2024 is the Year of Financial Data Intelligence
January 18, 2024 | 2 min read
Jason Henrichs, CEO of Alloy Labs, and Ryan Caldwell, Founder and CEO of MX, led an exclusive roundtable for CEOs in the financial industry. The entire discussion was packed with practical insights for executives at banks, credit unions, and fintech companies. Watch the discussion and read key highlights below to know what bank CEOs must do in 2020.
Henrichs shares research about how people respond to crisis situations in a variety of ways, saying that “10% of people will respond by immediately taking action, about 80% freeze, and another 10% do the not-so-helpful ‘chicken with their head cut off’ kind of panic reaction.” He then asks Caldwell about his personal experiences decades ago in SERE, an Air Force program that stands for survival, evasion, resistance, and escape.
“It was a fascinating experience,” Caldwell says. “You go through weeks and weeks of training and then it culminates with you essentially being dropped off in the forest after they've taught you how to get your own food and how to survive off nearly nothing. And you're essentially simulating being chased by an enemy in enemy territory.”
He adds, “I remember you get pretty hungry when you're in SERE, because you're out there for a while and it seems like it's a crisis. It was like, ‘Oh, there's no food, there's no food.’ But you find things that would normally be terrible, like being parked next to an anthill, and all of a sudden it's beneficial because it's a source of food. So things that might be threats when you're actually starving turn into things that are quite beneficial.”
Henrichs makes the point that the same is true for the COVID-19 crisis. Those leaders who act intelligently and see threats as opportunities will come out ahead.
Caldwell then talks about a piece he wrote on what banks can learn from Chick-Fil-A. Chick-Fil-A had already been experimenting with their mobile ordering, but the COVID-19 crisis supercharged the entire initiative. In the past, customers would tie up a parking spot for 45 minutes while they ate, but with easier digital access, customers could pull up to a parking spot, signal via a mobile phone that they were there, get their order, and go. As a result, Chick-Fil-A saw outsized revenue even during a crisis.
Caldwell also talks about how the more people use services such as Instacart, the more they’ll get used to the process and won’t go back. “They now think that that's how they shop when they're low on milk,” he says. People think, “I've got a two hour delivery window for Instacart … so I'll just do that.” He says, “You're watching human behavior shift faster, down a path they were already going.”
Henrichs points out that customer service in the digital age often does not look like it did in the past. “What makes your great return experience at Amazon isn't that it was super friendly,” he says. “It's that it was totally streamlined. They made it as easy as possible. The fact that you can return things without packaging now is just like, ‘Why go to a store and have to stand in line when I could just go drop it off?’”
Caldwell agrees, saying, “If you ask somebody, ‘How do you feel about customer service with Amazon?’ Almost everyone will tell you, ‘Oh, it's amazing. It's so easy. It's so fluid. It works so well.’” But the experience often doesn’t have anything to do with interacting with a customer service representative. “They didn't see someone; they didn't even talk to anyone on the phone. And yet they have this huge association of good customer service,” Caldwell says. The difference is that Amazon prioritizes personalized service, which is what people really want.
In the same vein as offering personalized customer service, Caldwell points out that the modern lifestyle is so full of interruptions that people increasingly prefer asynchronous communication over synchronous communication.
Henrichs agrees and says that he saw the same preference in a prior role. “We launched live chat on our website,” he says, “and it turns out that live chat suppresses conversion.” By contrast, when the chat window said, “No one's available right now. Do you want to just leave a message and we'll get back to you?” Henrichs saw “a dramatic increase in conversion.” He adds, “People actually did not like the idea of chatting with someone live, but they liked the idea that they could leave a message in real time. It fit into their lifestyle. It's something we couldn't have predicted. It was kind of the opposite of what we expected.”
Henrichs says the financial institutions he works with that are thriving are the ones that made data a foundational investment early on. As a result, they’ve been able to build features such as intelligent chatbots that helped during the rollout of the Payroll Protection Program.
Caldwell says that too often people chase “shiny objects” such as chatbots or auto-investing or auto-saving without understanding what is required behind the scenes. “They feel this urgency to immediately turn on that experience for that end user,” he says. “The problem is that you can't do that successfully without having the right underlying data. … If a chat bot can't understand the nature of your transactions, it doesn't matter.”
“We see the same thing with autosaving,” he continues. “If you can't properly estimate cashflow because you don't understand the nature of the transactions, it doesn’t help the end user. These really cool ideas and concepts up at the high level become manifestations of a larger data strategy.”
“I remember one of the most magical banking moments I had was with USAA,” Caldwell says. “I logged in to look for how to do a wire, and I couldn’t find quite what I needed online. So I called their number. And when I called the number, it immediately recognized it was my cell phone. It recognized that it was me calling and immediately said, ‘It looks as if you were searching for wires online. Would you like to go straight to someone who specializes in wires?’ And I was like, ‘Yes.’ And it took me there. It was amazing. It felt magical.”
He says that financial institutions should look to that example in all interactions from digital to voice to video conferencing. This requires adding a secure intelligence layer to the entire experience, but it pays off tremendously in the long run.
Caldwell talks about how helpful GPS technology is in showing people where they are and how to get to where they want to go. To do this, GPS technology triangulates a person’s position, using a range of data sources.
The same thing is possible with finances, though it requires triangulating all of a person’s financial accounts — investments, checking, savings, loans, etc. — in one place. In addition, it requires enhancing customer data so they can instantly make sense of it. This ability to aggregate and enhance data is foundational to creating the GPS of finances going forward.
To do this well, it’s essential to offer a financial feed in the vein of the best social media networks. “We can either try to be magically clairvoyant and imagine when someone might need a mortgage, or we can give them a feed of all their insights of what things might matter to them financially,” Caldwell says. He talks about offering personalized and insightful data mixed with educational materials. “There are all these things that you can provide by analyzing their data that protects the user financially,” he says. “But then it also gives you data back to say, ‘Hey, this person's really exploring. They're learning about a mortgage or whatever it might be. This is the right time for us to reach out.’”
Caldwell puts the opportunity succinctly, saying, “The real lesson in this is that if a bank doesn't do it, then another bank or a fintech will, and that user's attention is going to shift there.” In other words, the customer will go where they can get the most seamless, personalized, and data-driven service in the market. And the organization that provides that service will win.
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