Entrusting New Tech to Manage Our Financial Lives
AI, chatbots and APIs are changing how money moves and business gets done.
In the race for our digital attention, banks have settled into the tortoise approach: steady and cautious. It's a pace that's suited their customers, too. On the average, Americans are more likely to use their phones to shop or check Facebook than to manage their finances.
But that's beginning to change.
Startups and industry stalwarts alike aim to capitalize on our growing acceptance of technology in our financial lives in order to simplify the ways in which we spend, save and invest.
On-Demand Automated Tellers
Digital assistants like Apple's Siri are starting to become tools in our everyday lives, and banks are getting onboard.
Capitol One, for example, is bringing 'bots to banking using Amazon's Echo platform. Customers can ask Alexa to track recent transactions, get account balances and pay bills. The service uses OAuth, an online authentication standard, to handle sensitive account information. Alexa doesn't know customers' account information, so if the device is compromised, hackers can't clean out accounts.
Capitol One says it's critical that users can speak naturally with the 'bot. The team developed APIs that integrate with Alexa's natural language processing software. The service recognizes 150 query phrases—How much is my next car payment? or How much did I spend last weekend?—taken from the analysis of data gleaned from the company's call centers. Speed of response is critical for these 'bots.
"Unlike a web page where you have process bars, when you have a silence from an Echo, it is ten times more painful than a web page, so you have to have extremely responsive APIs," said Scott Totman—head of mobile technology, payments and innovation at Capital One—at a 2016 industry conference.
Historically, people have had to do plenty of homework to play the markets; but in these busy times, that can be overwhelming and intimidating. Robo-advisors are one way to invest without having to do a deep dive into financial markets.
Using front-end programming frameworks like Backbone.js and Ember.js, robo-advisor services ask investors a series of questions to get an idea of their risk tolerance and investment philosophies. From there, they use machine-learning algorithms to suggest the best investment options and manage clients' holdings.
Generally, robo-advisors make the choices for consumers based on their investment risk profiles. But micro-investing firm Stash gives people the option of investing as little as five dollars in their preferred funds, rather than forcing algorithmic decisions on them. This way, users continue to control their money, but with the help of AI suggestions—the best of both worlds, since even the best AI can't quite predict every twist and turn of the market.
APIs to Process Payments
While many of the emerging banking technologies are consumer-focused, businesses aren't being left behind, either. New digital payment services enable on-the-spot payment collection, eliminating tedious invoicing processes and giving executives at the office up-to-the-minute transactional information.
Payably, for example, is an app that syncs remote workers to QuickBooks Online at the office. Employees of, say, an appliance repair company can accept payments in the field, and those payments appear automatically in the firm's financial software, allowing company leaders to pull accurate revenue reports at any time. Currently, Payably works with QuickBooks, but it may expand to other financial software in the future.
"We have leveraged a wide range of the [Microsoft] Azure infrastructure and services to Payably's full advantage," says Robert Fifield, co-founder of Payably and COO of Avalon Solutions Group, which launched the app.
With the help of this all-in-one platform, businesses are able to scale quicker through automation and increased operational efficiencies.
The risk-averse nature of the financial world—and the compliance and security considerations required to protect individuals' and businesses' funds—means it's unlikely that banks will ever be early adopters of technology. But financial institutions cannot be complacent, either. These innovations enable people and companies to manage money more easily, without sacrificing the sense of security that comes from dealing with a teller at the local branch.