Claude Lawrence
Claude Lawrence is the Director of Insights, Payments & Lending at Mintel. His areas of focus include credit cards, unsecured lending and banking.
October 23rd, 2017

Artificial Intelligence (AI), specifically machine learning, was the featured topic on the first day of Money20/20. The morning keynote at the payments conference featured famed futurist Ray Kurzweil discussing the foundation of AI and its growing potential in financial services. Ray set the tone for the day highlighting all the impressive feats AI can handle but citing the limitations of the neural network layering on which it is based; essentially, AI requires processing of millions of examples to learn compared to a human which only requires a few.  A 4-year-old can be told the difference between a cat and dog once and be able to correctly delineate between the two from that point forward.  A computer needs to see a million images of cats and dogs to be able to learn the difference. Ray’s team at Google is using the search engines massive database of images to do just that. Steve Wozniak, co-founder of Apple, also spoke on AI, stating that he once was among the camp worried about AIs future conflict with humanity, but now is less concerned given its inherent limitations. Steve cited that anything that needs a million pictures of a dog to identify a dog cannot truly be intelligent in the traditional sense, and will always rely on a human for inputs.

Following the philosophical introductions to AI, Dr. Matt Wood, Director of Amazon Web Services (AWS) presented on some of its practical use cases. Wood stated that machine learning is the future of growth in the economy, and that its current major problem is scale, which is being addressed. Wood highlighted the growing use of financial services chatbots as one example of machine learning integration, specifically calling out chatbot offerings from Capital One, Liberty Mutual and Aon. Wood also highlighted examples from Expedia, which used machine learning to determine the best photos to feature on its booking site, and Instacart, which used machine learning to help its shoppers shop for multiple customers at once. Finally, Wood challenged the audience to find ways to use machine learning in their operations.

A focus on the customer

Multiple day one sessions focused on the customer experience and changing expectations. Investment bank Charles Schwab discussed its focus on the consumer in its fee structure, and suggesting that the current investment landscape is too complex, with over 50% of consumers either not understanding brokerage fees, or, not being aware that they are being applied. They are seeking to simplify the investment process for customers, drawing inspiration from an interesting place, Weight Watchers, which uses a point system to simplify the complex task of weight loss. Schwab is working to transform customer goals into digestible milestones.

Open Bank, an online only bank by Santander, discussed how it successfully offers a full service online bank with 1M customers and $8B in deposits, with only 30 employees. Open Bank gave the following rules to providing a best in-class online bank; a single app, the ability to handle multiple transactions in a single session, simplicity, increasingly personalized through incorporation of machine learning, full service, and heavy investment into web and mobile functionality.

Day 1’s evening keynote featured Jennifer Bailey, VP at Apple Pay, discussing the status of Apple Pay on its three year anniversary. Bailey focused on merchant acceptance and multiple use case, notably not discussing the relatively low user adoption of the service. On the horizon for Apple Pay is a full-fledged entrance to P2P, with the ability to send money from an Apple Pay wallet to another person, via text, coming later this year. Also, as is the case currently with Square Cash Card, and coming soon to Venmo, Apple Pay is also launching a virtual cash card, allowing users to pay with Apple Pay funds at any merchants that accept Apple Pay.

Lending Startup Affirm credited the simple, easy to understand pricing on its point of sale credit product as the source of its early success in customer adoption. Affirm founder Max Levchin answered a question on the potential threat of the rewards cards market competing with its millennial focused customer by stating that “rewards only matter on the coasts,” suggesting that there is a vocal mostly urban millennial minority driving the hype around rewards cards. Most Americans would prefer simple and clear financing for purchasing, and treat rewards as just a “nice to have”. A bold statement.

Read about Money20/20 Day 2 here, Day 3 here, and Day 4 here.

Claude Lawrence is a Senior Research Analyst with Comperemedia. His areas of focus include Credit Cards, Personal Lending and Banking.