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Updated on Wednesday, December 19, 2018
In the distant past, if you wanted to know your bank account balance or to make a transfer, you had to call your bank, or worse, visit in person. As the Internet age has progressed, you’ve been able to do more and more of your banking online. Web services came first, followed by smartphone apps and mobile deposit technology — eliminating the need to leave the house for a financial transaction unless you wanted to withdraw cash. Voice-activated technologies like Apple’s Siri and Amazon’s Alexa are the latest frontiers for online banking. The Apple iPhone is the most popular smartphone on the market, and nearly a third of people between 25 and 34 years old own an Amazon Echo speaker, according to an April 2018 report by advisory firm Javelin Strategy & Research.
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Financial institutions are taking advantage of this trend. Some, like Bank of America, are investing in their own voice-activated technologies. Others are utilizing Alexa’s custom platform to help customers. These technologies are currently limited to basic transactions, but according to banking technology experts, mortgages could be the next big financial product for voice assistants.
How digital voice assistants are transforming banking
Both Amazon and Apple have moved progressively further into financial technology through their voice assistants.
Amazon’s Echo speaker, which comes with its built-in Alexa voice assistant, lets you interact with Amazon in a variety of ways. You can ask Alexa for the weather forecast or to read news headlines. Amazon also allows third-party brands to develop “Alexa Skills,” which give the devices additional abilities. There are now tens of thousands of them in the Alexa Skills Store.
In 2016, Capital One became the first business to use Alexa Skills as a way for consumers to interact with their financial accounts. The bank’s Alexa Skill currently allows customers to check account balances, track their spending and pay their Capital One bill.
Since then, many other financial institutions have jumped in. At last count, Javelin found that 30 different banks have Alexa Skills, said Al Pascual, senior vice president of research and head of fraud and security at the firm.
However, they’re generally made for basic services like checking account balances or recent transactions, Pascual said. “They’re not designed to do anything like money movement, or in essence, higher risk transactions,” he said.
Why? Because it’s difficult to authenticate the user. For example, if you’re at your friend’s house and ask their Alexa to transfer you money, the device can’t really know if it’s you or the friend making the request, Pascual said. Requiring a PIN is how banks typically tackle authentication, but it’s not very secure.
“I think they have a while to go until they get that figured out, but once they do, I think that opens the floodgates a bit,” Pascual said.
Arguably, Siri — Apple’s digital voice assistant — is more advanced than Alexa, said Chris Ward, principal consultant at financial intelligence company Mapa Research. This is because globally, more banks have integrated with Siri, and it allows customers to make peer-to-peer payments. Alexa, on the other hand, is currently only about reviewing account information, such as balances or credit card payment dates, Ward said.
‘What you see right now is still very basic’
Regardless of whether you’re looking at Alexa or Siri, “what you see right now is still very basic, and banking through these channels certainly isn’t replacing the experiences customers can have via mobile app or an online platform,” Ward explained.
But there’s clearly demand for more voice-assisted banking. The Javelin report found that 35% of respondents would use services like Siri and Alexa to transfer money between accounts, and a third would use them to contact customer support with a question. About a quarter would likely use it to send money to someone else.
Rather than having to go through Amazon or Apple’s technology, some banks are creating their own voice assistants. For example, Bank of America has developed a digital assistant called “Erica,” which is housed within the bank’s smartphone app. Because the voice assistant technology is within an authenticated (logged in) session, it offers more security. Therefore, it gives you the ability to do more, Pascual said. For example, in addition to basic transactions like checking your balance, Erica lets you transfer money between your accounts, pay bills and send money to others.
How mortgages have been affected
Currently, due to the complexities of mortgage loans, digital voice assistants have barely entered the mortgage space. LendingTree, MagnifyMoney’s parent company, has a free Alexa Skill that allows borrowers to access mortgage rate quotes from lenders and send the results to their phone.
Rocket Mortgage from Quicken Loans has an Alexa Skill that lets customers initiate their mortgage payment, check mortgage rates and get in touch with a home loan expert. There are also several Alexa Skills that have mortgage calculators or can teach you about mortgage basics. However, we couldn’t find any lenders that currently allow consumers to apply for a mortgage via voice technology.
According to a Bank of America spokesperson Betty Riess, the Erica app doesn’t have any features related to mortgages as of now. “Currently, if a customer asks Erica about applying for a mortgage, the customer will be directed to the ‘explore our products’ page to select mortgage,” she said in an email.
Why aren’t mortgages there yet? Pascual says it’s because there are still many challenges around risk. How comfortable will borrowers feel about giving Alexa their sensitive personal information like a Social Security number if they’re not authenticated?
“People still have an element of hesitancy when it comes to interacting with machines,” Pascual said. Javelin’s report found that nearly two-thirds of consumers who aren’t interested in making financial transactions with smart speakers like Alexa say it’s due to security concerns.
Ward said many consumers, even those who own products with Siri and Alexa, have concerns about the voice-activated speakers listening to what they’re saying. Also, with Siri and Alexa, you’re interacting with your bank in addition to Apple or Amazon, which makes some people more wary about sharing their personal information, Ward said. Plus, you’d have to say confidential information aloud, which limits you to private areas. All of these security risks have to be sorted out before mortgages are ready for the big time on these devices.
What comes next?
Banking technology experts believe that going through the entire mortgage process with digital voice assistants is possible in the future, but it might never be fully automated.
Pascual predicts that the next step for this technology would be Alexa serving as a starting point for a mortgage application. He anticipates that Alexa could help a borrower learn about mortgages — pulling potential loan terms from a bank after the user shares less-sensitive information, like their income. The borrower could even possibly provide the address of the home they want to buy, and Alexa could check on the home prices and calculate what a mortgage might cost them.
However, from that point, Pascual thinks Alexa might drive the consumer to a different digital channel. Perhaps it would send a message through their mobile banking app, or a text or an email that allows them to continue the application in more depth elsewhere.
He also said he could see banks or lenders bringing a loan officer into a conversation. For example, if you’re looking for something more complicated than a conventional loan, like a jumbo loan or low down payment loan, Alexa could say, “This sounds really complex” and pipe in a loan officer to continue the conversation with you via voice, Pascual said.
In other words, you wouldn’t use Alexa from start to finish, but it would be used to get the process started, Pascual said. After all, he explained, mortgages are complex, and there will be limitations.
He said many consumers had bad experiences in the past with old chat bots that have been less than helpful. If lenders can recognize the limitations and address them by incorporating human beings or other digital channels, applying for mortgages via voice could be a reality — especially if the lenders can find ways to make it less tedious than filling out an online form.
“It can, in some ways, just be easier to talk to somebody,” Pascual said, even if it’s not a human. “Machines are very good at collecting data, especially uniform data. Rather than me having to sit there and type it all on a tiny phone screen, I’m having a conversation with Alexa.”
Since voice assistants from banks — like Bank of America’s Erica — are housed within their secure app, there’s more trust there from customers than with Siri or Alexa, Ward says. For this reason, he anticipates that any future developments in this space might first evolve with bank-owned technology first. “To me, containing all of that in the experience of the app is going to be quite interesting and might resonate more with customers because they feel like they’re in that secure environment,” Ward said.
While Ward thinks it will be possible to complete a full mortgage application via Siri or Alexa one day, he’s not convinced that it’ll happen within the next five years or that it will be easier than an online form.
“For me, Siri or Alexa Skills need to actually deliver a smoother, easier experience than the customer can get elsewhere,” Ward said. “Until they can do that, I’m a bit skeptical about to what extent Siri and Alexa will be the interface where consumers want to go through a full mortgage application.”
What he believes is most likely to happen is that technology like Alexa could help expedite the application process by drawing in data from other sources. For example, he said, rather than having to enter all of your information manually, you could ask Alexa to give Chase Bank your Bank of America information to expedite the process of applying for a mortgage with Chase. Or you could have your professional information pulled in from LinkedIn.
Of course, we might also see developments from banks with their own digital voice assistants. Small mortgage loan originators probably won’t be getting into this space anytime soon, Pascual predicts. But he expects that bigger banks — especially tech-forward ones like BBVA and USAA — will be the ones to watch.