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Apps put a bank branch in a customer’s hands

Rizwan Khalfan, left, chief digital officer for Toronto-Dominion Bank, speaks with Zor Gorelov, CEO and co-founder at Kasisto. TD introduced a chatbot service named KAI, which was developed by Kasisto.

Kasisto

When one pictures an online platform that delivers a range of digital services and apps to smartphone users, Google, Facebook, Apple and other technology giants usually come to mind. Joining that list soon … are banks?

Indeed, if they have their way, big banks will soon be more like Google and the rest in delivering a host of services to customers. But rather than being built around search engines or social networking, the banks plan to have financial services firmly at the core of their growing app portfolios.

"Our aspiration is to create one digital platform and then you can add or subtract capabilities based on the needs of the customers," says Rizwan Khalfan, chief digital officer for Toronto-Dominion Bank. "We'll partner with whoever has the best capability and bring them into the platform."

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TD, for one, has made several moves to that effect recently.

The company last year launched MySpend, an app that automatically analyzes customers' bank accounts and credit cards to provide spending insights via a traffic-light coloured metre. The app tells users if they're above or below their typical monthly spending.

The bank is also rolling out location-aware services that it has been developing in conjunction with Flybits Inc., a Toronto-based startup. TD signed a Canadian-exclusive deal with the company in 2015.

The app shows users the closest branches and automated teller machines. TD is also experimenting with delivering Go Transit times and schedules to some users in Toronto just as an information service.

One future additional application of Flybits' software, Mr. Khalfan says, would be giving customers the ability to ask TD's app how much they spend over time in a given location. Users could thus get quick summaries of their expenditures in a specific mall or stadium.

This month, TD also introduced a chatbot service named KAI. Developed by New York-based startup Kasisto, KAI is an artificially intelligent tool that can answer customers' general text queries on Facebook and then move to more sensitive questions within the bank's app. Kasisto counts DBS Bank, Wells Fargo and MasterCard among its other customers.

Company founder and chief executive officer Zor Gorelov says KAI is a "banking brain" that can provide customers with advanced answers by analyzing their accounts.

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"If I wanted to know how much I'm spending on Uber every week, this is not an answer that I can get easily from a bank today," he says. "These are the kinds of AI-enabled conversations that Kasisto enables."

Up next: voice interaction. Mr. Gorelov says KAI works just as well with verbal inputs through smart speakers such as Google Home and Amazon Echo. Mr. Khalfan says the ability for customers to bank using their voice is only months away.

It isn't just TD that's rolling out new apps and capabilities, though. Other major Canadian banks are also investing in developing platform-like services.

To that end, Bank of Nova Scotia opened a "digital factory" in Toronto in 2015, while Royal Bank of Canada and Canadian Imperial Bank of Commerce have also developed voice biometrics and algorithm-based online lending, respectively, among other capabilities.

Experts say the industry's shift is the result of a confluence of big banks and fledgling financial technology companies, also known as fintech startups.

Just a few years ago, the two sides were seen as far apart. Many fintech companies approached the market with brashness, expecting that they could beat the banks at their own game by being faster, more flexible and innovative.

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The banks, meanwhile, didn't necessarily believe they had to change and adopt new technologies in order to hold onto their customers.

It turns out both were wrong, to a degree. Many fintech companies found it hard to pry customers away from banks, which are generally highly trusted by their customers. The banks, on the other hand, encountered similar difficulties in developing and deploying innovative new services.

The result is that the two sides are now starting to come together.

"Every financial institution that I'm aware of is looking to the market for creativity and innovation. There's a new awakening that it's okay to work with smaller firms," says Jeff Hindle, managing director of finance and commerce for MaRS Venture Services in Toronto. "We're starting to see the real manifestation of that."

Partnerships are therefore allowing banks to deploy new services and fintech companies to actually establish trust with consumers. Mr. Hindle says it's a classic win-win-win situation.

"The only thing that's going to happen out of this is that the customer is going to benefit."

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About the Author

Peter Nowak has been writing about technology for 20 years, with a focus on trends and how they affect the world. He worked at The Globe and Mail between 1997 and 2004 before moving to China and then New Zealand, where he won the award for best technology reporter at the New Zealand Herald. More

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