Bankers See AI Casting a Long Shadow

By Kevin Flanagan, Marketing Director, Micronotes

To paraphrase Paul Revere, “AI is coming! AI is coming!!” And that includes machine learning, too.

That was one of the key findings in a new research report published by The Economist Intelligence Unit.

The researchers asked more than 400 retail banking executives worldwide to estimate the impact a variety of technologies, new competitors, and other factors are likely to have on the banking industry over the next several years.

Now, regular readers of this blog know that artificial intelligence (AI) is already having a significant effect on the banking industry, as an increasing number of institutions leverage AI machine learning to connect with their digital users, who rarely visit branches these days.

But it’s always interesting to read the opinions of bankers about which factors will make the most significant impact on the industry moving forward. That’s what this report provides.

The survey first asked bankers to rank the trends that will have the biggest impact on retail banks next year.


AI machine learning and other cutting-edge technologies outpaced even the changing requirements of customers, which often have the most significant impact on the future direction of any industry.

The survey then posed the same question, but asked respondents to look out an additional five years.


Bankers anticipate that AI machine learning will have an even greater impact on their business by 2025.

The takeaway from surveys like this is pretty simple: The pace of change brought about by technology will continue to increase.

With all the pressures on retail banks—competition from national institutions, efforts by non-bank fintechs to capture lucrative swaths of banking business, and the often fickle preferences of consumers—the time to adopt technologies such as AI machine learning that can help bankers connect with their digital customers isn’t five or six years in the future.

It’s today.

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July 3, 2019 0 Comments

For Bankers, Sales is a Game of Follow the Lead

By Kevin Flanagan, Marketing Director, Micronotes

When it comes to successfully selling financial products and services to current bank customers or credit union members, there is one rule that proves accurate time and again: Leads turn into sales.

And to generate those leads, you need to engage with your digital banking users and ask them questions about their lives in order to uncover the needs that turn into leads that become sales.

In examining the latest results from financial institution clients using Micronotes AI-driven engagement and sales platform, one thing is clear: banks and credit unions that use the in-session and logout interviews enabled by Micronotes to ask users about their lives and what they need are generating the most leads.

Here are some of the insights gleaned from recent client results:

  • A $1.4 billion bank in the mid-Atlantic region more than doubled the number of interviews it conducted vs. the previous month. Leads created jumped more than 160 percent, and sales rose by a sizable percentage, as well.
  • A small community bank in the upper Midwest increased the number of customer interviews it conducted by more than 300 percent. This resulted in a 25 percent increase in completed interviews. But, more importantly, those interviews generated a 100 percent increase in leads.
  • An East Coast community bank increased its completed interviews by a modest 19 percent over the prior month. But they still doubled the number of leads generated.
  • A West Coast credit union with more than $5 billion in assets increased the number of campaigns it ran by just 16 percent, which increased the number of interviews completed by about 5 percent. But even such a modest rise in completed interviews increased leads by more than 45 percent.

It’s important to note that not all Micronotes campaigns are designed to sell products and services. Our clients typically run about 40 percent or more of their campaigns to educate digital users about financial issues, security topics and the like.

And not all leads turn into sales instantly in any industry.

But in a world where it takes leads to make sales, we see a solid track record of success for financial institutions that engage with their digital users more frequently. In other words, they follow the lead, which leads to success.

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June 28, 2019 0 Comments

How to Achieve Deeper Relationships and a More Compliant Bank

By Kevin Flanagan, Marketing Director, Micronotes

More and more financial institutions are deploying Micronotes’ AI-driven solution to engage with their customers and drive sales and revenue growth. But there is another important benefit that our machine-learning platform delivers.

Banking is one of the most heavily regulated industries. Most governments around the world recognize the need to ensure that financial institutions handle the money of people and businesses in a legal and consistent way. Banks and credit unions employ teams of experts who are responsible for ensuring compliance with myriad regulations.

Most of our clients run two primary types of campaigns with their customers and members. The first is campaigns designed to help people choose the right products and services for their money. The second is what we call “quick facts,” which is a broad category of conversations conducted with digital banking users during and at the conclusion of online banking sessions.

Quick facts range from quizzes about upcoming holidays and community events to recycling days and opportunities to support charities. But while some quick facts have a lighter tone and are intended to share information and build a sense of community, other topics ranging from cybersecurity tips to financial literacy are where the compliance angle comes in.

Many of our clients use Micronotes campaigns to educate their customers and members about important topics related to their financial well-being.

On the topic of cyber security alone, financial institutions face a number of requirements—from multiple regulatory bodies—to educate their customers about cyber threats and how to protect themselves and their assets.

So, not only do our clients use Micronotes to build deeper relationships with their customers and members, they also are using our platform to comply with industry regulations. And we’re proud to help them with that important work.

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June 21, 2019 0 Comments

Does Monzo Mean Gonzo for Traditional Banks?

By Kevin Flanagan, Director of Marketing, Micronotes

This week’s announcement by Monzo, a UK-based mobile-only “bank,” that it plans to offer its services in Los Angeles this summer generated a lot of media coverage. Most of the articles described Monzo’s success competing against traditional banks in the UK and predicted it could do the same in the U.S.

Not so fast.

First of all, Monzo, the self-proclaimed “bank of the future,” isn’t actually a bank, so it is partnering with Sutton Bank to make its first foray into the U.S. market. And second, if Monzo—or any other mobile/digital/app-only financial company becomes successful in the U.S. it will be partly because of the products and services it offers, but it will be mostly because the majority of traditional financial institutions let it happen.

statement by Monzo’s CEO, Tom Blomfield, provides key insights into why incumbent banks could turn out to be their own worst enemy.

“When it comes to consumer apps, banks are at least a decade behind the ease and feature-set of a Lyft or an Airbnb, not to mention sloth-like and unimaginative when compared to the innovation cycle in the apps we use every day,” said Blomfield. “With Monzo, we aim to make money work for everyone by working with our community of users to build things that work for them.”

Essentially, Bloomfield is saying is that consumers increasingly prefer digital applications to perform many of the tasks, such as hailing a ride, that used to be done less efficiently. And he’s saying that banks are failing to give consumers modern convenience and fingertip access to their services.

Many savvy bankers see the future and know it’s digital. And they’re working hard to give their customers the ease of use and always-on availability to their banking that they get from their transportation and entertainment.

Way back when I was a freshman in college, I began working as a bank teller at a local bank. During my tenure, each time a new technology debuted, such as ATMs and paying bills by phone, there was widespread dismissal of these new ways of doing things. But such conveniences—and many more like them—quickly became commonplace for all banks.

If people want to do most of their banking digitally, there’s no reason traditional banks can’t accommodate them. Many already are. And those are the institutions that will fare best when Monzo and others like it come to town.

Legendary bank robber Willie Sutton is alleged to have answered the question “Why do you rob banks?” with a pithy “Because that’s where the money is.” While that tale is taller than most, the basic concept can be applied to the efforts of digital upstarts to disrupt banking.

There’s no question that people like the convenience of digital banking. Therefore, it’s up to banks and credit unions to “go where the customers are” and offer robust, feature-rich digital solutions, using artificial intelligence and other powerful technologies.

If not, maybe they will be gonzo.

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June 14, 2019 0 Comments

When Did Selling Become Bad for Business?

By Christian Klacko, Cofounder and COO, Micronotes

This week I attended a webinar with an interesting premise: It used Netflix as an example of how to successfully engage digital customers. The presentation focused on how bankers can take some tips from the Netflix playbook to meet the needs of customers who rarely visit branches.

After the initial compliments for all things Netflix, the presenters showed a screen shot from an anonymous bank’s website. Thinking this could be a good example of how bankers can engage digital users, I was curious to see where the presentation was headed.

I was quite surprised to hear one of the presenters say “Here’s an example of what not to do,” as she went on to say it didn’t matter which bank website she showed, because “of the hundreds of websites that we’ve gone through… a lot of them are virtually the same.”

She leveled the criticism that “95 percent [of bank websites] are focused on getting customers to online banking, and then beyond that to upsell and cross-sell and get them to those opportunities. So, the website for many is being used for selling, and not for transactions or support.”

What type of business is interested in selling products and services to its customers? Just every one I’ve ever worked for or engaged with!

Of course, providing easy access on your website to whatever information the visitor seeks is a good idea. But in a webinar aimed at bankers—who universally struggle to engage with customers they seldom see—being critical of efforts to drive revenue growth by also focusing on selling really misses the mark.

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June 7, 2019 0 Comments

“Hey, Erica, Make Me an Offer”

By Kevin Flanagan, Marketing Director, Micronotes

This week, Bank of America issued a news release touting that Erica, its digital banking assistant, completed 50 million requests for 7 million BofA digital banking users in its first year of operation. The announcement was picked up by many media outlets over the next few days.

Those big numbers are not surprising, given that Bank of America is one of the world’s largest banks.

But, if you dig deeper into this story, one thing stands out: Erica is very good at responding to customer requests, but there’s no mention of Erica being able to initiate conversations or make personalized offers to those 7 million customers. In other words, Erica’s sole function is to respond to questions from people about their personal finances.

Now, I’m not saying this type of engagement isn’t valuable, wouldn’t it be more valuable to Bank of America, or any bank or credit union, if they could use artificial intelligence machine learning to begin conversations with digital users? And I don’t mean just starting a conversation with “Hello” or “How may I help you?”

What if financial institutions had a platform that could really engage with digital banking users by using predictive analytics to anticipate our needs and make personalized offers?

Whenever we log in to the website or mobile app of our bank or credit union, the institution knows who we are and has our financial details handy. That’s how we can make deposits, transfers, pay bills and all the other tasks we perform.

But wouldn’t it be more useful to the institution—and to us—if our bank or credit union could use our financial data to offer us a better deal on our checking account, or suggest we move some of the money we have in a low-yield savings account and into a higher-interest CD or money market account? Or what if there were an AI solution that knew we had a mortgage with our bank and could offer us a home equity line of credit? That would truly be a win-win for the bank and us.

I guess we’ll just have to wait for some innovative company to come along and develop an AI machine-learning platform that does more than just perform basic banking functions that we request. Until then, well, we’ve got Erica….

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May 31, 2019 0 Comments

Putting the Person in Personalized Banking

By Christian Klacko, Cofounder and COO, Micronotes

May 17, 2019

I’m always interested in articles that discuss how businesses—particularly financial institutions—can use technology to deliver a more personalized experience to their customers.

Recently, I read an article from The Financial Brand titled “Personalization in Banking Can’t be Disguised as Cross-Selling.” Written by Executive Editor Steve Cocheo, the piece featured excellent insights on the subject from Alyson Clarke, principal analyst at Forrester Research, where she covers banking.

The banks and credit unions we do business with know a lot about us, at least when it comes to our finances. And, when you think about it, that gives them a great deal of knowledge about our lives. This knowledge provides financial institutions with a tremendous opportunity to deliver personalized service and build deeper relationships with their customers and members. But are bankers taking advantage of that information to build strong customer relationships? And isn’t that especially critical when it comes to digital banking users, people who rarely if ever visit a branch?

Clarke told a story about receiving a “Happy Birthday” email from her bank. A nice gesture, but that’s all it was—a gesture. There was nothing really personal about it, and nothing that provided her with any tangible benefit. Contrast that to the actions of a retailer Clarke patronizes. They sent her birthday greetings, too, but they included a discount on a product she had purchased previously and was likely to buy again. The article accurately states: “her bank knows much more about her than the [retailer] does, but the birthday message from the store meant much more than the bank’s.”

The article also cites a Harvard Business Review report on the value of personalization: “When executed effectively, strategic personalization initiatives, can drive significant revenue impact… fostering greater customer loyalty and retention.” That’s a message that any business serving consumers should take to heart, especially financial institutions.

But, that’s not happening—at least not to the extent it should be. “While most banks and credit unions recognize the value of personalization, however, they lag in building the capability,” The Financial Brand wrote. “Less than 10 percent of the industry has actually deployed advanced personalization technology, according to the Digital Banking Report. The truth is that simply stamping a consumer’s name at the top of a message means very little, no more than would sewing one’s name in an off-the-rack garment make it ‘tailored.’

As Clarke defines it, ‘Personalization is an experience that uses customer data and understanding to frame, guide, extend, and enhance interactions based on that person’s history, preferences, context, and intent.’” As she put it: “personalization means adding value. If you’re not doing that, you aren’t really personalizing.”

And that’s a lesson all banks and credit unions must remember and act on. They have the information required to deliver highly personalized service to digital banking users. They just need to use it effectively and, well, personally. The upside of doing this is huge. The downside is a huge problem.

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May 21, 2019 0 Comments

Empowering the Digital Marketer

[On Tuesday, May 7, Devon Kinkead spoke at the annual Fiserv Forum client conference in Las Vegas. His presentation, “Empowering the Digital Marketer,” was part of the Forum’s session on artificial intelligence and analytics. Following is a transcript of his talk.]

By Devon Kinkead, Founder and CEO, Micronotes

While attending the MIT Sloan School of Management, I got interested in big data and analytics. And I realized there was an opportunity to transform digital businesses that had two things: a lot of customer data, and high number of website visits, which is exactly what financial institutions have.

That led to the creation of Micronotes.

Let’s talk about the marketing function in financial institutions. Bank and credit union marketers have a tough job. They have to figure out what people want—without ever seeing them, in many cases—as customers seldom come into branches anymore. It’s a challenging problem.

Marketers have three main tools to work with today: email marketing, direct mail marketing, and advertising. As you probably know from your own behavior, you don’t interact with these items very much. You probably ignore spam, don’t click on advertising, and throw away most of the stuff that arrives in your mailbox. That’s why the efficacy of these tools is pretty low.

However, when you add artificial intelligence (AI) to the marketer’s toolkit, you supercharge the marketing function. That’s because, suddenly, a whole lot of data comes to bear on the problem. You can get the experience right on the customer side, and you can get a lot of user interaction, which is important.

Using AI, you can get customers to tell you explicitly if they’re in the market for a product or service. And that leads to the ability to make offers to truly in-market consumers and not aggravate those who are not in the market. And you can also let the consumers actually train the data model, which is where the machine learning element of AI comes into play on the Micronotes platform.

Let’s unpack a few of these things. First is this notion of data-driven dialogue. Micronotes takes in about six months of customer data from our bank and credit union clients. We create a time-search data set, and we turn classifiers loose on that data set, to classify everybody into essentially a probability matrix that tells us whether or not we should talk to a particular customer about a particular product.

The next thing that happens is Micronotes launches a 10-second interview (which looks a little bit like a survey) during customers’ mobile and online banking sessions. We ask questions such as “Are you interested in an auto loan?” or “Are you thinking about home repair?” and so on.

And the customer responds—with quite a bit of honesty—”Yes,” “No,” or “Maybe.” Then, if they are in the market for the product or service being offered, we create a lead that goes to the bank’s front lines. Or we handle it directly by sending the customer to the loan page or the CD page, or whatever page matches what they’ve told us interests them.

Even if the customer says “No,” it’s okay because that response becomes a piece of training data for the classifiers. That’s how machine learning works. Any response, positive or negative, is fed back into the system, training it to be even more accurate with each subsequent customer conversation.

If you’ve ever given a thumbs-up or thumbs-down to a recommendation from Netflix, you are training the Netflix machine by providing data for algorithms running in the background. You’re helping them figure out what programs to recommend the next time you log into Netflix.

The great news is when customers actually have the power to say explicitly whether they’re in-market for a particular product or service, that means all the marketing you do from that moment forward is focused on a legitimate need, which is a really powerful idea. And it’s something the world desperately needs.

And this notion of letting customers train the data set and personalize their own experience is another extremely powerful idea. At the end of the day, it means the financial institution is quickly learning from its customers, and marketing only to people who are explicitly in-market.

The results are pretty amazing. Most of our customers engage up to 20 percent of their entire digital population in any given month. If you do the math, that’s a learning curve about 20 times faster than what you can achieve with targeted advertising. And that’s huge because, as we know, fast learners get to the finish line first. And fast-learning financial institutions are more competitive than slow-learning ones.

With Micronotes’ AI-driven marketing automation platform, 100 percent of the marketing that takes place is focused on validated needs. If you pick up the phone and call a customer, it’s because you have validated that they are not only a high-propensity target, but they are actively in-market for what you’re offering.

Because we consume our banking clients’ data every day and measure how many sales they make, we know financial institutions can achieve 10 cross-sales per thousand active digital users, per year. That’s important because Micronotes measures our success on how many customer needs we meet during any particular timeframe. And our measure of how to meet customer needs is “Did we get the sale?” because we view each sale as a successful engagement that met the customer’s requirement.

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May 10, 2019 0 Comments

Keeping Customers, But Losing Business

By Kevin Flanagan, Marketing Director, Micronotes

Ron Shevlin, one of the most interesting analysts following the financial industry, is managing director of Fintech Research at Cornerstone Advisors. But he also writes a regular column for Forbes titled “Observations from the Fintech Snark Tank.“ How can you not read something with that title?

Shevlin captured my eye with the title of his column this week—”Why People Don’t Switch Banks Anymore.” From the Micronotes perspective, our business is to help our banking clients retain their customers by helping them deepen relationships with the digital users they rarely see. So, if people aren’t switching banks anymore, then bankers must have figured out how to engage with their digital users and perhaps they don’t need the industry’s only artificially intelligent marketing automation platform that enables them to make the right offer to the right customer.

I needn’t have worried.

According to Shevlin, bank switching is on the decline not because institutions have made banking convenient, but because “money movement is so convenient.” That’s a bold statement, and it contradicts the findings of JD Power’s 2019 U.S. Retail Banking Satisfaction Study, which said that just 4 percent of consumers switched primary banks in 2018, which would make it the lowest level of switching ever recorded by Power, and a 50 percent reduction from 2016’s record 8 percent.

For the sake of argument (and because he’s one of the sharpest observers of the banking and fintech industries), let’s assume that Shevlin is correct. He backs up his claim with this thesis: “Checking accounts have become ‘paycheck motels’—temporary places for people’s money to stay before it moves on to bigger and better places. The cause of this is deposit displacement: the displacement, or diversion, of funds from traditional accounts (i.e., checking) to alternative accounts.”

Those alternative accounts are now home to billions of dollars that formerly would have resided in checking accounts at traditional banks. They range from health spending accounts (home to $44 billion) and person-to-person payment accounts (Cornerstone estimates that Venmo and Square Cash alone are holding more than $90 billion) to merchant apps like Starbucks cards (which possess an estimated $2 billion) and digital-only banks such as Ally and Marcus, which have an estimated $125 billion in their coffers).

So, if you’re a traditional bank or credit union—big, small or somewhere in between—how much of those billions of dollars would you have held among your assets just a few years ago. A pretty good chunk of it, it’s safe to say.

All of which brings us back to the Micronotes value proposition. If consumers have more places to put their money than ever, and if traditional checking accounts are just a couch on which friends crash for a few days and not a permanent residence, isn’t it more important than ever to figure out a fast and effective way to engage with your digital users before they become someone else’s source of revenue?

The ability to conduct brief conversations with digital banking users where you can offer a homeowner a HELOC or someone without a car loan at your institution an attractive rate for a new car loan or a better deal to refinance their loan at another institution or any number of other attractive offers is a proven method of retaining customers and driving revenue growth.

If you don’t figure out how to keep your customers and members from spreading their money around to more places, then you’ll only be able to visit it when you’re in line for a latte and the woman in front of you pays with her app at the First National Bank of Starbucks.

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May 3, 2019 0 Comments

Banking Beyond the Crisis

By Devon Kinkead, Founder and CEO, Micronotes

I attended the MIT Sloan School of Management conference titled “Finance Beyond The Crisis” in New York City today and heard from some of the brightest, most accomplished minds in finance, including 1997 Nobel Laureate in Economics Bob Merton. Perhaps you’ve heard of the Black–Scholes–Merton model of pricing derivatives? Yeah, he’s that Merton. Here’s what I took from the conference about the future of banking:

Lesson 1: Keep it simple!
Merton discussed an incredibly powerful—but simple—model to help regular people save for retirement. It’s a government bond (zero-risk) innovation that works, for the consumer, very simply. The basic tenets are:

  • People want to retire with the same standard of living they enjoyed in the latter part of their working life.

  • Most people can’t do complex financial computations to determine how much to save and how to invest those savings to meet their goal.

  • People love pensions—but fewer have them.

 Merton’s idea is called SeLFIES(Standard-of-Living indexed, Forward-starting, Income-only Securities). The point I want to illustrate is the simplicity of this retirement solution for the retiree. Here’s how it works:

  • The aspiring retiree is, for example, 25 years old.

  • The person decides when s/he want to retire, say at age 65.

  • It’s 2019.

  • Each 2059 (2019 + 40 years to retirement) SeLFIE delivers $10 in retirement income per year.

  • The retiree decides s/he wants to retire with $50,000 in annual income.

  • The retiree needs to purchase 5,000 ($50,000/$10/SeLFIE) 2059 SeLFIES during her working life to ensure $50,000 per year in retirement income.

  • So, her retirement plan is to purchase 5,000 2059 SeLFIES over the course of her working life.

That’s it!  Once she reaches 2,500 SeLFIEs, she knows she’s half way there. Simple! What goes on in the background is more complex, but retirement planning now becomes something that anyone with a 10thgrade education can do. Brilliant!

What’s the lesson? Let’s design and explain retail banking products in ways that are simple, actionable and trackable. If we can do that, we can really help our customers and members live better lives.

Lesson 2: Dig into the data before making policy
Antoinette Shoar, a visiting professor at MIT Sloan, then spoke about her analysis of the mortgage/housing crisis of 2008. First, she dispelled the myth that the financial crisis was caused by an irrational zeal to lend a lot of money to subprime borrowers. Look at the plot below and note the subprime share of 3-year delinquent mortgages.

Banking Beyond the Crisis Blog Image - Apr 25 2019.png


If you look at the plots above, it’s impossible to conclude that subprime (FICO <660) or relatively poor buyers were the primary root cause of mortgage delinquency. So, any bank that adjusted its mortgage lending policies to safeguard against loan losses from subprime borrowers—the narrative—missed the point.

Surprisingly, she also found that 50 percent of the contact information that banks had on borrowers in 2008 was incorrect, which makes it difficult to reach customers for loan repayment discussions. Now I understand why Micronotes’ clients are so interested in our current information capture feature.

To sum it up, let’s keep it simple and keep our eyes on the facts—our customers and members will thank us with extraordinary loyalty. And that’s the best thing a business selling commoditized products can hope for.

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April 25, 2019 0 Comments