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‘We’re not there yet’: USAA’s Darrius Jones on security concerns in the next big channel — voice

People could soon be doing their banking over voice-activated channels. But there are major issues around security and privacy to iron out first.

On Wednesday, USAA began piloting an Alexa skill for Amazon home assistant devices that lets customers check balances, review spending history and get other account insights based on their transactions. USAA is keen on letting Alexa read back customers’ financial data, but it’s not ready to let Alexa make payments, said Darrius Jones, assistant vp at USAA Labs, a division of USAA.

Many industries, not just financial services, are getting concerned about Amazon inserting itself between them and their customers. Banks and fintech startups are interested in using voice platforms to reach customers, but data and identity security and privacy concerns loom.

Tearsheet caught up with Jones about the pilot, its relationship with Amazon and staying ahead of customers’ security needs. Answers have been edited for length and clarity.

What are some of the security challenges of this pilot?
Understanding Amazon’s role in security versus our role. Privacy is another. When you have one of these devices and you plug it in, it has to listen. That’s part of the challenge and what makes them work. It’s what you’re allowed to do with the things you hear that people are now kind of going back and forth on.

How do you mean?
You don’t want your information spewed out into the ether when anyone can be in your house and ask a question.

Or move money around.
We have not put any money movement capabilities on the platform at this point. [It] is not something our skill will accommodate because we’re not comfortable with the state of security for money movement on the platform. How do you do this seamlessly and securely? We’re just not there yet.

Is Amazon a competitor or a partner?
In this conversation we’re definitely in a partnership. We’ve had to asked them to help us better understand the technology platform, we’ve had to help them better understand our regulatory requirements.

Does Amazon keep USAA customers’ data?
Amazon only has access to what the member provides during the interaction with Alexa while using the USAA skill. We use OAuth 2.0 to provide the member with the ability to see what permissions Amazon will be granted and give them the power to decide whether to grant that permission, which they can also revoke at any time. Amazon knows the question that the member asks Alexa and the response that is provided, but not the raw data used to formulate the response. All the transaction data is USAA-owned data.

Customers often care less about privacy than they think and more about speed and convenience.
We’ve enabled secure key, a six-digit key enabled with the Alexa skill that has needs to be uttered upon invoking the USAA skill. Only once you do that will you be able to get personalized spending information and balances. It was something Amazon asked for, but even the way we implement it — having it directly on the Amazon platform, where you have to set it up to determine whether to keep it on or off — is another useful usage pattern we focus on.

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Inside the creation of USAA’s Alexa skill

USAA is jumping on the voice train.

The San Antonio bank on Wednesday began a 90-day pilot of an Alexa skill for Amazon devices that lets customers check balances, review spending history and get other account insights based on their transactions. If the pilot goes well, the bank could create a new channel for customers to access their financial data and view it in ways that will help them make financial decisions.

Don’t mistake the skill for advice, though, said Darrius Jones, assistant vp at USAA Labs, a division that lets the bank’s customers participate out and provide feedback on its latest innovations.

“It’s really to paint a proper picture of what’s going on with your finances,” he said. “Having sound financial security comes out of making sound decisions, and sound decisions are based on data.”

For example: “Alexa, can I spend $100 on a new phone?”

“You typically spend an average of $200 on electronics in a month.  So far this month you’ve spent $50.  This will leave you with a balance of $2,518.51.”

This approach fits with the industry’s move toward self-service through digital channels. For years, that took the form of transactions like depositing and withdrawing paper money. But now, customers are seeking control instead of (or in addition to) advice when it comes to spending and saving.

For many customers and industry observers, the recent crop of artificial intelligence-powered digital assistants and chatbots has been anticlimactic. It’s let people see their account balances but little more than that.

“We thought there was an opportunity for us to do something different from the Q&A response mechanism that you traditionally see,” Jones said. “You’ll start to see spending advice as more of a mechanism to make a decision than to get some help. We think conversationally is the best way to deliver it.”

USAA’s skill uses technology from Clinc, which uses natural language processing, machine learning and deep neural networks to understand and respond to people. While Capital One’s own technology is keyword driven with scripted commands, Clinc’s allows USAA customers to talk in normal human language, without using keywords.

Other financial firms like TD Ameritrade, Fidelity Investments and Amex offer Alexa skills. Capital One is the only other retail bank to have launched an Alexa skill, with similar capabilities as USAA’s, as well as the ability to pay bills.

USAA, however, isn’t letting people move money via the platform for now because of security concerns.

For the Alexa skill, as with other Labs innovations, USAA customers that opt in to updates receive a direct message from the bank that prompt them to visit USAA Labs online. USAA has gotten requests for Alexa skills in its feedback, Jones said.

But it was through the PYMNTS.com/Alexa Challenge, in which it won the “Easiest to Explain to Mom” designation a year ago that really got the bank interested in the conversational channel — and led to the invitation by Amazon to develop the pilot.

“It was an interesting opportunity to see what a new channel and interface style with a conversational assistant would potentially be with USAA,” Jones said.

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‘Design is a competitive advantage’: How three banks are integrating design into customer experience

Despite all the hype around transformative technologies or the fact that consumers aren’t actually using any “fintech,” the dinosaurs of the financial world are changing from the inside out, putting the customer experience before their business — and design thinking is at the forefront of that.

It’s optimistic, but also just a new way (for banks) of doing business. They’ve realized they no longer dictate how they do business and what they produce; their customers do. In a digital world filled with choice, banks’ customers need choice, empathy and ease of use designed into every interaction they have with the bank — and they need to deliver on that quickly, before their competitors, which now include retailers and other non-banks.

Design thinking is moving bank operations away from “managing” and more toward innovating. For example, banks co-create products with customers in order to integrate their feedback more quickly and more frequently, instead of some far off time when a product s due for an upgrade. They’re deliberately hiring teams with diverse backgrounds to reflect the diverse customers they serve and build solutions with empathy, instead building teams of people with similar backgrounds and strengths. When they build new products, they’re collaborating with other parts of the organization and even with other financial services providers, instead of working independently in silos that don’t communicate with each other, which drags the delivery process at every stage.

“There is no greater trojan horse to change an organization than design thinking,” said Stephen Gates, head of Citi Design. “Especially with something where there are lawyers, regulators… Part of what we had to do was change thinking, not behavior. If it’s new behavior on old thinking, we didn’t really change anything.”

Here are three banks going all in on their design people — finding experts, training non-experts, cultivating internal communities — to make their organizations and customer interactions stronger.

BBVA
Spanish banking giant BBVA is training 1,000 staff ‘ambassadors’ to spread good design practice throughout the organization, Rob Brown, head of marketing, design and responsible business at BBVA, said Thursday at Experience Fighters.

Brown, who BBVA poached from Barclays last year, said the most innovative and exciting products on the market are those created at places that incorporate design in every part of the organization, not just the creative department.

“These companies understand that design is a competitive advantage and that all employees, regardless of their role, should begin to see themselves as a designer that contributes to improving the customer experience,” he said.

BBVA currently has 150 designers in 11 countries, but as part of the design ambassador pilot it will train “up to” 1,000 more from various parts of the organization, by promoting design thinking courses and providing training for the “non-designers” to apply design thinking to their day-to-day work.

“My goal is that our more than 900 projects around the world be undertaken using Design Thinking, and that our professionals have fun doing so,” he said.

USAA
In February USAA unveiled its 120-person design studio in Austin to focus on improving digital experiences among customers and employees.

The bank, historically a leader in financial services innovation — it was one of the first banks to get into mobile check deposit and online banking, for example — sees people and internal culture as the essence of how it design translates to their customers. So it chose Austin, a tech hotbed, for its design community, versus its home base in sleepy San Antonio.

Their goal, like all banks today, is to make financial planning, applying for a mortgage or choosing insurance coverage as easy calling an Uber or one-click buying off Amazon. But the reality of user experience design is often, businesses don’t experience the brand the way customers do and as a result, the work falls short.

“You have to do detailed visibility testing but also understand emotions that bring someone to an experience,” Meriah Garrett, the bank’s chief design officer, told Tearsheet at the time. “If it’s an in-and-out transaction, like trying to make sure you get your bill pay right, it’s all about speed and clarity.”

Appropriateness is the key design principle, she said. “It comes down to how you apply things appropriately… That drives me to why we have to have really good people.”

Citi
In October 2015, Citi launched its FinTech unit to act as a startup inside a bank dedicated to mobile-first solutions for its consumer banking customers. A month before that, Citi’s Gates joined the bank as part of the then 40-person Citi FinTech unit, to lead its in-house design studios as well as external agencies. His team has designed the user experiences for Citi.com’s various updates, the Citi mobile app and worked on the branding and advertising for Citi FinTech, the Citi Innovation Labs and the Citi Global Consumer Bank.

A deal signed that with the design consultant Ideo, in which it would train Citi employees on design thinking, has been a tremendous force in Citi’s innovation strategy, Gates said in January at the Design+Finance conference. The two have been working together to create a version of design thinking with agile methods for innovation that’s unique to Citi. Gates said he hopes his team would take the lead on spreading innovation across Citi.

“[Design thinking] gives everyone permission to come into that process, to participate. So instead of me going to legal and saying ‘will you approve this, yes or no?’ Come be part of the process. And then I can tap into the base thing: people will psychologically support what they’re part of. That was a massive transformation… ‘Creative’ isn’t a department anymore.”

Since then, the demand for the design teams’ work has grown to be the fastest growing team in the consumer bank, he says. He began the transformation by evaluating existing in-house creative talent and then re-establishing standards, culture and structures for the team. He has since hired new leadership and talent and coaches existing talent across different studios.

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Inside USAA’s new 120-person Austin design studio

Finance giant USAA is amping up its customer experience focus with a new design studio in Austin to house the 120 people it has focused on improving digital experiences.  The goal is to make financial planning, applying for a mortgage or choosing insurance coverage as easy as ordering up an Uber or buying something off Amazon.

“It’s time to turn up the discipline, the capacity, the way we partner and do the actual work,” said Meriah Garrett, the bank’s chief design officer. “A big part of that is hiring. The Austin market is to really able to scale up at pace… there’s a tremendous local talent pool.”

Among U.S. banks, USAA has a reputation for innovation. It was one of the first banks to get into mobile check deposit and online banking, for instance. It chose to locate its design operations in Austin, a tech hotbed, versus its home base in sleepy San Antonio.

The studio looks like a modern office, but with a lot of collaboration spaces. There are no office cubes, but a lot of stand desks. 

“Designers are a little bit obsessed with vertical working space and being able to ‘externalize,’” Garrett said, whether it comes in the form of work sketches, Post-Its scribbled with research quotes and findings, or marking up work in red pen.

In banking, the focus on design and customers’ digital experiences came recently, with the rise of financial technology and the growth of the mobile channel. Many banks have invested more heavily in design in the last two years – take Chase, which opened new Manhattan headquarters for its digital team almost a year ago – but it can take years to see a real impact, Garrett said.

The reality of user experience design is businesses and executives don’t experience the brand the way customers do and as a result, all this work around customer experience falls short. For example, people in finance treat finance like it’s a well known entity, Garrett said. They know it’s been around for years an years, understand the vehicles, mechanisms and why to choose one account over another.

“In reality, most people are operating their regular lives and finance happens to be a part of it,” she said. “One of the things that has really struck me is how much people are missing the 101. That is a tremendous weight for design practice at USAA, an opportunity to change conversation and emotion we all have about money.”

To drive that conversation, USAA is using new technologies and different types of artificial intelligence, but Garrett said making sure it’s the right conversation often comes down to the designers and team members themselves – the humans behind the products.

The bank doesn’t have a universal measurement for impact, Garrett said, and that’s something that’s challenging the whole industry. She sees it as an opportunity to really identify or detail a given customer experience in a way that gives insight and understanding to the designers. She also said she tries to avoid hard measures like numbers or clicks.

“You have to do detailed visibility testing but also understand emotions that bring someone to an experience. If it’s an in-and-out transaction, like trying to make sure you get your bill pay right, it’s all about speed and clarity,” she said.

Appropriateness is the key design principle.

“It comes down to how you apply things appropriately… That drives me to why we have to have really good people. What keeps me up right now is hiring – hiring quality and pace and making sure we grow the right talent at USAA in order to be able to fulfill on this vision.”

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What Hurricane Matthew taught us about banks and fintechs

When Hurricane Matthew swept through Haiti, the Bermudas, and finally up the East Coast, the results were devastating: at least 900 people died in Haiti, and another 33 people lost their lives to the storm in the U.S. Alongside the tragic certainty of these deaths lies the economic uncertainties churned up in the storm’s wake. Haiti is expected to face up to a decade of economic recovery, while Matthew may have cost North Carolina billions in losses.

Unlike other natural disasters, however, the U.S. knew about Hurricane Matthew well in advance, so it provided the perfect opportunity for banks and fintechs to prove their customer care mettle. “An approaching storm puts people in a position of vulnerability,” said Jon Picoult, founder & principal of Watermark Consulting, a U.S.-based customer experience advisory firm. “As such, it affords a great opportunity for companies to proactively communicate with their customers and demonstrate advocacy – be it by sharing relevant information, providing reassurance, or offering some other type of assistance during the customer’s time of need.”

Some national banks grasped the importance of connecting with their frightened customers, and did so (community banks in the affected areas aren’t being counted for the purpose of this article, although, as community banks do, they were very communicative and supportive regarding all things Matthew).

Witness USAA’s epistle to customers in Matthew’s path (full disclosure: I bank with USAA):
screen-shot-2016-10-19-at-11-26-28-am

With this message, the insurance, banking, and investment company serving military personnel, veterans, and their families effectively ticked off everything on Picoult’s list. It shared relevant information to help customers protect their property, it provided reassurance, and it offered three different paths of assistance: online, digital, and phone.

The company also sent out three tweets about hurricane safety precautions:

Obviously, the more customers took steps to protect their property, the less USAA would have to pay out in claims. Yet the fact remains that the way in which the company communicated with customers in need was timely and on the mark. Not to mention that USAA followed up, by email

screen-shot-2016-10-19-at-11-24-59-am

and front and center on its website:

screen-shot-2016-10-19-at-11-37-47-am

Like USAA, JPMorgan Chase also understood the importance of connecting with customers as Hurricane Matthew fast approached. “On Wednesday afternoon, we posted a Weather Update ad (see bottom right) on the front page of chase.com that was visible only to people with IP addresses in Florida,” said Chase’s Tom Kelly. “That took them directly to the Branch Locator, which the bank updates in real time.”

Chase kept the severe weather ad up for 6 days.
Chase kept the severe weather ad up for 6 days.

The JPMC’s retail arm also tweeted about branch openings after Matthew passed through, showing not just its customers but the world that Chase was concerned about its customers on the east coast.

 

What of fintechs? At the time of publication, Credit Karma, Wealthfront, Square, and Quicken Loan’s Rocket Mortgage had not responded to Tradestreaming’s request for a comment. But PayPal did. “We aren’t doing anything specific on Venmo,” said Andy Lutzky, vp at Edelman. However, “in an effort to support relief efforts, Xoom is waiving fees for all services through October 15.”

So although PayPal graciously eased remittances for storm-struck Haitians, it didn’t treat the hurricane as a customer care issue. The fact that one of the more popular P2P money transfer apps didn’t see the need to address Hurricane Matthew suggests that fintechs might not be quite caught up with banks when it comes to customer care.

Of course, to be fair to fintechs, part of the reason that national banks seem to have outperformed fintechs in the emergency customer care category during the hurricane is because banks have been at the business longer. “As we’re in early days of our on-demand insurance product, and currently only available in Australia, we don’t do any proactive messaging around natural disasters,” Jeff Berezny, vp of marketing and communications at online insurer Trov.

The company is at least thinking about how natural disasters and customer care intersect. “A broader, proactive plan related to prevention is in the works that could include content-related to natural disasters, but it has not yet been activated,” Berezny said.

This is not to say that every national bank was on top of their customer care game as Hurricane Matthew stampeded towards Florida and North Carolina, nor that every fintech company was oblivious of the storm. But the above examples suggest that fintech companies, whether they want to go it solo, partner with banks, or become banks, could take a page or two from banks’ trusty customer care books.

 

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Hi 5! The five fintech stories we’re following this week

top fintech stories

Let’s get digital

Everyone’s still trying to figure out this digital thing. Some financial institutions are doing better at it than others. USAA’s customer-centric charter leads digital innovation, not the other way around. “Since the military community moves more often than the average consumer, USAA found a way to move with them.”

One entity that doesn’t quite get it is, well, the Fed. The organization launched a Facebook page recently. That’s when things started to go a bit off the rails. The Fed is using its social media presence to give a kinder, gentler view of its inner workings but the user comments are just flat out hysterical. It appears the public isn’t quite ready for this level of access.

The Australian Stock Exchange was shut down by a technical failure that stopped trading for a few hours. ING suffered a similar fate when a loud boom was followed by an outage at one of the bank’s data centers in Bucharest.

When they do decide to put rubber to pavement, banks and asset managers may do so using an advanced form of surveillance technology.

I don’t think P2P means what you think it means

There’s been a lot of excitement about Lemonade, the new well-capitalized insurance startup that launched this week. Much of that interest stemmed from the company’s marketing of its new peer to peer model of insurance. Looking at the app, Lemonade must mean something else when it says it’s P2P. Regardless, the app still looks pretty sweet.

Also, as more devices track our every move, some insurance companies are using this data to craft more personalized insurance policies around our behavior. In some instances, insurers are using this data to help modify policyholder behavior to nudge better outcomes (for both the guy who pays the premiums and the insurer itself).

Not sure how this fits in? Mike Galarza understands what fintech success means. The immigrant founder of Entryless was inspired by a talk Peter Thiel delivered at Stanford to do something he was passionate about. And he did.

Domo arigato, Mister Roboto

Roboadvisors have, by default almost, become the poster boys for consumer fintech. As they’ve grown and acquired more assets, they’ve also changed their focus. Lex Sokolin, who founded one of the first robos, joins us on the Tradestreaming Podcast this week to discuss what he calls, the four stages of roboadvice. It’s an interesting discussion and perspective, given the fact that Sokolin, who’s director of fintech research for Autonomous, believes we’re currently in the third wave.

According to a new McKinsey study, digital finance could add more than $3 trillion to emerging market GDP. Sure, the consulting firm is just talking up its book, but when you look at what’s happening, incumbent financial institutions are paying attention. 25 percent of them are actively considering acquiring fintech firms.

Speaking of robos, robo tax manager, Avalara raised close to $100 million.

Is bitcoin really money or not?

There’s still a lot of dickering going on about Bitcoin. The U.S. legal system, for example, is still trying to figure out if the cryptocurrency is money. After a local Miami judge ruled that Bitcoin wasn’t money, a U.S. judge just ruled that it actually is money.

Lots of banks are getting into the P2P game. But, honestly, it’s an interesting phenomenon that more banks haven’t gotten into the digital gifting game, which is weird because Christmas expenditure on gifts alone is $830 billion in the U.S.. As we explore the changing role of banks, we’ll probably see some financial institutions experiment more with this type of thing.

API-ification of banking

We’ve been exploring the theme of increasing use of APIs in banking. Here’s a good place to start answering the question, what is a bank API? What’s starting to happen is that banks are making their banking rails available, either publicly and or privately, to third parties to build stuff on. While the financial industry is behind other industries, it’s slowly legging into APIs. Regulation will help encourage the sharing of data, too.

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Inside USAA Bank’s digital experience playbook

Banks have begun the long, slow journey towards true customer-centric banking. It’s not like they have much choice. With commercial brands upping the ante on customer-centric moves, customers have come to expect the same from their financial service provider.

And because over 75 percent of millennials are willing to switch banks if they find a better alternative, banks that want to retain millennial customers, let alone acquire new ones, need to move from an organization-centric model to a customer-centric one. Preferably yesterday. The writing has been on the wall for years. Back in 2012, McKinsey warned that the future belongs to banks that put customers center stage in their business model.

Part of the push towards consumer-centric banking came from the bottom up. As a 2011 PWC report notes, mobile technology and social media have had a major impact on customer expectations and word-of-mouth marketing in the finance industry.

At USAA Federal Savings Bank, which serves active military members, veterans and their families, the process was reversed. Instead of digital serving as the catalyst for consumer-centric banking, the bank’s member-centric banking charter – much like that of a credit union – drives the firm’s digital experience strategy.

So while USAA is keeping an eye on certain prevailing fintech trends, like payments innovation, personalization and the rise of human-centered design, its digital experience roadmap is focused on solving customers’ needs and helping them become financially secure.

“As we evolve our digital experiences for the future, we’ve begun considering the idea of a distributed model for the digital experience,” said Melissa Ehresman, USAA’s AVP of bank digital experiences. “It will be less about a website or a mobile app as a destination and more about being where our members are and integrating with the technology around them, such as IoT and virtual assistants.”

The bank debuted its mobile virtual assistant app in 2013, and released a version of its online site in September 2016. The virtual agent is currently targeting infrequent digital users that need assistance with self service and those seeking a live agent. So far, member response has been good, with 800,000 members per month engaging with the virtual assistant. It’s been good for the bank, too. 70 percent of the members that interact with the tool don’t need to escalate to a live representative.

“We recognize the member desire to interact in different modalities, including tap, text, and speech,” Ehresman explained, noting that USAA has big plans for the virtual assistant. New technologies should enable the virtual assistant to learn member sentiment, and the bank hopes to expand adoption into more complicated or stressful tasks, like filing for insurance.

For USAA, the perfect digital experience is a three-shrimp cocktail: anticipating member needs with data, being proactive in communications with members, and ensuring the entire experience is simple and intuitive. The communication segment is particularly challenging, since USAA’s members are service members stationed across the globe.

But it is this geographical difficulty that has encouraged the bank to be a digital pioneer. “Since the military community moves more often than the average consumer, USAA found a way to move with them,” says Ehresman. The bank’s mobile app and website were created to address its military members’ financial needs, regardless of where they’re located or what time it is. For instance, the digital virtual assistant connects members to live service representatives, reducing the traditional IVR system’s number of  misrouted calls.

All of these innovations are a result of the bank’s investment in stable and scalable back-end infrastructure. By reinforcing the bank’s infrastructure and modernizing its technology architecture, USAA has been able to develop and implement front-end user experiences more fluidly.

While its members may be constantly on the move, the goal of all of USAA’s digital innovation remains the same: take care of its members.