In this installment of Geezeo One-To-One, Amy Hibbard spoke with John Best, founder, and CEO of Best Innovation Group (BIG), a financial technology (fintech) firm to discuss IoT and the opportunity it presents to the financial services industry.
Geezeo: What exactly does integrating artificial intelligence mean for banks and credit unions? Why would they want to pursue it?
John: Integrating artificial intelligence means marrying the data analytics strategy of the FI with an AI strategy to produce a result that is in line with the FI’s strategic goals. An example would be using AI to create a lending product for a group of people that the FI wouldn’t normally be able to serve. An AI platform would be able to either identify the group or provide the decisioning methodology for the product or customer group in a way that would be unique and reduce risk.
Geezeo: It seems evident that AI and machine learning will benefit a financial institution’s bottom line, but how will it impact their customers?
John: Initially, the impact will be seen in better products, reduced risk and faster decisioning by the FI. Later on in the AI revolution, the FI will begin to implement products that will improve the customer experience by either making decisions for customers or providing financial insights that are driven by the customer's financial goals.
Geezeo: FIs are always looking for a competitive edge — especially with the rise of digital challenger banks. How can AI provide that?
John: Earlier adopters of AI will see two benefits:
1. AI is going to require experience. It will be less of a product and more of a discipline. The fast a financial institution implements an AI strategy the faster they will learn.
2. NEO Banks or Digital Banks will drive down margins by using digital means to reduce friction in financial transactions that are complex. To compete, traditional banks will need to adopt digital banking strategies and marry them with their current services. Using AI can reduce friction by reducing the number of steps that a customer must go through in order to gain access to a financial service. Using AI for decisioning will reduce charge offs, and create more opportunities for loans by broadening the scope and veracity of traditional lending factors beyond debt to income or credit reports, as well as incorporating new insights that would be difficult for humans to grasp.
Geezeo: What are some examples of the hype around banking and AI that you think is overhyped?
John: I don’t think I have seen anything that has been overhyped, in my experience. In fact, this is one of the rare cases where I think the reality of the upcoming technology has yet to be fully grasped in the banking industry. As a result, the use cases that are out there are the obvious ones. As FI’s realize the power of the data they possess, it will open other possibilities that are not on the radar right now.
Geezeo: Conversational UI is going to play a significant role in future member interactions, particularly with Millennials and Gen X. How will voice banking shape the future of banking?
John: The first phase of Voice Banking will follow the traditional digitization model of using technology to reduce the more tedious and repetitive transactions that customers often call in with, such as informing the FI when traveling abroad or a setting a wire transfer. This will create more opportunities for customer service representatives to have deeper discussions about a customer's financial needs and how the FI can meet those needs.
The second phase of Voice Banking will replicate a member experience so well that it will be difficult for a customer to tell that they are interacting with an AI product. This will include new more human interaction capabilities, such as the ability to disambiguate financial data, use conversational colloquialisms, recall past interactions and use that data in the current conversation, and interact with billers and other entities on behalf of the customer. For instance, the AI might call a customer's credit card provider to transfer a balance or call a car dealership to schedule an appointment to test drive a car and provide pre-approval information.
John Best is an author, speaker, “outside the box” innovator, podcast host and founder and CEO of Best Innovation Group (BIG), a financial technology (fintech) firm which focuses on industry-wide code sharing and API prototype development. John is recognized as a forward-thinking thought leader and innovator in the fintech space, with a particular affinity for credit unions.
In 2017, BIG was recognized as first to certify Amazon Alexa skills for credit union voice banking transactions. BIG’s CULedger network is a groundbreaking collaborative initiative harnessing the power of distributed ledger (blockchain) technology for the benefit of the credit union movement, founded in partnership with CUNA and the Mountain West Credit Union Association. In 2015, BIG launched its BIGCast, a unique fintech podcast observing rising trends in emerging technologies and their impacts on financial services, specifically credit unions. John previously served as Chief Technology Officer and Senior Vice President at Wescom Credit Union and Wescom Resources Group.
John lives in Colorado Springs, where he spends whatever spare time he can carve out playing guitar, crashing drones, and binge-watching Star Wars and The Walking Dead.