Could voice banking help your community bank?

Some community banks are dipping their toes in voice banking, which allows customers the ease of banking directly through their smartphone or smart home device—no hands necessary. Is it time your bank considered this emerging platform?

By Colleen Morrison

“Alexa, pay my electric bill.” And just like that, your payment is made.

OK, there may be a few more steps, but the payment is completed without you having to log in on a mobile device or computer. But, more importantly, this voice-activated transaction may occur while you’re preparing dinner or sitting in traffic or doing any number of other activities. In today’s fast-paced, multitasking society, voice banking may offer a true lifestyle fit.

Quick stat

20%

of U.S. adults, or 47.3 million people, have access to a smart speaker device like the Amazon Echo or Google Home

Source: Voicebot.ai

Today, nearly half of all Americans have access to digital voice assistants, including those built into smartphones. In addition, 47.3 million U.S. adults are users of smart speaker devices like Amazon’s Echo or Google Home, and that number is growing. In the third quarter of 2018 alone, 19.7 million smart speakers were purchased, a 137 percent increase over the previous year.

These smart solutions are finding their way into banking. There are plentiful opportunities for banks to cost-effectively explore voice banking on a scaled basis—from simple products that check account balances to more focused technologies that support payments.

For example, FIS was recognized as “Best of Challenge” for its MyBanker product at the 2018 PYMNTS.com Voice Challenge with Amazon Alexa. Fiserv offers Voice Banking: Amazon Alexa to enable customers to check balances and access transaction information. Fintech company ENACOMM offers virtual personal assistant banking to community banks, integrating with core providers and offering a hosted, dynamic interactive voice response solution. And a new offering from Jack Henry marries Amazon’s Echo technology with existing bill pay services to create a voice-activated solution. The company has plans to expand the service to p2p payments via the Zelle network this year.

“We’ve recognized over time there’s been a growing trend of voice technology,” explains Greg Adelson, vice president of Jack Henry & Associates and general manager of Jack Henry & Associates payment business units. “It’s less about the utilization, and it’s more about the perception of the offering.”

Talking the talk

But where does implementing voice banking fall in a community bank’s ever-expanding to-do list? And what are the cost considerations? Each bank will evaluate the offering in line with its business strategy, and every institution is different, but experts agree that voice banking may not immediately rise to the top of the stack.

“[Voice banking] is going to be lower in priority,” says Kevin Tweddle, chief operating officer of the ICBA Services Network. “It’s a nice-to-have, not a have-to-have today. That may change two or three years from now, but from where we sit today, that’s how I view it.”

Todd Wood, e-manager and digital banking manager at $1.5 billion-asset Avidia Bank in Hudson, Mass., concurs. The community bank has decided to offer voice banking as a customer benefit, but it isn’t expecting immediate returns.

“It’s more of a value-add than a revenue generator,” Wood indicates. “This isn’t going to be, ‘Everybody’s going to run in because Avidia’s got voice banking.’ Once fully available, we are going to advertise to our customers, ‘Hey, this can make your life easier,’ and we hope that brings in additional deposit dollars or additional transaction usage where there are real revenue generation streams.”

Customers are speaking up

Digital voice technology has embedded itself in American culture and transformed consumer expectations, and there’s no slowing in sight. Several reports point to a continued rapid rise in technology prevalence and adoption.

46%

of Americans use digital voice assistants, according to the Pew Research Center

34.9%

Compound annual growth rate of the global intelligent virtual assistant market between 2016 and 2024, according to analysis firm Global Market Insights

7.5 billion

voice AI-capable devices will be active by 2021, Ovum predicts

Risk vs. reward

While it may not be priority number one, voice banking—and its array of potential offerings—may be a way to deepen customer relationships. Paying a bill via a community bank’s Alexa feature may mean the customer shies away from biller-centric payments and embraces a bank’s bill-pay offerings. If a community bank enables voice-activated p2p payments, customers may be more likely to use their bank’s infrastructure. Ultimately, voice banking could act as a gateway to enhanced customer engagement.

“If you look at voice banking, it really doesn’t move the needle on things like growing revenue and cutting costs,” Tweddle points out. “But using something like voice banking allows for a better experience for your customer base. You’re able to better please that customer just by making it easier and simpler to do business with you.”

While things may be streamlined for customers, risk and compliance issues are far from easy when new voice service providers are involved.

“Compliance is definitely a big, big piece,” Wood notes. “You hear the stories on the news where a 5-year-old ordered $10,000 of stuff off of their smart TV by telling Alexa to order everything that came on the infomercial. What security pieces are you putting in? Are you making someone authenticate themselves every time they do a monetary transaction? Has your vendor done enough due diligence to make sure the system is secure and the controls are in place?”

The good news is that the voice banking products available today have scalability to help financial institutions manage their risk tolerance. For example, some solutions will only allow for customers to check their balances after authentication, while other technologies offer transactional services, with varying degrees and types of identity verification. This allows the bank to make a decision about how deep it wants to go in voice banking and customize their offerings.

“If you’re looking into a product, sometimes you have to get your hands dirty,” advises Tim Shangle, digital channels and marketing officer at $650 million-asset ChoiceOne Bank headquartered in Sparta, Mich. “With [voice banking], you have to go out and get an Amazon Echo and just try it and really kind of play with it.”

Experimentation aside, the decision to implement voice banking may come down to meeting customer expectations.

“Customers—not just millennials or Generation Z; it’s baby boomers as well—expect the same digital experience whether they are going to the Amazon website or to choiceone.com,” Shangle says. “They expect certain features. When our bank doesn’t provide it, they want to know why we don’t offer it.”

Alexa-enabled bill pay

For ChoiceOne Bank in Sparta, Mich., adding voice banking was a no-brainer. It chose to dip its toes into this particular tech by leveraging Jack Henry & Associates’ iPay QuickPay, a voice solution that integrates consumer bill pay functionality with Alexa smart speakers.

“Everyone was in favor of it, and a lot of it is because we have such a great relationship with Jack Henry. It’s very different than if a third-party fintech startup came in and pitched the idea of doing this versus a Jack Henry,” says Tim Shangle, the bank’s digital channels and marketing officer.

ChoiceOne conducted an assessment of what it would take to offer QuickPay and decided to move forward. Because the bank already launched with iPay, it saw a turnkey implementation and an ongoing low-cost service with the addition of QuickPay. Plus, key authentication safeguards are built into the solution to protect customers against fraudulent transactions.

Shangle notes that there is one downside. The bank expects to see more customer service queries, including calls from customers who forgot their Amazon ID or aren’t sure how to use their online bill pay. But the frontline team is prepped and ready to answer questions.

“The biggest reason why we’re [offering QuickPay] is we’re meeting customers where they’re already at,” Shangle says. “We have all kinds of online stuff, but still, a lot of our commercial lenders will drive to the apple orchard and get the farmer off his tractor to sign loan documents. Alexa is just one of those other places or channels that our customers are already at.”


Colleen Morrison is a writer in Virginia.

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