Financial Services

Top 3 Innovations Driving Customer Experience Benefits in Banking & Payments

Jim Miller, VP of Global Banking & Payments Intelligence at J.D. Power shares his perspective on innovations that are driving customer experience benefits?

Q. When you think about consumer banking in the past 5 and 10 years, what are the top 3 innovations that have had the greatest benefit to consumer experience?

  1. Mobile Banking – Mobile has been revolutionary in banking changing customer behavior and how they interact with banks.  A key development was mobile check deposit, but it goes far beyond that.  
  2. Smart ATMs – while ATMs have been around for a long time, newer ATMs allowed customers to do more activities on their schedule without seeing a representative.  Envelope free deposits was a key point in migrating transactions to the ATM (somewhat offset by the rise of mobile deposits)
  3. P2P Payments – for years it was very difficult to move money between people, with most of it taking place by check or cash.  With Venmo first, and now Zelle, paying and receiving money as become much easier.

Q. Do you have a short list of likely 3-5 innovations that will transform experience in the next 5 to 10 years?

Artificial Intelligence (and Big Data)

    • Chatbots and Voice Banking – Chatbots are already being used in text messaging and through applications such as BofA’s Erica.  Customers will have the option of instantly interacting with a chatbot through Amazon Echo, Google Home, Siri and other connected advices.  As technology progresses and the service becomes more reliable customer adoption will increase and voice banking will handle more complex interactions.
    • Advice – AI will allow banks, or fintechs, to give consumers more in-the-moment advice.  AI will also be used to help customers automatically better manage their money (automate savings, move money between accounts, automatic payments, etc.).  Personal Financial Management tools have primarily presented data, but through AI will make more recommendations.  There will be more focus on supporting consumers’ financial wellness, supported by behavioral science.
    • Banking becoming invisible – According to an American Banker report “Digital banking technologies — including artificial intelligence, analytics, personal financial management software, internet of things, voice banking, banking as a service and fintech innovation – are converging toward one end goal: invisible banking.”

Real Time Payments

    • The U.S. payments systems is still very slow.  At the extreme you have checks which can take days to settle, but also moving money around is inefficient, slow and can be expensive.  Real time payments will allow consumers to get money sooner and as well as better manage their money by instantly moving it to where they need it.  A major pain point for bank customers in understanding banks’ funds availability policies and how much money they really have in their account.  Real time payments makes most of this go away.

Data Sharing and APIs.

    • While the U.S. appears unlikely to embrace open banking, banks are working with fintechs and other financial service providers to give them access to customer account information. This will allow non-banks to provide more financial services and financial information.  It will increase the usefulness of personal financial management services.

Wearables and biometrics 

    • Contactless payments opens the door to multiple payment options (phones, wearables, contactless cards, biometrics).  AI may give the consumer the ability to even choose the optimal payment method.  The could choose to get an instant installment loan, put it on the credit card that maximizes their rewards, directly debit from their bank account, come out of specific pots of money to help them manage their budget, etc.