Here’s the pattern: a product group becomes popular. Major players make comparatively expensive products with good QA and designs. Early adopters gobble them up, then there’s a brief period of popular adoption. Then everyone who was going to buy a tablet has a tablet. Positions are taken regarding the various advantages of each type. Flame wars are fought. Then people stop caring. As evidenced by the mediocre reviews of the Samsung Galaxy Note 10.1 and the many reports of broken Nexus 7 devices, it’s clear that the tablet segment is losing profitability. Build quality and design dedication are falling and the tablets of yesterday, the tank-like Xoom and the rough and tumble Kindle, are ceding to chintzier, cheaper devices designed to entice bargain buyers. As manufacturers realize they have to hit that magical $199 price point, the quality will fall even further as more corners are cut. This spiral will continue until OEMs start shipping barely upgraded devices for under $200. Sure, it’s nice to have low-priced options on the market but low price without intrinsic value is bad for the consumer. Resale value, for example, is an excellent indicator of overall demand and no models in recent memory hold their value over a few months. A new Toshiba Excite costs costs $400 while a used one tops out at about $250. Similar price drops can be seen in nearly every other “value” tablet. I don’t think we’re going to see the death of tablets the way we saw the death of netbooks. Netbooks were so wildly niche that they just couldn’t survive. More. . .