The significance of AI and retail banking
There can no longer be any question about it. When it comes to dealing with Bank of America, Erica is the belle of the ball. At first glance, this may seem a little unusual, since Erica is not a person, but a mobile phone application. Voice-activated, she can answer questions, transfer money, even tell jokes. Yet by the numbers, her popularity is no joke. Since its nationwide rollout in June 2018, Erica has:
- Been downloaded by over 7 million BofA customers at a pace of 500,000 new customers per month,
- Doubled the number of ways to understand financial questions – from 200,000 at launch to more than 400,000 today,
- Completed over 50 million client requests.
You may wonder if any of this matters to customers of other banks. We think it does because the success of Erica has broader implications for the entire retail banking industry going forward. In subtle, and not so subtle ways, Erica is poised to change the very nature of banking itself and the way you interact with your bank.
How She Works
Erica’s rapid adoption is made possible by advances in two fields of artificial intelligence (AI), predictive analytics and natural language processing. Predictive analytics relies on several statistical techniques to analyze current and historical data to make predictions about unknown events. Natural language processing is a mix of linguistics, computer science, and machine learning to program computers to recognize, understand, and generate spoken words.
Predictive analytics allows Erica to make educated guesses about how to answer questions. Natural language processing enables customers to interact with her as they would someone over the phone. Neither process may be perfect, but together they are good enough for an average of 150,000 BofA clients to turn to Erica a week to answer common banking questions.
The Significance of Erica’s Popularity
All this adoption is excellent news for Bank of America. Erica never sleeps, never needs a vacation, and never refuses a request. She does not require time off, health benefits, or a salary. Every question she answers saves a BofA employee from having to deal with it.
For BofA customers, Erica’s success is also great news. Downloading Erica on your mobile phone turns it into a branch bank. It is also a branch bank with some distinct advantages. It never closes. As long as you can find your cell phone, you don’t have to drive to reach it. You never have to wait in line for service.
We grant you that talking to a bot and not a teller doesn’t always provide the best customer experience. Still, it has only been a year, and Bank of America is just beginning to scratch the surface of Erica’s full potential to transform the client experience. Thanks to her popularity, for the remainder of 2019 and beyond, Bank of America will continue to expand and refine Erica’s capabilities to give customers the ability to optimize cash flow, manage debt, monitor transactions, and balance competing financial priorities.
Just as with ATM’s, the growing success of Erica will force other retail banks and consumer financial institutions to follow suit. When the time comes for your financial institution to release an “Erica-like” product, embracing it rather than ignore it will help you get the most out of your banking experience.
IMPORTANT DISCLOSURE INFORMATION: Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Republic Wealth Advisors), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Republic Wealth Advisors. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Republic Wealth Advisors is neither a law firm nor a certified public accounting firm and no portion of this blog content should be construed as legal or accounting advice. If you are a Republic Wealth Advisors client, please remember to contact Republic Wealth Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. A copy of the Republic Wealth Advisors’ current written disclosure statement discussing our advisory services and fees is available upon request.