Banking in the Jetsons Era

Mitch Woods: Welcome to today's episode of Lending Made Easy, and we're gonna talk about something that might sound like it's coming straight out of a science fiction movie. Autonomous Bank Branches. So, you might have seen the news about the fully autonomous McDonald's restaurants popping up in Texas and Colorado but it's clear that robots are really taking over in some industries. And it's not really just a pipe dream - it's not the Jetsons anymore. So I wanna talk a little bit about what does this mean for the banking industry? Are we gonna see robots running our local bank branches? Are we gonna see them giving advice or providing some customer service?

So we're gonna dive into this topic a little bit, but first, Bryan, David, whoever wants to take this, if you had to design a robot to work at a bank branch, What would it look like and what tasks would you make it responsible for to start out?

Bryan Peckinpaugh: I mean, it's hard to imagine 'em doing anything more than janitorial work at today's version of robots. I think probably some back office type work, even though that's continuing to get cannibalized by. software solutions. I don't know that we're ready as a society for interacting with a robot for my financial services needs.

There's still times I need to talk to somebody as opposed to interacting with the ATM as opposed to what I can do through the mobile app. So, me personally, if I do have to go to the branch and it's not often anymore. it's for something I need an actual human being to help me with. I think there's a lot of,modernization potential in the financial institution, more self-service concepts and ideas, potentially supporting the more high-end functions through maybe not a robot, but through a virtual interaction, if you will. The challenge you're gonna find there though, is if I can deliver that virtually in a branch I can deliver it virtually wherever you are. Right? I don't need the branch to have a conversation about your investment needs, conversation about your mortgage process.

I think that will continue to differentiate the financial services sector from what you're talking about, Mitch, right? I mean, if I go to a McDonald's, I want a hamburger and I still gotta go there to get it. We haven't figured out that Jetsons thing yet where they could just zap it to my house, hot and warm and ready to go. I have to go to the fast food restaurant to, to get that. and thus we're replacing that delivery mechanism. So I think we'd have to start thinking through what does that look like? What does that true delivery, what would an autonomous branch look like if it's over and above what we're already seeing from the ATM through the video concepts that are in place.

David Catalano: It's almost autonomous at this point, so, since 1999, I've been banking with the First Internet Bank of Indiana. I started there and haven't left so they don't have any bank branches, nor do they have cash. So there'd be no use case for me to go to a branch based on my behavior since 1999.

Now, you can call somebody there and they could help you with something. And I'd probably have done that since then, for one thing or another. You know, the question is, are those employees being replaced with robots? So we've kind of done that now with online banking and with ATMs and with any self-service type device we have.

I just see that continuing as these self-service devices become smarter and can think, for lack of a better way to say it, so they can make recommendations that are intelligent based on the use case, based on the data that they have, and the person that they're talking to. So that kinda gets back to that ChatGPT model where the intelligence is smart enough to replace someone with critical thinking skills and knowledge of banking and knowledge of you, but whether that's a brick and mortar, I can't imagine why you would need a brick and mortar to talk to a bot. So, I mean, the current path, I could see brick and mortar branches, going away. 

Mitch Woods: Yeah, I think that's, you kind of hitting on the idea of going from a transaction center to really more of an advice center where you're gonna want that one-to-one personal communication with someone. I think a lot of places really have gone, a lot of people can do most of their banking, self-service, but I think, Bryan, you've brought it up before in an episode, who's gonna be responsible for advice or recommendations that are made by an autonomous being? Right? It's not necessarily a person thinking, it is someone that is…

David Catalano: It's who's gonna be responsible for making those decisions? It's the bank, right? The bank. the bank. The corporation is the responsible party there. And if they make incorrect recommendations based on the data that they have, then that's would be no different I think, than a human making that within, inside the bank and the machine you would think would be more consistent and if it's fed the wrong information and would deliver the wrong answer consistently.

But if it's fed the right information and that algorithm is correct, then it would deliver the right answer. Versus a human who could have a bad day and deliver the wrong answer. So you definitely get consistency, which I would, in our world when you have consistency through a process, you de-risk the process cuz we're in the risk business. So, I don't see that as a problem. 

Mitch Woods: Yeah, and Bryan care to share your thoughts on that. We're talking a little bit about where does the buck stop. If you, if we're having artificial intelligence or autonomous software that's helping give advice to customers, where does that responsibility ultimately fall? And is that something that you think, a bank or a credit union, how should they approach that?

Bryan Peckinpaugh: Yeah, that's the very challenging area. I know it's gonna scare off vendors. We end up in those conversations with financial institutions all the time about how our technology is used. If we're providing tools and they're using those tools to come to a certain conclusion, who can be on the hook if those conclusions are bad, this is gonna even further drive, divide into that conversation, as we bring the true AI and machine learning concepts to, to bear.

So I think it's going to, slow adoption as people are trying to figure out who is responsible. If I provide you a self-learning thing and it learns incorrectly, could be seen as being on the hook for that. So it's so new in this space, it'll take a while for those kinds of things to, to shake out.

So I think I could see it, again, in less advisory type uses and more in tactical black or white type solutions, guiding you to the appropriate point, saying, Hey, at this point you need to speak to somebody until we figure it out. and I think it'll take us a while.

Mitch Woods: Yeah, I think, as people are adopting more and more technology. Bryan, I know you've said this before, we used to bring technology home with us and now we're taking technology from home to work with us. As people are getting more and more used to some of these automated services.

I'm thinking also, what about those, and you talked about kind of middle back office, are those things gonna become more autonomous? I know we're doing a lot of things with software, for that, but are there other processes that you could see? at a bank or a credit union that could be replaced, right? Like, or not replaced or, we could automate in different ways.

Bryan Peckinpaugh: Again, we'll probably eventually get there, but we've already replaced a lot and one of the biggest drivers to further adoption, further automation is actually the. the consumers of the bank's products are the credit union's products. I go into the bank once or twice a year at best. My dad probably goes into the bank once or twice a week, It's just a differing, approach to how you consume financial services. I'm much more inclined to, to use those automated tools, whether it's remote deposit capture, to handle the handful of checks I do get. using online services for money, movement, bill pay, et cetera.

As the technology generation continues to grow as those who, had it brought to them later in life, move on, I think by nature, the bank will change. Does it drive robots? I don't know. Does it drive, further adoption of the ATMs? does that change a little bit? Do you start putting more video capabilities into the ATMs themselves and have more drive through banking?

Potentially? I, cause I think it'll eventually, it'll settle into what are the long-term in-person financial transactions that need to happen and if and when we identify some that aren't advisory in nature I think that's where we start to look at where other automation can be applied. We're probably little ways away from truly replacing the advisory aspect of it cuz of all the things we've talked about.

Mitch Woods: Yeah, so sounds like consensus. Not gonna happen anytime soon. But I think there are institutions that are looking at artificial intelligence and looking at these autonomous processes and really looking for ways to gain efficiency and, serve their customers better. So I think some fun things to talk about today and kind of dream about what what could be in the future of a bank or credit union. 

So, Bryan, David, thank you guys for your time and your insights and talking about a kind of a fun topic, today. It's fun to dream a little bit. So thank you guys and thanks everyone out there for tuning in to today's episode of Lending Made Easy.