Wells Fargo’s Head of Innovation, Lisa Frazier, believes one of the most compelling use cases for artificial intelligence will depend on customers making judgements that change the role of banking .
Digital technologies such as artificial intelligence (AI), data analytics and the Internet of Things are making banking increasingly intuitive, if not invisible. Even the most basic of accounts can help customers manage their money, avoid overspending and keep to their budget.
At the heart of this move from transactional banking to ‘behavioural banking’ is access to personalised data – and a customer’s willingness to share it comes down to whether they think the ‘value exchange’ being offered by banks is worth it, believes Lisa Frazier, head of innovation at Wells Fargo.
She’s long advocated the benefits of using AI in banking and financial services, and for a wide range of applications, including security and compliance. But Frazier sees its real benefits lying in personalisation.
“We see the future in being a coach for financial health – doing very different things than we are used to, in real time to help the customer make their decision with the best information that they have. That’s what AI is really about. It’s an exciting area, because you start to see the creativity of humans, coming together with machines, and doing things we never thought were possible before.”
That ambition is evidenced in Wells Fargo’s Control Tower solution, available across devices, that gives customers a streamlined view of their finances. Tools include card management, simple on and off permissioning of data sharing, and a recurring payments feature for customers to easily identify and cancel any subscriptions or memberships they may no longer be using, thereby saving them money. A logical next step, which others, including Yolt in the UK, have taken, would be to beef up the latter into what is, in effect, a consumer advice service, curating specific markets, be they energy suppliers or car dealers, to find cheaper providers and help people to switch. This is where AI data analytics proves useful in providing ‘new experiences to help people achieve future financial health or achieve their financial goals’, says Frazier.
“Before, banking was very transactional but it will move into these behavioural experiences that allow customers to be better off in the future. It’s real-time reminders of things that will make their life better. But the customer remains in control, not the bank. The bank can’t judge, right? It’s up to the individual to make the decision and take action.”
It has to be said that we often aren’t up to doing that on our own. And, while there has been a lot of debate about ‘unconscious bias’ being programmed into AI, machines can, in fact, help to address the unconscious bias that humans are themselves victim to, believes Frazier.
“One example is that everybody knows they should have a retirement or pension account, but 50 per cent of millennials don’t and the unconscious bias is to defer that long-term decision as long as possible, just because it’s too hard and it feels like homework,” she says.
The data trade-off
Wells Fargo’s newest accounts – a cheque-less account for a monthly flat fee of $5 and another which includes cheques for $10 a month – both promise alerts to help customers stay on top of their finances, alongside access to a mobile banking app and the bank’s Control Tower solution. The accounts are scheduled to be available from early next year.
Further down the line, Wells Fargo looks set to increase such financial management functionalities, as highlighted by its recent tie-up with highly successful tech player Plaid. The San Francisco-based firm, which is being acquired by Visa for $5.3billion, will enable the bank’s customers to connect their account information, using a single, tokenised ‘handshake’, to third-party apps available through Plaid’s application programming interface (API). It will also allow customers to switch off such data sharing. The service is expected to be available to some customers within months.
Such partnerships are a necessary feature of the US market in the absence of federal data-sharing regulation governing financial services. There is, as yet, no equivalent to the EU’s revised Payment Services Directive (PSD2). But, despite there being no nationwide legislative framework to work by, innovation clearly isn’t being hindered, says Frazier. Neither does she believe that customer privacy is under threat.
“There have been a lot of changes around privacy in the United States, most recently in California state law, with other states following, that has consumers’ interests at heart.”
Frazier stresses that, at Wells Fargo, ‘the data is owned by the customer’. “Wells Fargo doesn’t have the rights to that data, to freely use it as it wishes, and nor does any other organisation – be it Google, Amazon or others,” she says.
But she has noticed a clear shift in public attitudes towards data sharing and the ‘value exchange’ – the trade-off between customers sharing their data and the financial and other services they receive in return from banks.
“What customers believe today about what’s fair exchange – what they would give their data for – may be different in the future,” says Frazier. “Just as generations before us saw things differently. Everything is an evolution, but the customer, and their preferences, and the exchange for the value they get, is what’s important.”
Further and faster
Founded in 1852 at the peak of the Gold Rush, Wells Fargo claims that, for generations, it’s been helping people go further, faster – from exchanging gold coins for paper cheques, to enabling online transactions, ‘we’re continually innovating so our customers can get ahead’, its website declares.
“Innovation is our responsibility if we want to do well by our customers and evolve banking services,” says Frazier.
To that end, the Wells Fargo Startup Accelerator, now in its fifth year, makes up to $1million of funding available to develop emerging technologies in pursuit of those breakthroughs in financial services. The startups also receive guidance from Wells Fargo business and technology leaders to help refine and scale their companies. This year’s virtual, six-month programme welcomed Argo and The Climate Service to the portfolio, taking the total number of startups to 25.
“Wells Fargo continues to invest in and work closely with fintech companies to help integrate their big ideas into the banking services of tomorrow,” says Frazier. “Teaming up with Argo, The Climate Service, and other startups in the accelerator programme, helps us look past the current horizon to disrupt, innovate and deliver the experiences customers demand.”
Argo, based in Montpellier, France, develops augmented reality technologies to build new business models and experiences that bring to life print and digital mediums, providing just-in-time contextual information, anywhere and without a manual search.
The Climate Service , meanwhile, working out of Durham, North Carolina, enables corporations and financial services firms to measure, monitor and manage their financial risks and opportunities related to climate change.
“We’re always looking for bright new startups that have potential to solve some of our biggest problems as a bank,” says Frazier. “It’s also about creating a mindset and culture in the bank that fosters innovation at the closest level to business.”