What does the future of banking look like?

What does the future of banking look like?

Derek White, BBVA global head of customer solutions, takes a tour of the new digital technologies that are set to reshape banking.

Technology is redefining how we bank – from mobile apps to online account management – we increasingly use digital means to make our money and data work harder for us.

The technology already exists to have the nuances of our voices analysed to gain access to our bank account, or for Artificial Intelligence algorithms to check your account spending to help you better save for a life-goal or target.

Increasingly we are also seeing the emergence of new fintech solutions to consumer banking issues – with the convergence of technology allowing devices like Amazon’s Echo, for example, being able to buy products for you with just the direction of your voice.

But where might this convergence be heading? What technologies could banking customers have access to in the near future? And more importantly, how will they improve our everyday lives?

It’s a question that unsurprisingly BBVA and others are working on. One US bank recently announced it was looking at a kind of banking assistant that can actively advise you on whether it is time to pay off a credit card or that buying a product now would be a mistake.

But in the future we can go much further

So here is just some of the latest thinking in this area – both from within my team and from some of those fintech leaders we met at the Propel Annual CEO summit in San Francisco two-weeks ago.

Let’s start with a scenario suggested by Brian Roemmele of Pay Finders and Multiplex. He says: “Imagine your own personal assistant – a digital earpiece linked to your mobile phone – hearing and remembering everything you do, say, listen to and storing it safely in the Cloud just for your benefit.

“So when you want to remember a product you heard about, or the name of that person you sat next to at dinner two years ago, the system can remember and tell you.

“Now link that kind of functionality to your financial life… and with a smart financial advisor that can help you manage your money more efficiently, and you have an incredibly powerful tool. This system will tell you it’s time to move utility provider because it’s actively looking at your expenditure and tracking tariffs, or to change your credit card to save you x-amount on interest. And this is all based on the power of voice. . it’s the evolution of going to see your bank manager that we did 20-years-ago, but brought into the modern, digital world.”

This is great – a real example of technologies converging to add value to our customers

But what if we take it on a bit more. What if we start adding smart data management – not just on transactions, but on the contents of your bills, things like usage – to the clever AI robo-advisor algorithms, all protected with the power of blockchain distributed ledgers and cutting edge biometric identity processes, and accessed by you through real-time, real-life conversations. Then the tool can not only safely manage your money, but make your data – an extremely valuable asset – work harder for you too and in an easier, more accessible way.

Imagine this advisor being able to recall a product you were interested in at some point in the past – perhaps a new tablet computer – and telling you that now is the best time to buy it based on your financial health, what version you might need based on your usage, how you should fund the purchase, and arranging a finance deal that makes it more affordable for you, and liaising with the retailer to get the software you need and use installed, and getting it delivered, and insured. It’s a combination of all the fintech disciplines, converging and collaborating together underpinned by the security systems of big banks like BBVA, working for the benefit of customers.

That could easily be the future

Here’s another scenario – again based on BBVA finding solutions to real issues. Our customers tell us that their biggest stress is money: their long-term finances, their budget, how they can afford a vacation, how they can stay organized and ahead of their bills, how they can afford to get their child their first computer or just pay school fees.

What if in the future customers could consciously and unconsciously trust their own digital financial ‘advisor’ to help with all of that stress. This trust will deepen as they see value generated from their interaction with this advisor and equally as they interact more, the advisor will also learn and be able to do more.

So, imagine a self-driving, autonomous, financial life – a money-enabled life – with your personal financial advisor accessible wherever and whenever you want through your screen-based (mobiles, tablets) and voice enabled (like Echo or Google Home) technology. As well as doing the basics – the bank balances, checks on credit, advice on when to pay off debts – it could actively manage your finances. It could help you budget for the monthly bills – everything from food to insurance – and pay off the bills as they arrive in the most effective manner.

But that’s just basics. Even further, though, the evolving AI could constantly look out for your financial well-being, advising you of how you could better invest your pension pot to give you the retirement you want, that more is needed in your kid’s college funds, that the new car savings plan you have is slightly behind but by changing to a different utility provider it will get back on track or that the X-amount of Euros you want stashed in a pot for birthday and other presents is being put aside. And it would do these things for you.

It’s about giving our customers the power of BBVA’s financial knowledge and technological tools to help them better manage their finances. But perhaps more important than that, it’s about giving people back some time – time that can be used to do anything else than worry about money!

These are just a few of the technology-driven ideas we are looking at – but our focus remains the same. We are doing this because we understand it will add value for our customers and clients – either financially, time-wise or through peace of mind – and ultimately it will create opportunities for people and improve their banking experience. Keep watching this space.

Comments: (7)

James Piggot
James Piggot - Finastra - London 04 May, 2017, 09:31Be the first to give this comment the thumbs up 0 likes

How do you reconcile helping your customers to make savings with the need of banks to make a profit? For example banks offer savings accounts with good rates of interest that revert to a standard (i.e. very low in the current interest rate environment) rate after a period of time.

This is done to capture new customers and reduce churn, but also works for the banks because customers either don't realise the rate on their account is being reduced or they cannot be bothered to transfer their money to a new account.

If we create an AI assistant shouldn

A Finextra member
A Finextra member 04 May, 2017, 15:16Be the first to give this comment the thumbs up 0 likes

Who would trust such a tool to manage their affairs?  Would it be able to save money for a financially savvy customer after commission or upfront or subscription costs?  Those barriers are probably at least as great as the technological ones.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 04 May, 2017, 17:39Be the first to give this comment the thumbs up 0 likes

I grapple nearly everyday with questions like "What was the last payment I made to my ad agency?", "When did I last repay a loan?", etc. I thought it would be a piece of cake to find answers to such questions by using simple search functionality on my online banking portal. But no such luck - I haven't found this feature on any of my bank's portals. Maybe it requires AI. Hope I'll get this feature in the future of banking.

James Piggot
James Piggot - Finastra - London 04 May, 2017, 17:46Be the first to give this comment the thumbs up 0 likes

My bank does not have search functionality on the mobile app. On the internet portal you can search but only in 3 month chunks!

This is because behind the scenes everything is still running on an IBM mainframe and because the mobile app is a generic product from a vendor.

I imagine most large banks have similar issues, mind you making any changes when you are processing millions of transactions a day must be pretty terrifying...

Yet there are banks that have solved these issues...

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 04 May, 2017, 18:42Be the first to give this comment the thumbs up 0 likes

None of my current 3 banks uses IBM mainframes. Their CBS run on open Unix + Oracle systems.

A Finextra member
A Finextra member 05 May, 2017, 09:17Be the first to give this comment the thumbs up 0 likes

Ketharaman, Santander UK have a 'smartbank' mobile app for personal customers that you can ask those very questions via voice.  How successfully it would answer I cannot say.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 05 May, 2017, 12:24Be the first to give this comment the thumbs up 0 likes

Why banks, every one of my service providers has a mobile app to which I can ask such and other questions via voice / hand gesture / thought waves and other interfaces. How successfully they answer I cannot say. Whoa, the future is already here.