Steve Ellis foresees a bright future for banks in the digital age — a future of adapting, collaborating, and flourishing as they create a culture of innovation, service, and trust.
“Having a banking infrastructure is clearly essential going forward,” said the head of Wells Fargo’s Innovation Group. “Just like water, power, transportation, and electricity, banking services are a necessity in today’s modern life. And the cool thing is that banking evolves to meet changing customer needs — from branches and contact centers to ATMs, the web, and mobile.”
Not everyone, however, shares such optimism about banks. Futurist and financial technology entrepreneur Brett King is well known for his bleak forecasts for large banks as they try to keep up with technological change and harness it to serve customers.
Dubbed “two of the world’s most accomplished pilots of bank innovation,” Ellis and King squared off in an Oct. 23 debate dubbed “Bank to the Future: Where We’re Going, Do We Need Banks?” The event is part of Money 20/20, the annual conference of the payments and financial services technology industry.
In this Q&A, Ellis gave his perspective about some of the issues in the debate.
Q: For a long time, banks and fintech companies seemed to be in a survival of the fittest battle. How has that changed now that banks like Wells Fargo are actually teaming with some fintechs?
Fintech firms and banks may be both competitors, customers, and partners — it depends on the context — but they’ve been working together for many years before the term “fintech” was coined. In general, I think fintechs have brought to the game a different way to see some aspects of financial services. It’s a natural fit, since financial assets are essentially digital and tailor-made for the nonpaper world. That’s especially true in the area of customer experience and how we can use data creatively to provide better value to customers. Additionally, tech companies are often using the services of banks. At Wells Fargo, we work to foster innovation with startups in several capacities, such as growing the Wells Fargo Startup Accelerator. Ultimately, the most innovative solutions will be a product of both fintechs and large banks such as Wells Fargo — the new kids on the block, and those of us that are 165 years young.
Q: In a fintech collaboration, what do banks bring to the table in terms of regulatory experience and other capabilities?
So often you hear people talk about fintech companies and ask “what would happen if they were regulated just like banks?” The reality is there is a lot of regulation out there that already impacts fintech companies — here in the U.S. and globally. If you are trying to conduct business nationally, there is a potpourri of state, federal, and local regulations, which makes it very difficult for fintechs to operate across the U.S. The regulatory and legal framework around financial services is complex — something that banks have been dealing with for a much longer time. It takes a lot of experience and focus to successfully navigate those waters, and large banks can help be that compass.
Q: In collaborating with banks, what insights do fintechs offer in driving innovation?
I think what fintechs have brought is a fresh set of eyes to look at an issue, potential problem, or potential solution. I really think that ability to have a different mindset has added a lot of value as far as questioning old assumptions about the way things are done. I’ve always thought that one of the best ways to drive fresh thinking is to get people to stop looking at their computer screens, step away from their desk, and just look out the window toward the horizon. That means looking at where companies and people are headed, finding a fresh perspective, and then bringing that back to the drawing board to come up with new ways of doing things.
Q: Banks and fintechs are both engaged in the artificial intelligence revolution. How do you see the role of AI expanding in financial services?
I look at AI as having three big components: First, there’s natural language processing, or the voice-driven, conversational approach to banking, as opposed to typing something on a keyboard. The second piece involves the use of analytics to make data smarter, more in-depth, and more useful for customers and employees of banks or fintechs. And the third part is robotics process automation, or creating the separate ‘intelligence’ part of AI.
Natural language processing is by far the one customers will see the most, and when you add in the analytics piece to that, you’re building a brand new paradigm that will revolutionize the way we interact with customers. Everything from how customers are authenticated to how they apply for products and services — completely reimagined.
Q: In your view, what will be the role of people and personal service in a future, where robotics, virtual assistants, and other such systems are a reality?
There’s no doubt in my mind that human interaction in banking is still going to be around for a long, long time. Just like the internet giants and the majority of businesses, the value of being able to interact with a person when you have a concern is crucial. Every day, the list of things you can perform fully digitally — like ordering your lunch or opening a checking account — increases. But what we can do digitally spans a huge range of transactions, and there’s a big difference between buying a digital book and planning finances for your retirement. People are always going to want advice and counsel when making some of those big decisions, even if there are digital elements that are part of the action plan.