Posted on

Inside Wells Fargo’s plan to ‘disrupt the disruptors’

Like most aspects of banking, small business loans are no longer just about the financial agreement between the bank and the customer, but the personal attention that comes before and after the service. That’s a recurring theme among online lenders, but it’s also the view of Wells Fargo’s Lisa Stevens, president of western region regional banking.

Last year, the bank launched its own online lending product, FastFlex, in response to not only new competition from the likes of OnDeck Capital and Bond Street, but to its own customers asking for ease of access to loans, ease of use and guidance. Now it wants to open that product beyond Wells Fargo customers.

Based on the latest Community Reinvestment Act data released in 2016, Wells Fargo extended 473,847 loans and $21.3 billion in total loan originations under $1 million to U.S. small businesses that year. It is the top ranking U.S. small business lender by dollar amount.

Tearsheet caught up with Stevens about how Wells Fargo approaches small businesses and what competition from alternative lenders mean for the bank.

Wells Fargo is the number one SBA lender in dollars. What’s your focus?
It depends on customers, what their need is at the time. But our focus has been about being where our customers need to be and making it easy for them. The business encompasses a lot because it’s about trying to see things from perspective of a small business owner versus the perspective of the institution.

What’s the perspective of the institution, historically speaking?
From the 2008 recession to a couple years ago we knew diverse-segment small businesses were struggling more than they had prior to 2008. We did a study with Gallup to understand what are the pain points for Asian-, Hispanic-, African-, women- and veteran-owned businesses and what could we do to help revitalize these businesses at a faster rate.

What did you learn?
Small business owners know everything about their businesses but don’t necessarily know what they need to do to make sure they put all the right financial instruments and advice into place. We created four initiatives and one was to help with credit coaching.

What does that entail?
We call people that get declined and walk them through what happened, why they got declined and what they need to do to get approved. When small business owners they get declined for a line of credit or loan they often don’t know why. At the time we were the only financial institution to do something like this. FastFlex was also an answer to what some in the market were looking for.

How so?
It was that ability to control your inventory or be able to move quickly on something when you have an opportunity and you need to get credit quickly. With FastFlex, we came together and made the decision to basically disrupt the disruptors, create a product we knew would be competitive and easy access for our customers with the capabilities we had. But we did it fast. We’ve got more piloting the line of credit right now. Now we’re looking to offer Fast Flex to new customers who don’t have a history with us.

Is your business threatened by online lenders?
It’s a competitive market but thats a good thing for small businesses. All the online products that have come out have been a positive thing for small business owners because it’s given them more choices and opportunities. And it’s allowed us to sit back and rethink how we’re creating the best tools and advice.

What about Amazon?
Companies like Amazon, Zappos — they’re all fantastic opportunities for us to understand what’s the experience we should be creating for the business owner or customers and to be able to learn from others innovating.

How do you measure success?
There are financial metrics, the number of customers we’re reaching, how we continue to innovate and be responsive to a world that’s changing so quickly. We also have surveys based on what our customers are saying. The anecdotal success is just as important.

Posted on

‘They need new blood’: Wells Fargo is in another reputational crisis

Wells Fargo has found itself in the midst of yet another PR fire — a minor flareup compared to last year’s phony accounts scandal, but a cringeworthy development nevertheless.

On Monday, the bank disclosed that earlier this month it had “inadvertently” released a trove of confidential data about at least 50,000 of its wealthiest clients in an email exchange between lawyers. Approximately 1.4 gigabytes of files — spreadsheets, names, Social Security numbers — and financial details including the size of their investment portfolios, and the fees the bank charged them.

“Wells Fargo is taking swift legal action to ensure client data, which was inadvertently released to a lawyer as the result of a subpoena, is returned immediately,” the bank said in a statement shared with Tearsheet on Tuesday. “Additionally, Wells Fargo is seeking to prohibit the data from being disseminated. We take the security and privacy of our customers’ information very seriously. We are continuing to thoroughly investigate this matter and will take all appropriate steps based upon the outcome of our investigation.”

It’s entirely possible for companies to recover from reputational incidents — just look at BP and AIG. What makes bank’s scandal so much worse is the succession of problems and inconsistencies between what they’re marketing and how they’re running the business, said Michael Rubin, chair of the crisis practice at Levick.

“These things are cumulative and can damage the brand,” he said. “It seems to be part of a pattern of a lack of oversight, accountability, management and controls. It’s different from what they dealt with last year but in many ways it conveys the same poor management and oversight.”

The story of the data breach was serendipitously released two days after Wells Fargo began pushing its latest consumer mobile banking product, one meant to convey the message that customers should own and control their data and how it’s used (and ideally, thereby build trust and develop emotional loyalty). “Control is about making you feel comfortable and it comes back to trust,” Ben Soccorsy, head of digital payments and digital product management at Wells Fargo, told Tearsheet.

Perhaps that was a little ambitious. With all the attention being paid by media and everyday consumers about cyber breaches and lost data, it’s just “the wrong story at the wrong time for Wells Fargo,” Rubin said.

Unlike Wells’ major event in September — in which it admitted to creating some two million fake accounts in order for bank tellers’ to make sales quotas and fired 5,300 of its employees — the average retail bank customer may not even know or care about the latest incident, said Dorothy Crenshaw, CEO of Crenshaw Communications.

First of all, the story mostly affects customers of Wells Fargo Advisors, the arm of the bank that caters to high-net-worth investors the wealthiest clients. While there was a breach of data, no sensitive, personal information has been posted or used in any way (that’s not to say it won’t or can’t be). And it was an emailing accident between lawyers, not Wells Fargo itself.

“The only thing they can really responsibly do right now is own it and explain how it’s never going to happen again,” Rubin said. “Blaming it on a law firm will not fly. They’re responsible for the law firm, for choosing the law firm. They can’t pawn this one off on the contractor, the only thing they can do is own up to it and show how it’s never going to happen again.”

The best thing for Wells to do at this stage would be to announce a thorough security review starting with email practices and all vendors. They’re its weakest links, Crenshaw said.

“The vendor is the weak link, the business partner is the weak link when it comes to email,” she said. “This is really a fairly common situation.”

But when it comes to saving your brand, that last detail is neither here nor there.

“Last years debacle is still fresh in people’s minds so when something of this magnitude comes up… everyday consumers will link what happened last time to what happened in this case,” Rubin said.

Not just that. In February, the company’s participation in financing the construction of the Dakota Access Pipeline led to demonstrations at multiple branches and corporate offices and prompted some customers to reconsider their business with the company. In May it surfaced that Wells employees scouted the streets and Social Security offices for potential clients: undocumented immigrants they would take to the branch and persuade to open bank accounts. Days later, the state of New York said it would cut ties with the bank. Last month it surfaced that officials in the bank’s mortgage business were putting through unauthorized changes to home loans held by customers in bankruptcy.

“It’s really about internal culture,” Crenshaw said. “What they have forgotten is internal culture extends to your partners, your vendors, your law firms, your PR firms, your digital marketing agencies.”

And replacing John Stumpf, the CEO at the time of last year’s major scandal, with Tim Sloan really wasn’t enough.

“They have to really clean house when it comes to their security practices,” said Crenshaw. “They need new blood. Sloan was a lifer, they need someone from outside the bank in a key position, maybe another C-level spot, who symbolizes a fresh start.”

Posted on

How Wells Fargo is letting customers take back control of their financial data

People store card information in a lot of places. Netflix, Spotify, Uber; various apps for their favorite workout, lunch, shopping apps. There’s sensitive financial data flying all around us; it’s the risk people take in exchange for convenience.

Now, Wells Fargo is rolling out a tool that lets customers keep track of it all, an aptly named “Control Tower,” within its mobile banking app that gives them a single view of their digital financial footprint — which includes recurring payments, third parties, mobile wallets, subscriptions, different devices where they’re signed into their banking account — and lets them turn on or off the sharing of their bank account information.

For the bank, it’s about meeting customer expectations, which have evolved. People pay for things and manage their financial lives with other non-bank financial services providers just because they like them (and they’re usually free). Instead of trying to retain customers by replicating those other offerings — which is unrealistic for an institution of Wells Fargo’s size and scale — or somehow preventing customers from buying into their allure, Wells is letting them go about their financial lives as they like and incentivizing them to at least come home at the end of the day for dinner.

The bank is piloting the product with employees later this year and plans to launch it for customers in 2018.

Through a number of moves over the last year, Wells Fargo has positioned itself as leader of the crusade to give customers control over their financial data and how it’s used, but none so pronounced as the introduction of the Control Tower. Ben Soccorsy, head of digital payments product management at Wells Fargo, called it a new type of interaction model for customers — one based on control and trust.

“There are fintechs and other types of companies that can deliver pieces of this already,” Soccorsy said. “It’s not those pieces or the inherent technology that are new, it’s this new way of putting it together in a way that delivers new value to the customer. It’s not just data sharing here and turning your debit card on or off there, device management there. It’s one place.”

That customers expect self-service — ATM withdrawals and deposits, online bill pay, mobile money transfers — from their bank is perhaps the most visible way technology has changed banking. The Control Tower takes that a step further. Giving customers control over how their data is used is the holy grail of digital identity, and the bank has been taking steps toward that goal over the past year by signing agreements with Xero, Intuit — owner of QuickBooks, TurboTax and Mint — and Finicity that allow it to share customer data with the third party using application programming interfaces.

The Control Tower will be rolled out in stages as the bank pursues similar agreements with more third parties; they need to connect with the bank through an API in order for the customer to get the full benefits of the offering, Wells CEO Tim Sloan said at Fortune’s Brainstorm Tech conference in Aspen last week. That implies Wells Fargo is about to get pretty aggressive in its partnering strategy.

The first ambition of these arrangements is to move away from the commonly used screen-scraping method — where the third party “scrapes” the necessary information when customers log in with their bank credentials and hold onto it for future use. Wells has also been speaking out about the need for banks to take a stand against screen-scraping by creating industry standards for data exchange.

Beyond data security, the move by Wells is a sign of the industry’s new willingness to break down their silos and partner or collaborate with third party providers and in some cases products that could be considered competitors, like Apple Pay — all in the name of offering customers choice and developing emotional loyalty.

“We want our customers to have their financial relationship with Wells Fargo. If you want to use another payments provider because that’s your choice, that’s fine, as long as you come back to Wells Fargo,” Sloan said. “We want to offer our customers convenience as long as, ultimately, they come home.”

That’s similar to what JPMorgan Chase said when it announced its data sharing agreement with Finicity two weeks ago.

“Our customers really want to use these financial apps and they do use them a lot,” Trish Wexler, a JPMorgan spokeswoman, said at the time. “We want them to find a safe, secure and private way for them to be able to do that without having to hand over their bank password.”

How personal financial management apps like Moven, Clarity or even old timers like Intuit’s Mint survive in a world where all banks can show customers their entire financial snapshot beyond just their bank accounts is unclear. It’s too early to say, but there’s probably room for both types to exist, Wells Fargo’s Soccorsy said. Of course, the startups also provide a lot of inspiration.

“It’s a good thing we have companies out there looking at creative and innovative ways to help customers be more financially successful. They do it in a way that’s focused on probably one use case, one type of problem, one very specific need a customer has,” he said. “Our company has learned that they’ve been successful in doing that in pieces and parts; we are putting it together in more comprehensive ways.”

That’s one of the reasons innovation appears more difficult to execute at banks than at startups. Small announcements like credit card toggling and direct fraud alerts seem insignificant when they land in customers’ inboxes, but banks are often working to solve broader problems before customers even realize they’re problems. Whether Wells customers begin to care about who has their financial data and how it’s being used once they have the ability to control it remains to be seen.

“That’s part of the role we play. Control is about making you feel comfortable and it comes back to trust,” Soccorsy said. “Our company wants to build trust everyday with customers. This is a forward looking opportunity to do that, recognizing that customers aren’t asking for it by name today.”

Posted on

Wells Fargo rethinks retail, plans to shutter 450 branches

Wells Fargo has perhaps the largest branch and ATM network of any bank in the U.S., but it’s finally catching up to its peers, who are closing redundant branches, reinvesting in more modern ones and upgrading ATMs as customers embrace digital channels more and more.

While it’s focused on reducing expenses and improving efficiency, it’s still investing in things that make managing finances easier for commercial and consumer customers, Tim Sloan, CEO, said on an earnings call Monday,. In the second quarter Wells introduced Zelle, legacy banks’ peer-to-peer payments answer to Venmo, and began piloting a chatbot for Facebook Messenger. It also upgraded its mobile checking account opening experiences, launched a service for commercial card customers that lets them upload and manage receipts on their mobile device and automated the accounts receivable functions for Treasury Management customers.

“We are focused on improving the operating performance of the company by increasing our emphasis on core banking products and services that we believe are most relevant for our customers and provide the best financial returns for our shareholders,” Sloan said.

It’s also been rethinking its ATM and branch strategies. Wells was the first major bank to bring cardless cash withdrawals at the ATM last year, followed by Bank of America and Chase, and the first to install the feature in all of its ATMs by the end of the first quarter this year, Sloan said, touting that customers had used the feature more than a million times as of last week.

While Wells Fargo has shut down 93 branches this year (54 in the second quarter alone) to eliminate overlap and improve performance of the network, and plans to close about 450 total by the end of 2018, it also plans to increase “infrastructure and platforms available on-demand for self service” — a.k.a, ATMs — from 85 to 845, according to its second quarter earnings supplement.

The bank’s branch total stands at 5,977 as of the end of the second quarter, compared to 6,028 branches in quarter one and 6,111 branches in the second quarter of last year. Wells expects branch closure and “optimization” to save it about $170 million in expenses by the end of 2018.

Wells has been less aggressive than its peers when it comes to branch closures. It closed just 98 branches between 2012 and 2016, according to the FDIC, a 1.6 percent decline compared to Chase (3.4 percent), Bank of America (16 percent) and Citi (28.5 percent).

“The branch interactions are reflective of what’s going on in terms of customer choice moving more to mobile than anything else,” Sloan said. “When you think about our customer interactions… look [not only] at branch interactions, but also look at the number of online and mobile interactions.”

Wells reported 379.9 million customer interactions through ATMs and branches in the second quarter, a three percent decline from 393.3 million in the same period last year. The bank says the change reflects continued customer migration to virtual channels and increasing digital adoption. Interactions through online and mobile channels totaled 1.4 billion in the second quarter of 2017, up five percent from 1.3 billion in the second quarter of 2016.

“It’s important…to make sure that we’re investing in technologies. So a customer can open account on their mobile device set. And if they want to they can come into one of our branches, that’s fine.”

“We’re seeing a slow, but steady return in an improvement in underlying retail business,” Sloan said. “We still have more work to do.”

Posted on

How Citi and Wells Fargo are creating cultures of innovation

It’s easier to change an organization’s technology stack than its culture or talent pool, and for banks, sometimes the biggest obstacle isn’t technology or regulation, it’s force of habit.

Wells Fargo and Citibank know that now. Both banks have created dedicated innovation units within their organizations in 2015 — Wells Fargo’s Innovation Group launched in July 2015 and that October, Citibank launched Citi FinTech — to help accelerate the banks’ delivery of digital products and services. Citi FinTech is specifically focused on mobile-first experiences.

Carey Kolaja, global head of product at Citi FinTech, and Sherrie Littlejohn, executive vice president of Wells Fargo’s innovation group, spoke at CB Insights’ Future of Fintech conference in New York Wednesday and talked about the challenges they’ve faced trying to rebuild company culture from inside.

Pushing the limits of ‘no’
Innovators get told ‘no’ a lot when they’re pitching new projects. Innovation can be too expensive to implement, too difficult to implement, or just plain old be out of line with regulatory requirements. A lot of that comes from bankers on autopilot that are just too used to the stodgy old bank culture Citi is trying to change.

“We still live on a lot of historical architecture, but what has really encumbered us is people, and the perception that the limitations are the regulatory environment,” Citi’s Kolaja said. “Changing the way people look at why the ‘no’ is there has been really important.”

That’s not to say that regulatory compliance isn’t important or that regulation isn’t there to protect people. But having leadership that pushes back on why people on other parts of the business say no to innovation has been a big part of the equation for Citi FinTech.

Kolaja explained that twice a week, the product team meets with representatives of the controls team, which oversees the pace of changes in products, processes and the legal and regulatory environment.

“We walk them through the user story and walk them through the product we want to build,” Kolaja explained. “In doing so we expedite the process, but the big learning there was we have people who say ‘you can’t do that.’” Often though, they say that “because it was an old policy or it was opinion.”

Educational opportunities
Technology moves so fast that it can seem natural to hire the right talent for its increasingly digital operations and processes from the outside. But Wells Fargo’s Littlejohn, said that as important as it is to seek new talent and partner with the right startups, it’s just as important to develop existing talent.

Banks have sought to invest more in young tech talent and data scientists and some are facing competition with financial startups over college graduates. While many say it can be difficult to find the right people, Littlejohn said she sees that as an opportunity for Wells Fargo, which might not be doing enough internal training and development around new technologies.

“Thats one of the roadblocks we have: we’re so busy operationally trying to keep things running that we haven’t seen a way to make room for ourselves to learn and train and teach and be curious about how to make this new world come to fruition,” she said. “We need to educate our team members to understand what these new technologies are.”

The fact that new technologies that automate antiquated processes removes the need for some jobs is a harsh reality, she added. Historically, whenever new technology has eliminated old jobs, there has also been job creation. Wells can foster the talent for those inevitable jobs internally as well as seeking new skills externally. She didn’t say if the bank is preparing for that now, just that it’s an area of opportunity.

“Culture is difficult,” she said. “Being afraid that suddenly you won’t have a job tomorrow — that’s real for people.”

Posted on

How banks are using virtual reality

Virtual reality has emerged as a hot topic in banking with the rise of artificial intelligence, innovation labs, and the death of the physical bank branch. There’s a way to tap into the mind of the customer through VR, but how it should fit into the business is still a mystery for most.

Venture capital funding in VR totaled $2 billion from 2015-2016, according to Digi-Capital and revenue from VR is expected to hit $162 billion or more by 2020 from $5.2 billion in 2016, according to IDC Research.

It’s still early for banks interested in bringing VR into their business. And like any new technology, VR is going to face some opposition before it’s more widely adopted across financial services. Just because banks can use it, doesn’t mean they should use it everywhere, or at all. Banks are experimenting with how to use it, when it’s appropriate, and who their partners will be. One thing is for certain, though: if customers like it, banks will want it.

“Banking customers have rarely seen a channel or a way to interact with a bank that they didn’t like,” said Raja Bose, global retail banking consulting leader at Genpact. “Branches, contact centers, online, mobile; banks are now letting customers interact with them via social media. The more ways you get consumers to touch their banks the better and there are always going to be some consumers that like it and want to do it.”

However, some banks have dabbled in the technology already. Below are examples of three banks’ brushes with VR.

BNP Paribas
On Tuesday, the French banking giant BNP Paribas introduced a VR-based app for retail banking that allows users to virtually access their account activity and transaction records.

The experiment is perhaps the first to actually touch the financial services parts of banking, unlike the marketing approach banks like Citi and Wells Fargo below use to cultivate their brands.

“Banking concepts and savings and saving for retirement — all this stuff is often very intangible,” Bose said. “You’re not buying anything, you’re not walking out of a branch holding something. To some extent VR becomes a way of helping customers get a little more tangibility. Virtualizing is a good tool for visualizing data. If you can come up with a way of showing how the $100 you save today turns into a big pile of money in 20 years it might make it easier for people to grasp the concept.”

The bank’s real estate arm also partnered with French startup Vectuel & RF Studio to develop “the POD,” a teleportation “capsule” that allows people to step inside and view new apartments and buildings under construction or for sale in three dimensions and in 360 degrees, and move through the journey of a real estate purchase.

BNP did not respond to requests for comment by deadline.

Citi
Citi has a partnership with Live Nation and NextVR to produce a series of live virtual reality concerts as part of its “Backstage with Citi” initiative, which rewards its cardmembers with such events. In this case, fans are transported with VR headsets to live shows and “backstage experiences” with some of the most popular artists.

It also has a longstanding partnership with NBC and the Today Show where it presents a concert series and did the first ever VR concert livestream on the Today Show.

“We took requests from consumers and had 30,000 requests for VR headsets,” Citi’s chief marketing officer, Jennifer Breithaupt, recently told Tearsheet. “We gave those away and people were able to experience that show live from Rockefeller Plaza but also experience it from home as if they were there.”

Wells Fargo
Developers at Wells Fargo Digital Labs are working on integrating VR into next-generation financial services. Digital Labs, a 1,700-square-foot facility in San Francisco with virtual reality headsets, high-definition touch screens and video conferencing, was founded almost 10 years ago as an online-only “space” to showcase and demo new technologies for customers, executives and other employees.

Last year, Wells also went on a “Together Experience Mobile Tour,” which hits music festivals, sporting events, pride festivals and other cultural events nationwide. Along the tour the bank allows people to experience memorable and engaging activities, like “Treasure Quest,” a virtual reality challenge that takes users through the brand history of Wells Fargo, beginning in the 1860s. Users are greeted by a virtual banker at the start of their journey and then challenged to Gold Rush-era activities like gold panning. Users are directed to Wells Fargo ATMs throughout the quest and need to complete their challenge to return to modern day.

Posted on

Wells Fargo’s Monica Cole: Banks should rethink diversity training

In a midtown hotel in New York, 220 female bankers from the country’s biggest institutions including Bank of America, PNC, and U.S. Bank gathered on Wednesday to talk about battling unconscious bias.

They were asked to raise their hands if they had some kind of diversity or inclusion program in their organizations. All hands went up. Unconscious bias or diversity training? All hands stayed up. Events for underrepresented groups like women of color or the LGBTQ community? All hands still stayed up. Blind resume review? All but a few hands lowered.

Organized leadership and community building has done a lot in raising awareness of the importance of diversity, but little to make actual changes in company processes that eventually do show an impact both in company culture and the bottom line.

To make those changes, leaders will have to admit that bias exists. Even though they raise awareness and go through training, at the end of the day, it can be scary to be the person that signs off on real change, said Monica Cole, Wells Fargo’s group head of North region middle market banking, at the Women in Banking LEAD conference.

“As hiring managers, we have to have the courage to not hire a rainmaker who does not believe in our values across all people,” she said. “That’s very hard to do when you have numbers to make; when you’ve had your eye on someone in the market that you know is right. It takes a lot of courage to say ‘[that’s] not the kind of person I want in my organization because he doesn’t reflect the values I believe in.’”

Wells Fargo’s global workforce totals 269,000, of which 56 percent are women and 42 percent are “ethnically and racially diverse.” The bank has long thought itself a champion for women on boards, with seven women on its 16-member board, the leader among large U.S. commercial banks with a 44 percent ratio.

In its hiring process, Cole said, Wells makes sure the interview committee represents the broader employee base to include both men and women, people of color, people who identify as LGBTQ, midlevel employees as well as top level employees.

Like most banks, Wells Fargo has a number of networks and councils for minorities, including employees who are women; who are Asian, black, Latin, Middle Eastern or Native American Indian; who have “diverse abilities,” or are veterans; and for members of the LGBTQ community.  CEO Tim Sloan also chairs a Enterprise Diversity and Inclusion Council responsible for identifying D&I goals and creating plans.

Leaders at the bank also receive a quarterly diversity scorecard, to measure progress and create accountability.

But despite how far women have progressed to get a seat at the table, sometimes it still takes a man at the table to push things through. It’s the difference between tackling conscious bias and unconscious bias, where women may have a seat at the table, but not necessarily a voice.

“Oftentimes the person that’s the head of D&I tends to be a person of color, and often, a woman. But when you have a white heterosexual male that’s invested in the process at the table with all of us and accountable in terms of financial impact, it starts to make a real difference.”

Posted on

Wells Fargo: Banks need to create data exchange standards

Wells Fargo is trying to establish itself as the leader of a movement to give banks’ customers control over their data and how it’s used.

The first step, according to Brett Pitts, head of digital for Wells Fargo Virtual Channels, is to come up with cross-industry standards for moving data to different parties.

“This will be successful if more banks, more aggregators, more fintech firms wind up signing into these kinds of agreements, and figure out an open standard way of passing data and keeping customers at the center of discussions,” Pitts said of its data-exchange agreement with data aggregator Finicity, announced earlier this week. “Ultimately, this isn’t going to work if its just Wells Fargo, Intuit and Finicity doing it.”

The agreement allows Wells Fargo to share its customer data with Finicity using application programming interfaces. The bank made similar agreements with Intuit, which owns QuickBooks, TurboTax and Mint, in February and with Xero last summer. This week’s agreement is different in that it allows Wells to move data to third-party fintech apps that work with Finicity, whereas the agreements with Intuit and Xero allow them to use customer data on their own financial applications.

Right now the most common way of accessing customer data is through a method called screen scraping: customers log into the third party site or app with their bank credentials and that company “scrapes” the information to be able to log in as the customer to retrieve account data as necessary.

“Screen scraping is the anti-pattern we want to stop,” said Pam Dingle, principal technical architect at Ping Identity, a maker of identity management software. “By sharing their passwords, customers are allowing the third parties to be them – transfer money, take out loans, literally do everything the customer can do. These passwords are stored in a format which allows them to be used, so a breach at the third party is a breach of the bank account.”

Intuit also established a data sharing agreement with JPMorgan Chase in January; in February Silicon Valley Bank and Xero made a similar move. Wells’ arrangement with Finicity is the third such agreement, but Pitts indicated the bank doesn’t plan to stop there.

“We have lots of these kinds of conversations in the pipeline right now,” Pitts said. “Early on it’s important for Wells that we show leadership, that this is possible, that we build momentum through these kinds of agreements and they’re used as a catalyst for creating an industry standard ways of doing things. We’re hoping this can constitute a sort of tipping point.”

When Wells Fargo announced its agreement with Xero it framed it as one that takes a stand against the more common practice of screen scraping. Its progress in establishing more agreements with more data companies has “felt a little bit slower than what we would have liked” because of the variety of business models among various aggregators, Pitts said.

Now Wells is hoping over time its campaign to end screen scraping becomes better understood and more easily replicable by others, by making sure its different arrangements can have have as many common elements as possible on the technology side, Pitts said.

“The strategy is to really provide quality access and quality data for consumers financial records,” said Finicity CEO Steve Smith, “to digitize and speed up the existing process thats been out there for a long time and enable speed, security and convenience of financial records.”

Posted on

10 years on: Once a first mover, Mint must work to stay relevant

Mint was an instant hit when it launched 10 years ago. It came out of nowhere, making something boring but important like budgeting kind of fun. It was easy to use, and best of all, it was free.

It was so full of promise it exceeded its new user acquisition goal of 100,000 in the first six months — by 10 times that. Two years in, it hit 1.5 million and was sold to the data aggregator Intuit for $170 million. It hasn’t had much in the way of competition — until now.

Mint today is a mobile app working to stay relevant in a sea of similar personal financial management (PFM) apps, such as Moven, Clarity and Penny. The popularity of such apps has increased over the last two or three years and will probably continue to do so with the rise of digital assistants like Siri or Alexa, automated savings and investment apps and an overall financial services shift toward customer self-service and control over their money.

Mint still stands out from the crowd, but it hasn’t been able to attract new users like it used to, said Stephen Greer, an analyst in consulting firm Celent’s banking practice. People who like managing and tracking their money carefully tend to check their accounts more frequently today than they did 10 years ago which is running Mint into the same wall blocking all PFM apps: getting secure real time data feeds from the financial institution.

“For a while, Mint was the best on the market because it was the only one on the market,” he said. “It did a good job for a while but the biggest issue for Mint, and one reason it’s gone downhill, has always been the aggregation piece. If the site isn’t accurately reflecting your spending – if it’s not live, it’s not real time, you see discrepancies – you’re most likely not going to use that service.”

Mint now has more than 20 million customers, according to an April 2016 blog post. It hit 10 million users around Aug. 2012. Mint did not provide growth figures over the last 10 years by deadline.

That friction also creates a sort of set-it-and-forget-it mentality, said Tiffani Montez, a senior analyst with Aite Group.

“One of the challenges is [PFM] is like a shiny toy,” she said. “If you try to combat the set-it-and-forget-it mentality you have to be able to provide some additional value that deepens the relationship.”

That may require a smoother flow of customer data between the customer’s bank and PFM app, like the ones Intuit just won from Wells Fargo and JPMorgan Chase. Earlier this year it reached deals with both banks that should theoretically help reduce some of the friction around data sharing. According to the agreement, Chase customers can authorize the bank to share their data electronically with Intuit’s apps: Mint, TurboTax and QuickBooks. Before, customers would give third parties their online banking passwords so they could log in and import customer account information.

Many banks have claimed that common practice compromises cybersecurity and in 2015 several of them, including JPMorgan, temporarily suspended customer data access to third-party data aggregators like Intuit.

However, how much data gets shared is unclear, Greer noted. The banks can probably share basic transactional information like how much money a customer spent in a given period or the current account balance, but might not reveal how much interest a customer is being charged on a credit card or what kinds of fees he or she is paying.

Mint said while it’s always been good at tracking and insights, it is now focusing on moving into transacting on users’ behalf, beginning with its bill pay functionality.

“In the past you got that insight but you had to take action yourself,” said Kevin Kirn, head of product for Mint. “Bill pay is just the beginning of that journey from insight to action. All our teams are looking for ways to connect that action experience through Mint.”

Perhaps the data sharing agreements will help Mint in creating more and more action experiences, but Greer is skeptical.

“Opacity is in their best interest and withholding a lot of that data works in the financial institution’s best interest,” Greer said. “My curiosity is in how much information they’re actually getting through this ‘direct connection’ and what that entails. My skepticism is around how much value that provides. I’m willing to say its not as much as it could be.”

That’s because even with the agreement, Mint is a direct-to-consumer product. Today there are plenty of companies that sell their PFM solutions to the banks themselves, aggregators like Yodlee, MX and Plaid that provide more value to the bank than Mint does. Mint makes money off its consumer business. When it comes to advice, it makes recommendations in customers’ best interest – and not necessarily in the best interest of the banks.

About a year ago Intuit shut down its financial services aggregation services, probably so it could access a market of direct connections – like those with JPM and Wells – and direct links to feed its specific services, like Mint.

“There’s just more value they can provide,” Greer said of the MXs, Yodlees and other direct-access data aggregators and infrastructure providers. “Mint hasn’t provided a whole lot of value to institutions and banks don’t want to play that game. They’d rather cut off the aggregator from getting data on consumers so the service will buffer – that’s essentially what’s happened.”

Posted on

By investing in biometrics and AI, Wells Fargo is eyeing a move into voice payments

Wells Fargo is working on a voice-first payment capability it could soon make available for consumers.

That would go beyond where the rest of industry is at with voice interface, which, for the most part, has not yet advanced beyond basic requests like, “How much money do I have in my checking account?”

In 2015 for example USAA launched Nuance’s virtual assistant, Nina, on its website. Bank of America expects to launch Erica later this year as a virtual assistant integrated into the mobile banking app. Capital One has an Alexa skill. Customers can turn to their virtual financial assistant for basic day-to-day functions, like checking account balances and credit scores of scheduling bill payments.

But all of these things just scratch the surface, said Steve Ellis, head of Wells Fargo’s innovation group, who teased the bank’s own forthcoming voice-controlled payments offering.

“These digital assistants like Siri or Alexa — these things are just starting,” Ellis said. “There’s a really big future here for how our customers interact with us. We are starting to do proofs of concept with information exchange… but the idea of moving money from a fund to someone through a peer-to-peer payments system — that’s coming.”

He didn’t specify when it would introduce that functionality but hinted it would be “a shorter time frame than three to five years.” In the meantime, the bank is exploring how it uses the artificial intelligence that provides conversational banking abilities, and is bulking its biometric authentication practices necessary to nail mobile voice banking.

People are embracing the idea of conversing with digital assistants to exchange information and even make Amazon shopping purchases. Apps like Uber have raised customers’ standards for experiences that are fast, seamless and secure. Owners of smartphone devices are getting used to authenticating using their fingerprint, even if it’s just to unlock their phones; Apple claims a user will do this 80 times a day.

Banks, however, have yet to make the customer experience completely password- and PIN-less.

“We have about 5 billion-plus interactions with our customers every year and every one of them starts with authentication,” Ellis said. “If you can’t get that right, you can’t do anything else, so that’s always our first focus.”

Wells Fargo is no stranger to biometrics. Ellis himself co-launched its startup accelerator in 2014 when EyeVerify approached it with an idea to develop eye-recognition technology for security and identification purposes. Today, Wells uses EyeVerify’s eyeprint verification for its commercial banking customers.

Chatbot provider Kasisto, which Ellis described as a Siri for financial services, was selected for the same inaugural accelerator class. Whether Kasisto has the success of EyeVerify remains to be proven but last month the chatbot startup raised $9.2 million to expand its virtual assistant offerings. Ellis said Wells is “very close” to rolling out some of those virtual assistant capabilities to select employees and customers on a test-and-learn basis.

Besides the biometric factor, Wells and its peers need to work on the quality of the AI and its speech recognition as well as its ability to truly understand and process what a customer is saying on an emotional level, said Ron Shevlin, director of research at Cornerstone Advisors and author of Smarter Bank.

“There’s a lot of potential for [voice banking] but I’m afraid we’re conflating the voice interface with the AI capabilities needed to interact in a high quality, whether it’s providing service or advice, he said. “If it’s simple types of interaction then the bloom is off the rose… There’s no economic impact, no greater levels of customer satisfaction you’ve just created one more way for someone to check their account balance or account fraud or maybe pay a bill.”

Ellis identified three markers on the road to a voice-first future: information exchange, funds transfer and personalized advice. Most banks are at the beginning. Wells Fargo hopes to be an early mover into the second stage.

That was part of the reason for refocusing its efforts inside the Innovation Group. This week it announced it would be dedicated to AI as well as payments and application platform interfaces.

“AI is a baby step right now,” Ellis said. “It’s going to really adjust the way people think of how they use their phone get information and actually do things.”