Kasisto’s Zor Gorelov on the future of conversational banking

Artificial intelligence portends to change the way finance operates. From improving speeds and accuracy of customer service to automation to proactively offering clients the right product at the right time.

This week’s guest on the podcast is Zor Gorelov, the co-founder and CEO of Kasisto. Kasisto specializes in creating banking smart AI that can fundamentally transform the way banks and financial institutions connect with and serve with their customers.

I sat down with Gorelev to find out more about how Kasisto is helping its partners to achieve scale without opening another branch location.

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Below are highlights, edited for clarity, from the episode.
Conversational artificial intelligence
What conversational AI is the ability to maintain human-to-human-like conversations between humans and machines. To do that, we use artificial intelligence. It’s not just marketing, either. It spans the entire spectrum of customer interactions with the enterprise. Chatbots are one use of conversational AI systems. Chatbots have obviously become very popular recently with major announcements from Facebook, Microsoft, Amazon and others.

Chatbots as one example of conversational AI
Kasisto isn’t really a chatbot company — we do conversational AI. The difference is that we build virtual assistants that will create conversational experiences that span the spectrum of customer touch points within the enterprise — from Alexa to messaging platforms like Facebook Messenger and WeChat to  mobile applications, websites and call centers. Kasisto builds the true omnichannel experience.

Banks use our technology to interact with their customers across channels and use cases — from retail and business banking to wealth management and even interacting with employees. Think of KAI [Kasisto’s product] as a banking brain that knows how to interact with customers and employees using artificial technology.

DBS and Kasisto: A case study
Let’s take retail banking as an example. Singapore-based DBS is one of the largest banks in Southeast Asia. A few years ago the bank decided to expand its footprint in Asia and it chose a digital-only strategy. The launched a mobile-only bank, digibank.

There are two key characteristics that really set it apart: it enables 90-second paperless account opening and it uses virtual assistants built on KAI that manages all customer interactions.

If you’re a DBS customer in India, Indonesia or Singapore, you can use your mobile app to do thinks like open an additional savings account, understand your spending on restaurants on a recent trip, and determine whether you’ll need to pay ATM fees when you’re traveling overseas. And you do all of this simply by having a conversation with the bank as if you had a virtual banker or teller residing in the app.

In India, digibank acquired 1.5 million customers in a year and a half after launching. There are no branches and no call centers. KAI is there to help digibank acquire and support customers. Today, KAI handles 82 percent of all customer interactions with DBS customers without any human intervention. Put differently, only 18 percent of KAI sessions end up with live chat agents. That really changes the economics of digital banking. DBS is able to run its bank at one-fifth the cost of a traditional bank.

The future of AI and opening up new opportunities
Why use AI and not human agents? Well, you can train AI on an unprecedented number of use cases. You can teach KAI or other virtual assistant a sheer number of things that would be impossible for a human to keep in his or her head.

There’s another aspect of AI that’s really interesting: consumers interact differently with AI than they do with other humans and that creates new users experiences. For example, you can ask KAI how much you spend on Uber or on eating out. This isn’t something you’d consider calling your bank about. You probably wouldn’t call Bank of America to find out how much you spent on wine last month. These types of new experiences can generate customer surprise and delight with their bank, deepening customer relationships.

‘Chatbots are getting way over hyped’: Ron Shevlin on the future of people in banking

Last week, we hosted our first conference, the Tradestreaming Money Conference. We had hundreds of top speakers and attendees from the largest financial institutions like Vanguard, US Bank, Goldman Sachs, JP Morgan, NY Life, and Fidelity a join us to talk about reigniting growth in our industry.

Those discussions took different forms. Some of our sessions talked about the state-of-the-art in marketing. What are current best practices to acquire and retain new customers? Other sessions focused on how to drive more innovation within large financial institutions and attract new top talent. All in, it was a great event to learn, network, and collaborate.

Ron Shevlin, Director of Research at Cornerstone Advisors was one of those speakers. An analyst’s analyst, Shevlin has been covering the financial services space for 25 years. One of the things I appreciate most about Ron is his no-nonsense delivery style. He frequently questions consensus thinking, going deeper and more honest into many of the hot-button issues our industry faces. He shares those views on his blog, Snarketing 2.0

Shevlin participated in a unique format session at our conference called Pardon the Interruption. Unscripted and unprepared, I threw various words and concepts at him, letting him riff off of them for a minute in front of our audience. The following recording joins that conversation part way through.

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Below are highlights, edited for clarity, from the episode.

Chatbots

Chatbots are getting really overhyped in terms of what their current capabilities are and what they can deliver. That’s just a maturity issue. If I had a dollar for every credit union CEO who told me that his firm’s competitive advantage is its people, I could retire. It’s not really true. The promise of chatbots is a more consistent user experience with customers and prospects delivered via technology.

Community banks and credit unions

Many community banks are looking at the consumer market and are giving up on it. They think consumer banking is just about gathering deposits. These banks are going to face big trouble. In a low interest environment, consumer behavior around deposits has changed significantly. There is more than $1 billion deposited on to Starbucks Cards and I’ve heard numbers that it’s double that. That’s more money than most community banks have and that’s money that community banks can’t lend out.

Fintech partnerships

Fintech partnerships are way overhyped. To develop and execute on partnerships requires a lot of time, effort and resources. The reality is that no matter how big a bank you are, you’re resource constrained when it comes to managing partnerships. My firm does a lot of strategic planning work with midsize banks and credit unions and they’re all thinking about these types of partnerships with fintech firms. There’s no way Jim over there in IT who’s also doing security and device management is going to handle a partnership. Or, they look to their core vendors, like FIS, Fiserv, and Jack Henry. They’re doing to do the partnership? The reality is that this is too resource dependent for most financial institutions.

 

WTF is a banking chatbot?

what's a banking chatbot?

Remember negotiating a bank’s phone tree, trying (desperately) to speak to a human being? Yeah, well, some financial institutions have vastly improved their customer service, understanding that with lots of options, banking customers want to be treated right and get their concerns and questions addressed.

Nevertheless, financial firms that service end customers are always looking for technologies to improve and, if possible, automate customer service.

Seriously, what’s a chatbot?

The newest installment in technology-aided customer service is the chatbot. These are computer programs that are designed to make you feel like you’re having a conversation with a real person. But you’re not. You’re chatting with a computer. Sorry to disappoint, but banks still don’t want you to speak to a real human (at least, not off the bat).

Early in 2016, Microsoft launched the notorious Tay, that learned to communicate by reading comments on Twitter (it wasn’t long before she launched into genocidal, racist rants, requiring the software company to take her offline). In a major move, Facebook announced at its F8 developer conference in April 2016 that businesses can now build and launch their own chatbots on top of the social network’s Messenger communication tool.

Why chatbots and why now?

chatbot usage
The Economist on comms apps

With the popularity of text messaging, WhatsApp, and Facebook messenger, chatting is becoming a preferred mode of communication. Younger folks aren’t even using email anymore, opting instead to chat. So, top technology firms are creating these light robots to interact with the public. According to the Economist, over 2.5 billion people have at least one messaging app installed. Facebook Messenger and the social network’s other messaging app, WhatsApp, dominate.

Teenagers are giving up posting on social networks and are spending more time chatting. WhatsApp users average nearly 200 minutes per week.

That sounds…interesting. How are chatbots used in finance?

These aren’t just dumb dolls that repeat “mama” all day long. Chatbots are smart forms of artificial intelligence and learn as they mature. In banking, chatbots can be used to deliver front-line customer service. For example, American Express recently mentioned it was developing a customer-service focused app for its card holders to track their purchases. Bank customers can communicate with chatbots to check their most recent balances and other forms of self-service, just like they would use a bank’s website. Chatbots can be used proactively as well, warning customers when they’re about to be overdrawn or when a check bounces.

Other fintech startups are using chatbots as the entire user interface for their apps themselves. Instead of interacting with what looks like a webpage on a phone, users of popular finance apps like Digit add and move money to their accounts by communicating back and forth with a chatbot. Gone is clicking on a button to get things done and in its place, people are now chatting with their technology. We call this trend Slack Finance, named after the hugely popular corporate communication tool.

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