Imagine, if you will, the big bank as an incubator.
In the year that bitcoin began to grow up and Apple Pay was born, this is precisely what the country’s largest financial institutions want you to imagine. Three of them opened up innovation labs to think of what’s next in mobile banking; some are starting their own accelerators. The latest research estimates that U.S. mobile payments, currently at $52 billion, will grow to $142 billion within five years.
Now an industry not exactly known for speed is approaching 2015 with an ethos that sounds more Silicon Valley than Wall Street, touting visions of semi-automation, wearables, and the kind of futuristic security they hope will inspire consumers to trust them and their technology in the first place.
Whatever threat Apple Pay may represent to banks’ technological edge, the reasons behind their geeky turn are much bigger. Look no further than the millennials who believe that someday soon, they’ll be able to live without them. In an age of social media and upstarts like Square and bitcoin, big banks, according to one recent study, make up four of the top 10 most hated brands among people born between 1981 and 2000. But the purchasing power of these young people is estimated to be enormous—around .
Next year, bank executives say, automated systems will help address long-standing customer requests, like the ability to withdraw more cash at ATMs, spend less time waiting in line at branches, and even leave their wallets at home.
At Chase, the robots are coming, but they’re not completely taking over. The bank intends to roll out a half-automated ATM in 2015, says Brad Nolan, head of the bank’s branch and ATM innovation. Though he couldn’t specify locations, the machines will likely be first adopted at select California and Ohio branches before spreading across the country in the coming years.
“We’re going to be equipping our tellers with tablets inside of the branches,” he says. “Customers can withdraw more cash and our risk systems can alert a teller if a secondary form of ID is needed. We’re really trying to not just focus on self-service. It’s this whole concept of assisted service.”
The bank began rolling out its first form of eATMs earlier this year in a few locations, including Silicon Valley branches. “If you put that experience out there and enable customers to do what they want to do, they’ll use it hands down, day in and day out,” he says.
This also means getting rid of cards altogether. Starting in 2015, tellers equipped with tablets—they didn’t say which kind—will be able to access account information with just a customer’s fingerprint. “There’s still a lot of customers who don’t have debit cards,” Nolan says. “Now customers will be able to come in, and if they don’t have a card, no problem.”
Bank of America’s new Teller Assist ATMs combines on-screen tellers with an ATM that dispenses many more denominations of cash than normal. Starting in 2015, the bank also plans to convert all of its credit cards to chip-embedded EMV cards, which offer greater security features.
Banks close earlier than most other businesses, which is why Wells Fargo, Chase, and Bank of America are all planning ways to use video as a focal point for customer interaction in 2015.
Bank of America e-commerce technology executive Hari Gopalkrishnan says that kind of convenience is the biggest demand he gets from customers. Nolan, Chase’s ATM innovation head, says banks need video more than any other industry. “We’re interested in how you can make this enable devices that we manage, like ATMs, bank kiosks, all the way to a live chat session from a customer’s computer at home or on their mobile device.”
With 13 million mobile users, Wells Fargo will be continuing pilot research on videoconferencing with tellers between users’ tablets and TVs.
“When making important financial decisions, video is going to be key to connect bankers with our customers where and when they want,” says Jim Smith, head of Wells Fargo’s Virtual Channels Group. He says the bank plans to integrate apps for Google Glass as well. In a demo, the bank showed clients using Glass to scan checks and credit cards in order to pay bills in order to authenticate themselves to a teller on the other side of a videoconference.
The bank also created an Oculus Rift prototype that allows customers to walk into a virtual branch, and Capital One has been experimenting with the VR headset too, but neither look terribly impressive. Fidelity has announced an Oculus vision that would enable users to view their stocks in the form of a three-dimensional city.
Closer to production is Wells Fargo’s connected car concept, which addresses the 30% of Wells Fargo’s customers who prefer drive-through banking. In 2015, a second round of testing will include making payments at bridge tolls, drive-throughs, and eateries. MasterCard—which is also working on connected car payments—presumes “you’ll be able to order ahead from a gas station without taking hands off the steering wheel,” says chief innovation officer Garry Lyons.
MasterCard recently demonstrated mobile payments between smartwatches and laundromats, and will be piloting payment-enabled refrigerators in 2015. Though the details are still under wraps, this will likely include a screen like the kind seen on modern soda machines, only it would give users the option to buy groceries for pickup or delivery.
“If I’m running out of eggs or milk, depending on the intelligence in the device, the fridge will notify you when you need milk, eggs, or whatever you need,” Lyons says. “The technology is already there so we don’t need to invent anything new, we just need to deploy our scale.”
Chase and Wells Fargo are both planning to include services that allow customers to “check in” to a branch. Chase’s, called “You Know Me,” will enable tellers to expect who’s coming in, and to bypass basic questions. Wells Fargo intends to launch a pilot with Bluetooth beacon technology in 2015, allowing customers to opt in to be recognized when they enter a branch. Services like this—already being tested at some Apple Stores—are meant to target the customer who spends more time in the bank.
Wells Fargo has developed a separate beacon system for use in several retailers and mall operators like Macerich to analyze in-store shoppers in real time, suggest targeted discounts, and allow them to make on-the-go payments from their phones. Such concepts were used in the bank’s recent smartwatch interface prototype, which also offers users budget milestones: “Do you want to make a payment now,” or “Congratulations—you’ve reached your savings goal!” Think Fitbit for banking.
With all of the plans to rev up banks’ technology, there’s more of a need for security than ever. And even the most formidable firewalls haven’t proved safe: In June, JPMorgan Chase suffered a massive hack that affected over a million customer accounts.
Enter biometrics, say the banks—fingerprints, handprints, voiceprints, and more. “You authenticate yourself before you make a payment; why can’t you authenticate yourself before you walk into a bank?” says Chase’s digital director Avin Arumugam, who worked on the tokenization of Apple Pay and who is developing palm-scanning ATMs.
Starting next year, big banks will be using biometrics not just for authentication but also so that users can perform hands-free mobile banking on their phones or in their cars.
Jim Smith, of Wells Fargo, says users will be able to ask things like, “How much did I spend in September? “How much money was deposited into my account yesterday?” and “How much did I spend at Starbucks last week?” Users will be able to use their voice to do things like sort through transaction history, move money, and make payments.
“One of the biggest findings from the pilot was how voice made everything so much more convenient,” Smith says.
The bank expects demand for services that make mobile banking easier, in keeping with a rise in mobile customers. Chase has 23% more mobile users from a year ago and saw a 61% user jump in its QuickPay feature. And wearables like Apple’s smartwatch are set to bring in more users who want to be able to conveniently bank without the use of many buttons.
Chase’s Brad Nolan says all these biometrics won’t just improve customer experience but that of bankers as well, “from a holistic ‘How do we manage the branch?’ perspective.”
“We have all kinds of keys within the branch for locks, codes, and sign-on passwords, and biometrics can provide a very easy way for our employees to access a branch, navigate within the branch, open a vault and those types of things,” he says.
Among the stranger authentications in the works for 2015 is MasterCard’s collaboration with heart rate biometrics company Bionym, whose wearable device connects to an ECG sensor that reads the electrical impulses of a user’s heart.
Lyons describes the idea as part of a new phenomenon called “Persistent Authentication,” enabling him to do things like “make a payment with my mobile device without a password and the potential to unlock anything that requires a key,” he says. “When I leave my house, it locks the door. I walk to my car, it unlocks the car, and it sets my seat settings. I walk to the office, it automatically lets me in. I walk to my laptop and it automatically logs me on.”
Wells Fargo has also begun experimenting with Google Glass, which would be worn by tellers to scan guest’s faces to authenticate and bypass questions. Arumugam, Chase’s digital director, says he’s not sanguine about the whole face-scanning idea, preferring instead to use his phone as his banking device.
“I’m not going to sit here and talk about using people’s faces for our tellers to scan,” he says. “The technology is interesting but I think we are really protective of our customers’ privacy and understanding how we want to interact with them. How we blend that [technology-advanced authentication] in with the consumer, with the real world—that’s the challenge.”