Digital Banking Moves Beyond Mobile 'Taps & Swipes'

Derek White spends a lot of his time contemplating what he calls “the glass.” That’s the screen that is the increasingly ubiquitous link between consumers and banking providers on mobile devices.

“Increasingly we’re in an environment where financial services isn’t a human-to-human interaction, but a human interacting with ‘the glass’,” says White, CEO at Galileo Financial Technologies. The rapid uptake of digital banking in the last few years is testimony to this, and to people’s increasing comfort level with “the glass” and everything beyond it.

But the comfort level with the screen is still finite, according to White, a banking industry veteran. His past posts include most recently VP at Google FSI Cloud and Vice-Chair and Chief Digital Officer at U.S. Bank. White sees the need to improve the trust people have in conducting their financial affairs digitally.

This transition is necessary before many financial institutions can gain further advantage from digitization of banking. The evolution entails two key ingredients: better use of consumer data and application of multiple technologies to the challenge.

Galileo is a subsidiary of SoFi, which acquired the tech firm in 2020. White discussed his views on next steps as well as the survival strategies of neobanks and fintechs and the influence of “techfins” on the future of financial services delivery in an interview with The Financial Brand.

Building Greater Consumer Rapport with Digital Banking

Digital banking has come a long way, but in a sense it remains a mass product, somewhat like off-the-rack clothing in a time when consumers are coming to expect greater tailoring. White thinks the industry must work towards a sense of digital channels being used as if “there is only one human interacting with the glass.”

For that to happen, White continues, institutions must deliver “smart interactions,” digital delivery that is personalized to the customer. To succeed, these interactions will have to approach the level of personalization that banking customers had back when nearly all banking was conducted face-to-face. Until institutions can do this, the glass will continue to be both a connection and a barrier.

Another factor that will accelerate increasing comfort levels with digital banking technology will be movement to digital interactions that don’t depend on mobile touch screens at all, or not entirely. White thinks voice technology is going to carry much of this momentum forward.

Voice Tech Talks Louder:

Not so long ago, voice technology for digital banking had a quick ride on the hype cycle and then it tailed off. But interest may be rising again.

Studies by Edison Research support White’s contention that voice could increase digital adoption.

For example, in mid-2022 35% of Americans 18 and over owned a smart speaker — devices like the Amazon Echo or the Google Nest — which is more than twice the level seen in 2017. Edison reports that rising use of voice-operated personal assistants has been seen on many devices.

62% of Americans 18 and older use a voice assistant on some digital device today. Below are some additional voice-related statistics from Edison Research, with 2022 figures in bold and 2020 numbers in parentheses:

56% of smartphone owners use personal assistants. (51%)
35% do so via smartspeakers. (27%)
29% do so in cars. (23%)
24% do on a desktop or laptop computer. (19%)

Daily use of voice commands has also been rising. In spring 2022 57% of device owners used voice commands daily, versus 46% in winter 2019. Edison’s research has also found that voice commands are being used for a broader variety of purposes. In 2022 smartphone owners requested 10.7 tasks via smartphone, versus 8.8 in 2020.

Many people rankle at smart speakers’ giving unsolicited information, but a significant minority say they aren’t bothered at all:

Not bothered when the smart speaker offered more information than requested: 40%
… when it makes an unprompted recommendation: 39%
… when it suggests a purchase without being asked: 27%

What a ‘Voice and Glass’ Hybrid Could Look Like

White sees the increasing comfort level, supported by the data above, resulting in applications where a banking inquiry and follow-up becomes embedded within the give and take that arises through voice rather than tapping and swiping a screen, but which uses the screen to answer the query, in part.

For example, White continues, say you and a friend are driving through a residential section and spot a house with a “for sale” sign. The friend wonders what the house costs.

“You can simply say, ‘Hey Google’ or ‘Hey Alexa,’ how much is the house at such and such address going for?” says White.

The device could go to an open financial platform and answer the question while the car is still on the block. It could offer a virtual tour of the home for the passenger while the driver can still feed it questions, all by voice. But even before that it could present information like how sales prices compare to asking prices in the neighborhood and suggest a mortgage lender and indicate how quickly they could close a loan.

“In the future that’s how consumers could be interacting,” says White.

“Adoption of new behaviors and new technologies takes time. But it’s already changed dramatically. The financial companies that win in the future will be those that understand how human behavior is changing.”

— Derek White, Galileo

Neobanks and Fintechs Diversify for Growth and Survival

Galileo serves both traditional banking institutions as well as neobanks, fintechs and others. White notes that the latter group has been striving to become broader while not becoming so broad that they can’t offer standout products because they have become generalists.

“There are few that can attempt to provide a full-service, one-stop shop,” at scale, says White. He considers SoFi, Galileo’s parent, to be one of these few. SoFi started as a student lending specialist and has grown much broader and picked up a bank charter along the way.

“Many fintechs and neobanks started with just deposit product, and/or debit cards,” says White, “and they have been exploring how to extend to other products.” Typically the aim has not been merely to do what traditional players do, but to add some new angle to freshen up the offering, he explains.

“Many of our clients are indicating that they and their partners would like to add the lending side of banking relationships to the deposit side,” says White.

An example of going for a fresh take on credit comes from Galileo client TomoCredit, which offers what is essentially a secured credit card without using credit scoring while applying alternative standards. The latter include review of the applicant’s deposit history. This is important because the product is designed to permit users to pay with the card, which is referred to as a “charge card,” to repay seven days later through automatic withdrawal from a designated deposit account. (Other payment arrangements can be made.) No interest is charged. The company’s banking partner is Community Federal Savings Bank.

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Expanding the Role of Big Techs in Partnerships

Overall, White believes the nature of financial partnerships will evolve further, taking in more bigtechs (which he refers to as “techfins”).

Worldwide the continuing emergence of open finance legislation and regulation is changing what’s “under the glass,” according to White. He expects to see some big players beginning to work with third-party facilitators like Galileo to provide more connectivity between their huge user bases and banking providers that want to reach those potential customers.

“With all of their users on their platforms and transacting in their ecosystems, they’re able to drive interactions that can then be monetized,” says White.