Financial wellness is fast becoming a competitive differentiator in retail banking. The change is being propelled by economic uncertainties faced by many consumers, and their increasing acceptance of digital financial tools.
Royal Bank of Canada, second-largest bank in Canada by assets (C$1.62 trillion ), has been building its competence in this area for several years, using advanced technology. Results suggest the investment is paying off. Not only are the number of users increasing, but they’re spending more time using features of the bank’s popular virtual assistant, called NOMI (for “know me”). A newly added cash-flow forecasting feature could add to the momentum.
Planning for your financial future is great, but for a lot of people knowing how much money you will have over the next week is critical. “Will paying the rent cause an account overdraft?” “If I splurge on a night out, will I have enough in my account to cover my monthly student loan payment?”
It isn’t a small segment of the population asking such questions. FINRA data from 2021 shows that 37% of Americans are living on the financial edge and 14% are living paycheck to paycheck. Experts have been predicting that advanced technology could be a boon for consumers in this situation. RBC’s NOMI now addresses this need specifically.
Can a digital assistant be a personal finance game changer? More than half of NOMI users say it is, and less than 1% have left RBC since starting to use the app.
The bank’s 12.8 million personal banking customers can now get the answers to everyday cash-flow questions like those above using NOMI Forecast, the newest addition to the mobile digital assistant. Built using machine learning and artificial intelligence software, NOMI Forecast tells RBC customers how much money they will have over a seven-day period based on their preauthorized payment withdrawals.
The NOMI platform already provides customized insights to customers to create simplified budgets and automated savings. Launched in 2017, NOMI has about 1.5 million active users. The “active” designation is significant because tallies of users typically include the people who may have downloaded an app, but never actually used it. Further, more than half (53%) of NOMI users say the virtual assistant is a game changer for their finances, the bank states. This is partly because RBC has been steadily adding features to the platform.
“We’re confident that RBC is the leading bank in North America for digitization,” says Peter Tilton, SVP Digital at RBC in an interview with The Financial Brand. That’s a bold, if not boastful statement, but Tilton says that it’s the marriage of digital tools with machine learning and artificial intelligence that sets RBC apart from its competitors.
How NOMI Reduces Fear of ‘Coming up Short’
With NOMI Forecast, consumers are less likely to miss paying a bill or run short of cash before payday, explains Tilton. “NOMI Forecast addresses pain points that consumers have about finances. We take some of that anxiety away and improve their financial well-being and confidence.”
Of course, financial stress and anxiety exists south of the Canadian border as well. A Capital One study found that just over three quarters of Americans feel anxious about their financial situation and more than half (58%) feel that finances control their lives.
NOMI Forecast gives customers back that control. “It’s not about looking through the rear view mirror,” quips Tilton. “It’s about looking out the front windshield to see where you’re driving.”
NOMI Forecast uses technology from Borealis AI, a research center backed by RBC that is focused on using ML: and AI in financial applications. NOMI Forecast marks the first time Borealis has been integrated into a retail banking offering.
Tilton explains that NOMI’s forecasting will get better over time, as it continues to crunch massive amounts of data across millions of customers every day.
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The Rest of NOMI’s AI Features
NOMI Forecast joins several other popular functions on the digital assistant platform:
NOMI Insights uses customers’ data and activities to deliver snippets of financial information. Since its launch in 2017, NOMI Insights has delivered more than two billion “hyper personalized insights” read by customers, according to the bank. These insights could highlight unusual account activity or spending patterns or let customers know about bank services that could make banking even easier.
NOMI Find & Save, also launched in 2017 has been used by RBC customers to save more than $1.9 billion dollars. The average customer saves about $415 month, or about $5,000 per year, the bank states.
Find & Save is more than more than a rounding-up feature that deposits the extra 17 cents from a $2.83 coffee. NOMI Find & Save uses ML/AI to find money that the customer could be saving — and likely won’t miss — based on their spending and automatically moves that money into a savings account, once a customer turns it on.
Consumer time on app has more than doubled — to seven and a half minutes — since the virtual assistant was launched.
NOMI Budget has suggested more than two million budgets for customers, since its launch in 2019, based on their spending habits. If NOMI discovers that a customer spends between $200 and $300 on meals out, it will create a reasonable budget. If the customer consistently starts spending more, NOMI Budget doesn’t scold but recommends a more realistic budget.
Ask NOMI is a multilingual chatbot that has so far responded to four million customer text and voice inquiries. Ask NOMI was scheduled to debut late in 2020, but RBC sped up the launch in response to the pandemic, anticipating that customers would have a lot of questions about banking and their finances.
In total, the virtual assistant packs a powerful punch. With all its features, NOMI encourages customers to linger. RBC states that NOMI has increased the average visit time on the RBC mobile app from three and a half minutes to about seven and a half minutes.
While the bank wouldn’t share specifics on exactly what customers are doing during the expanded visit time, a spokesperson says the increased time is correlated with the NOMI capabilities, including reading Insights, checking their Find & Save account, checking budgets, etc.
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NOMI also helps reduce customer churn. Tilton notes that the attrition rate of NOMI users is less than 1% and the bank reports record levels of satisfaction. “Those who use NOMI are very loyal to RBC,” says Tilton. “Consumers understand that we are doing this for the right reasons: to help people better manage their money with financial cash flow forecasting, budgeting and automated savings.”
A Simpler Verification Tool
Along with the launch of NOMI Forecast, RBC also released 2-Step Verification to make it easier for customers to access their accounts by eliminating the need to enter a verification code, a common industry practice.
From within RBC’s mobile app, customers assign their mobile phone as their primary access channel. When customers log into their account from their laptop, they receive a prompt with a date and time stamp within the mobile app to verify the session. Instead of having to enter a code within a few seconds, the customer simply presses a button to access their accounts. The prompt stays live for five minutes.
RBC will continue to improve the NOMI platform, relying on ML/AI and an enormous amount of computing power to help customers improve their financial health.
“By providing customers with insights and helping them with financial management, the platform helps us achieve our goal to democratize finance for consumers, regardless of how much money they have or how financially literate they are,” says Tilton.