The birth of personal banking assistants
It seems that the world is gradually turning everything into data, and we are storing data at lightspeed.
Our watches now track our sleep, our movement, our heart rate and much more. With it they can “coach” us with training plans that are specific to our individual capabilities.
At the top end of smartwatches, you have the ability to pay for things, listen to music, get guided GPS navigation and more. They have become as smart as smartphones. They are a personal assistant for your health.
Our cars are monitoring how often, how far and how fast we drive. They can guide us through the shortest, fastest or most scenic route to our destination. They warn us on speed, how close other cars are or if there is traffic. They are effectively a co-pilot for driving.
Top-end cars have already started to provide “digital services” to enhance the physical car. From an app the car can be heated and journeys pre-planned and set up for your car’s navigation system.
We are almost at the dawn of self-driving cars. BMW’s IPA (Intelligent Personal Assistant) claims to learn your habits as well as tell you how to use specific features of the car. No more manuals, you just ask the car using its voice assistant.
In the home, Google (Nest), Amazon and other players like Hive are creating smart home products to control most things you can think of. Over one third of UK houses now have a smart home device.
This market is worth £3.8 billion and growing by over 10% a year, while penetration of new homes is growing at almost 14%.
Like the sensors in watches and cars, homes will not be recording data like banking transactions. They will be streaming data constantly. Data streaming will generate an explosion of new data and even more use cases. Already we have personal assistants like Alexa, Siri and Google accessible through voice commands to manage these smart home devices.
Whether it is our watch, car or home, as the variety of new data points increases, the usefulness increases.
My first running watch some 15 years ago simply recorded distance, so it was not difficult to know everything the watch could do. My current watch far surpasses my ability to understand and make use of everything it can do, and over the air updates mean that it just keeps getting smarter.
Yet in banking, what new data is being captured? How are banks capitalising on this data explosion and using it to develop new services? Open banking provides banks access to more of the same data they have, but new data sources could create the opportunity to provide services previously unavailable to customers.
Open finance will create a new generation of online applications for managing our complete finances, replacing what many of us held in spreadsheets. However, much of this data was previously captured manually by a financial adviser. Open finance will just help to expediate a financial review.
Like with open banking, I’m sure start-ups will use the data in new and interesting ways, but what will banks do?
Robo-advisory services may automate recommendations for investments, but will they become our personal assistant like the smartwatch for health, or cars for travelling?
Increasingly, banks are losing touch with customers as they move online. This situation is made worse by fintechs unbundling individual products and competing with banks on digital experience.
While the impact of losing some products has damaged banks greatly, the impact of losing trust will have massive repercussions. Today the last threads of trust hang on the ability to visit a branch or speak to a human being, but soon even those threads will snap.
There is no doubt that banks have lots of data. I’m just saying that to become a “smart bank” (like the shift to smartwatches, smart cars and smart homes), they will need to capture data from different sources than they are today.
These new data sources should offer better context for providing financial advice so that banks can aim to be a personal banking assistant for your money/wealth.
Personally, I believe fintechs will get there first, and inevitably some will be acquired by banks.
About the author
Dharmesh Mistry has been in banking for 30 years and has been at the forefront of banking technology and innovation. From the very first internet and mobile banking apps to artificial intelligence (AI) and virtual reality (VR).
He has been on both sides of the fence and he’s not afraid to share his opinions.
He is CEO of AskHomey, which focuses on the experience for households, and an investor and mentor in proptech and fintech.
Read all his “I’m just saying” musings here.