As it stands today, most—actually all—home banking systems are reactive. What is reactive banking? Reactive banking means that your home or mobile banking platform isn’t doing anything to influence the future, it’s simply reporting what happened in the past. Take the example of overdrafts. For most people, the first indication of an overdraft is a fee (and they end up paying more than they expected for that latte!) In some cases you may get a non-sufficient funds alert, but even if you did, the software itself offers no remedy. Your banking platform may alert you about the overdraft, but it doesn’t predict an overdraft and then offer to move money over from your savings.
Olden Days of Checkbook Ledgers
Before the days of home banking, finding out your balance meant calling the bank or going to a branch. Home records were kept by hand using the ancient system of a checkbook ledger. Once digital banking arrived on the scene, the ledger was no longer necessary. Yet something was missing. When you write things down, it helps your frontal lobe absorb information and the discipline of writing down the checkbook balance helped to absorb your balances and spending. In the digital age, the balance sheet is a bunch of information on a screen that we scroll past to find the current balance. Having access to instant account information from your laptop or phone hasn’t actually promoted financial health. Perhaps it helps some people to know their balance more often, but overall, the system is still reactive and is not built to prevent bad outcomes.
Proactive Banking, AI, and Autonomous Cars
Proactive banking is the next level. With the use of artificial intelligence (AI), a proactive banking system would go through your financial data and apply algorithms to influence your future. Already, there are a few products that keep track of your trends and savings, but proactive banking would do more than simply record your spending patterns—it would steer you toward a better financial situation. The idea behind an autonomous car is to set the destination, get in the car, and have it take you there safely. We’re going to want the same thing for our finances. Tell the proactive banking product your goals “I want this amount in savings, I want to have started an IRA, I want to have paid down this loan by this much”, and the account will take you there safely.
Unfortunately, the software can’t keep you out of your own account. It’s not going to stop you from going to the ATM and pulling out $600.
Or will it?
Proactive banking could allow you to create restrictions for yourself. Ideally, the product would be a mixture of alerts and account settings to help you meet custom financial goals. Instead of only looking at a current balance, you would look at a future balance, based on following the plan. Of course the unexpected will happen, both good and bad—but this is where proactive banking will really shine. If your pay gets cut, or you receive an unexpected bonus, it will recognize that something is out of scope and make suggestions.
The idea of autonomous or proactive banking is all about assistance. Would your rates go down if you paid your credit card bimonthly? Then your digital financial assistant could use AI to tell you how and when you should pay your bills. Everyone wants Ironman’s Jarvis as their butler, but imagine having Jarvis for your account. A customizable AI agent who tells you what to spend, when to spend, where to spend, and how to spend.
Emotional Banking: Coming Full Circle
There’s a level that builds on autonomous banking which I like to call emotional banking. In some ways, emotional banking brings the systems full circle. In my book, Breaking Digital Gridlock, I talk about my first experience with my credit union—it wasn’t an introduction to an entity, it was an interaction with a lady named Arvis. At the time, I was working for the school system and was young enough to be ignorant of the fact that I wasn’t going to be paid over the summer. Arvis helped me take advantage of the summer skips program for loans and she became my advocate in the Suncoast credit organization.
With digital banking, I don’t have any contact with Arvis. The lack of personal interaction has sapped emotional connection to financial institutions, and getting it back won’t be easy. It won’t be easy to create a digital interpreter that people will actually care about. But with the promise of AI, and the future of bandwidth, I believe we can get there. I believe we can mix proactive artificial intelligence with Arvis. Technology doesn’t mean anything without people, and if we can use digital services to connect people, then we will achieve emotional banking.
As much as I would love to believe that the AI will be completely human and sound like Jarvis, we all know that Jarvis was actually Paul Bettany. No matter what we call our digital financial assistant, in the end, it will still be a computer. But what if the digital financial assistant was a front end to an actual person working at a branch? What if we joined the analytics of AI with access to a personal financial assistant who was available to answer questions and work on issues in a seamless flow of communication? Now we have some serious power.
Aren’t we constantly talking about closing the branches down? Well, let’s not do that. No doubt the branches are slowing down, but let’s re-purpose the down times. Let the branch employees become digital assistant wranglers—overseeing the digital assistant software and connecting with members. Let them turn their chairs around and, instead of waiting for inbound calls, make outbound calls to drive opportunity, savings, and financial health throughout the community.
Our current digitalness robs us of emotional connection. It’s not enough to build proactive banking features, we’ve got to figure out how to retain personal connections. Autonomous banking is the technology of the future, but it is the added layer of emotional banking that brings the relationship front and center and restores the missing piece from the checkbook ledger days.