OBSERVATIONS FROM THE FINTECH SNARK TANK
In an article on its website, tech vendor EdgeVerve tells banks they need an "AI-first" strategy:
While ‘mobile-first’ was a revolution led by a single device, ‘AI-first’ in banking would be a more holistic experience driven by home speakers, perky digital assistants, voice & touch apps and IoT wallets for the consumer. Traditional banking organizations are facing their ‘Kodak moment’. They need to develop and invest in an ‘AI-first’ strategy right away."
Advice like this shouldn't come as a surprise to anyone, as it's part of a long line of [enter-the-latest-tech-here]-first proclamations from consultants and analysts.
The Next-Hottest-Tech-First Strategy
It started about five years in a Bank Systems & Technology article titled 5 Keys to Success for a Mobile-First Strategy which said:
Digital banking is undergoing a dramatic shift as banks’ strategies go from 'cram online banking into the mobile device' to a true mobile-first strategy.”
Advice in the consulting world has a short shelf-life, however, and two years later a leading analyst in the digital space wrote:
As more people research, shop and buy financial services with their mobile device, a ‘mobile-first’ design strategy may not be enough. To be successful, brands and agencies must think beyond mobile campaigns and start to think about mobile-only as a complete foundation for the next generation customer journey.”
Snark Tank note: Apparently, to be successful, you don’t actually have to do anything, you just have to “start to think” about it.
Not long after that, another article warned us to Get Ready for the Voice Revolution in Financial Services with an Accenture white paper proclaiming:
AI is creating a new era of computing, rapidly moving from mobile-first to AI-first in the customer experience and moving staff to more judgment-based and higher value-added roles.”
Snark Tank note: Moving staff to judgment-based roles? Wasn't AI supposed to produce “judgments” superior to what humans are capable of?
So naturally, we had to move on to a voice-first strategy. A Fintech News article titled Here’s Why The Voice-First Strategy Will Rule tells banks that:
The starting point can be skills or services offered either via smart speakers or voice assistants embedded in existing bank apps to deliver relevant information to the customers. This would help in keeping customers more engaged with the bank."
Snark Tank note: Because everyone wants to talk to their Alexa about banking all the time, right?
Stop Being [Technology]-First!
Calls for banks to be mobile-first, mobile-only, voice-first, AI-first--or any ‘technology-first’—are misguided. They represent a channel-, technology-, or device-centric view that is at the root of banks’ strategic problems. [Fill-in-the-blank]-first thinking is misguided because:
- Convenience drives consumers’ choices of channels and devices. I don’t care how many market research stats you can find about consumers’ use of branches, mobile devices, or voice-enabled technology, you will never sway my belief that consumers will use whatever channel or device is most convenient for them at the moment they want or need to interact.
- Bank customers aren't AI-first. A Statista study found that only one in five bank customers have "warmed up" to conversing with chatbots, while another study from NewVoiceMedia revealed that just 13% of consumers prefer their customer service queries to be handled by a chatbot. Why in the world would you be "AI-first" when your customers are anything but?
- It’s the process—not the device—that matters. Technology isn't a panacea for ineffective business processes, practices, or policies. Having AI-enabled, voice recognition capabilities that understand customers’ questions—and improves the understanding of those questions over time—is great, but is useless unless the questions, issues, and opportunities are resolved to the liking of both the customer and the bank.
- The product still matters. If a bank's products and services aren't competitive, slapping a “voice-first” or “AI-first” capability on top of them is a waste of money. If, however, AI-powered capabilities provide better advice and guidance to consumers looking to make smarter decisions, than that is sellable. In other words, the technology capability can become the product or service if consumers value (i.e., are willing to pay for) it. In most [tech]-first proclamations, however, there's no mention of products and services.
Banks Don't Need an AI Strategy
Banks no more need an AI-first strategy in 2019 than they needed a COBOL-first strategy back in 1959. What they do need is a:
- Business strategy. Jay Palter, a Canadian-based social media advisor, recently asked a number of fintech experts what the most important factor in digital transformation was. The best answer came from Theodora Lau, co-founder of Unconventional Ventures, who said, "Having a clearly defined vision of where the company should and needs to be.” Bingo. If you don't know where you want to go, what good will an AI-first strategy do?
- Vendor strategy. According to a Cornerstone Advisors study, just 2% of mid-size financial institutions have already deployed AI technologies. Why so few? Because they rely predominantly on vendors for their technology. A business strategy will dictate what opportunities banks should address that AI might help with. But if banks don't choose vendors who are staying on top of technology innovation, they might find themselves shut out from them. If you're not working with vendors with strong AI capabilities, what good will an AI-first strategy do?
- Data strategy. AI algorithms are only as good as the data they have to work with. And therein lies the challenge for mid-sized financial institutions: They often don't have enough data--quantity- or quality-wise--to make AI work. In another Cornerstone Advisors survey of mid-size institutions, just three in 10 said that their digital transformation efforts have improved their data management and analytics capabilities. If you don't have good data and analytics capabilities, what good will an AI-first strategy do?
