By Priya Dozier
As mobile banking and digital wallets advance commerce and service opportunities, the recent surge in popular devices and methods continues to push the horizon of digital expectations into new channels. When it comes to smart speaker products, it is still early. According to PYMNTS, estimates for the number of smart speakers in the U.S. by the end of 2017 were between 25 million and 30 million. Analysts expect there will be 175 million by the end of 2022.
There is a great deal of opportunity associated with voice-controlled artificial intelligence (AI) devices. It is a virtuous cycle – the more comfortable consumers get with it, the more skills and services are added, which then attracts additional users. While the opportunities in the space are huge, there are also challenges to overcome, especially for the credit union industry.
According to a PSCU-sponsored report by Javelin Strategy & Research, 36% of credit union members perceive voice banking as not secure compared to 29% of overall consumers.
Ten Key Learnings
Extensive research and testing is required to ensure the services offered provide value for members, and to make sure credit unions are able to maintain member trust and avoid fraud through the voice channel. PSCU’s Innovation team and the University of South Florida (USF) recently completed an Internet of Things (IoT) project that explored these opportunities. Participating students explored and developed financial services use cases for Amazon Echo and Google Home, the result of which was 10 key learnings for credit unions related to smart speakers:
1. Smart speaker devices are in the early stage of product evolution, which is creating new opportunities for payments. In some cases, interactions must be specifically coded, word for word, in order for the device to take the correct action.
2. Credit unions should tie concepts and use cases to the problem for which they want to solve when creating an IoT strategy. Consider card-on-file use and top-of-wallet cases while planning for volumes and managing latency on the device.
3. IoT is a design, not a platform. Partnering with a best-in-class IoT vendor can be helpful, as technology is a significant consideration. Look for a vendor partner that can provide a technology engine that will scale.
4. Data is critical, which may encourage an analysis of the current state of data sources and future storage plans.
5. It is important to understand how the data will be utilized with the consent of the member. Speakers accumulate data based on user behavior, which helps the machine-learning algorithms become more robust to the benefit of the end user.
6. Data storage in the cloud is another primary consideration. Smart speaker skills reside in the cloud but can be redirected to the credit union or processor database.
7. Credit unions should create security standards when designing their IoT strategy. Devices marketed as “always-listening virtual personal assistants” are constantly collecting data, making security of upmost concern for users.
8. Consider authentication, because natively, smart speakers do not require a passcode. However, to process payment information, it is becoming standard practice to require one.
9. Specialized talent will need to be trained or hired to run dedicated IoT strategies and projects, and to keep up with the latest software releases.
10. Start with small use cases that can have a big impact.
Get Prepared for This New Normal
These findings provide valuable information that will remain relevant as more members connect to these and other devices either in-market or in conceptualization stages. Connected devices are the “new normal,” and credit unions should be prepared for the proliferation of service and commerce opportunities associated with them in the coming years.
PSCU’s Innovation team is currently building off the work done last year with students at USF by participating in the PYMNTS Voice Challenge with Alexa. The challenge will see innovative teams turned loose on Amazon’s virtual assistant, tasked with developing and executing a prototype using Alexa to solve problems, remove points of friction, and add value to the payments and commerce ecosystem.
As a credit union or business, thinking outside the box for ways to remain knowledgeable about the latest technology is vital to survival. Innovating and learning can never stop, and your members will thank you for it.
Priya Dozier directs PSCU’s initiatives to innovate, design, develop and integrate new digital solutions for owner credit unions.