American Banker was recently invited to have a fireside chat with Hari Gopalkrishnan, a managing director at Bank of America who oversees mobile banking for its consumer and wealth management business, at the Mobile Banking and Payments USA conference in New York hosted by Open Mobile Media.

In the interview, Gopalkrishnan talks about the balance of privacy and personalization and how improving the customer experience is the next frontier of mobile banking. The following is a transcript of that conversation that has been edited for brevity and clarity.

Millennials check their phones, on average, 45 times a day, according to a promotional video for Bank of America.

Yeah, but the more interesting stat is that two-thirds of Americans reach out to their smart phone before their loved one in the morning. We do this annual mobility survey where we go out and ask for behavioral patterns and that's the one that stood out for me this year. Last year, it was that most millennials forget their toothbrush before they forget their smart phone.

What have been the stand-out trends to you in the last 12 months in mobile banking?

Last year, for the first time, mobile volume overtook online volume. More and more people are using mobile banking more and more frequently. This year we've seen a 24% uptick in weekly mobile check deposit compared to 2014.

The second thing we are seeing is the emergence of capabilities that let you do things more securely on a mobile device than what you could do before. Biometrics, fingerprints — things that we've talked about for 10 to 15 years are now real.

Mobile payments have also been talked about for 10 to 15 years and now Apple Pay opened up Pandora's box. It is still very early days, but we are starting to see the trend line shift where customers are starting to adopt and technology providers are starting to provide much more mobile-friendly solutions.

What do you think is going to be the game changer a year from now?

Customer experience is not something we've historically thought about immediately in banking and finance. We thought about transactions. It is typically the Apples and the Googles that think about customer experience. Banks are now starting to see how important it is to driving customer satisfaction. In the next 12 months, I see massive adoption and embracing of things like biometrics, like geolocation, like payments to drive customer experiences that are truly differentiating them into their daily lives. No one wakes up in the morning to bank. No one wakes up and says, 'Gosh, I can't wait to go deposit a check.' At least, I haven't. So for us to have the ability to create great experiences that integrate into our daily lives — that's the differentiator we have to go after.

What are the hurdles?

It is an interesting landscape, because on one hand our customers want frictionless, but on the other, they want super security. They want real personalization — tell me that you know me — but on the other hand, they want privacy. The real challenge is how do we, as a bank, balance between really great, personalized capabilities and making sure that security, privacy and scalability are table stakes. And there is a regulatory regime that obviously oversees all of that. Some of the startups and the fintechs don't have that oversight and they have the luxury of doing cool things.

You mentioned that people don't wake up and want to bank — do you want them to?

We want to integrate into their day-to-day lives. If my son texts me that he is out of money at Syracuse and I need to transfer money from one account to another, historically, there would be an email from him and then I have to log on and find the right place online. Today he can text me, I can respond to the text, then Touch ID authenticate, go to saved transactions and move money while walking from Penn Station to here. To me, that is an example of making a transaction simpler so that it fits into your day-to-day routine, versus saying I'll get to that when I'm in front of a PC.

How do you balance delivering the right kind of experience with security?

Security is not something we are going to compromise on. The minute we lower the bar on that we lose our trust and entitlement to do anything else. There are ways to accomplish both. Everyone knows Touch ID, but that's not it. There are so many other things you can do — you can check for malware, you can check if a phone has been jailbroken, has the same customer logged in from two geographically different locations in the last four hours. You can combine all of that into a set of data points that can enable you to create fraud analytics that help you provide a better security model. It may seem that by making it frictionless, you're lowering the bar. In reality, the opportunity in combining all the capabilities that are out there raises the bar of security while creating a frictionless experience. 

What do you need from the consumer side to make this happen?

People lag in adopting mobile capabilities because they are afraid. I'll walk in to a branch on a Saturday morning and see someone on their phone, updating their Facebook status update, with a check in their hand and standing in line for 20 minutes to deposit it. A couple of times I've walked up and said, 'Dude, you've got a check in your hand, a phone in the other. Why don't you just deposit the check with your mobile device?' Typically, the response is, 'I like mobile, it is good for checking my balances, but this check is important and I want to make sure the teller has it and can look me in the eye and confirm they have it.' There is nothing that the teller does that is different from what your phone can do. That's a customer mindset: for many financial transactions, I'm not comfortable yet.

We have to make consumers more aware of the security capabilities so they are less afraid.

What do you think is the future of mobile banking in the age of component-based banking where consumers may use several third parties to monitor their money?

Places like Europe and Australia, customers are much more open to link up their bank account with their social accounts. In the U.S., customers want to manage their financial life separately. 

In basic balance functions, there are a lot of things we can do. We've done prototypes and proofs of concept about how you can connect your balance information with your social information. Our customers aren't ready to go that far. We'll continue to test and learn.

You take a photo on Instagram, you can share it to Facebook and Twitter easily with a push of a button. Banking is different, but is it conceivable that banking goes that way at some point?

Everything is probably headed that direction. It is not the technology that is holding us back. Technologists know that it is fairly straightforward to connect. It goes back to the customers' perception of security and safety. From our seat we have to be very conscious of privacy, of where customers' mindsets are at, and then work around that.

Your area of the world is consumer and wealth management, but what are your thoughts on the commercial side of mobile? 

We still find on the commercial side that mobile usage is just not as prevalent. Treasurers are still very much in a desktop mentality. That said, we've had a customer approve a billion-dollar money movement transaction on a mobile phone using our CashPro platform. That is not the norm. But we are starting to see people do it. The other thing is that the worlds are not that independent. A commercial client came to us and asked if they could use our peer-to-peer rails to distribute money electronically and take checks out of the system entirely. We are live with them on it and they are finding significant savings in their ability to send money out the door. 

Talk about the bank earnings environment as it relates to the rise of self-service. 

If you think about channel costs, if you hand a check to a teller, that is pretty much the most expensive way for you to deposit a check. Doing it with a mobile phone is the cheapest. But the benefit we see is that it is easier for the customer as well. Consumer incentives and financial incentives are well-aligned. It is really great for the customer and it is really great for the bank. 

How much do customers value personalization? 

Personalization inherently involves a value exchange of data sharing. I'll tell you about myself and in return you give me something back. It has been a challenge for banks. When we launched p2p payments, you're using a text or an email account. Why would you want to reenter that when you have it in your contacts? So we created a simple experience. As soon as you go to make a payment, we ask can we access your contacts. And quickly, Twitter lit up: Bank of America wants to reach into my contacts. Recently we had a release that had to do with setting up appointments. So we asked for access to your calendar so we could put up in an appointment. And we once again had people asking why we wanted in the calendar. Going back to the consumer behavior, I think when it comes to finance, they want to protect their stuff. But increasingly, if they are provided with some value exchange, they are open to it.

You've touched on this, but how do you get the customers there? 

It comes back to what's the value. For instance, when you walk into the branch, let's assume that magically they knew you were coming. You've got a greeter with a tablet that has your CRM information. The person knows that you called in last night about a stolen card. The only way this works is if the customer perceives real value. And there is real value in knowing you're coming in, but it is based on the treatment when you walk in. Is the treatment me trying to sell you one more credit card or is it us saying, 'I noticed that you lost your card yesterday and you placed a call. Just wanted to let you know that we've processed it, we've put a block and the new one has been shipped and you'll get it in two days.' That's a very different experience. You may look at that and say, 'Wow, that feels good. I'm getting differentiated treatment, but I'm not getting junk stuff because I let you in the door.' 

How do you think the digital channels will evolve? 

Customer experience has been a challenge. We've got to get better. We can cram 50 different things on to that phone, but if the user can't find what they need they're going to call a call center. Two years ago we launched a set of capabilities that we thought were great. Why would you ever call a call center when you lose your card? You can report it from your phone. We looked at the analytics and people were still calling. In the moment of truth, when you freak out because you've lost a card, you want to talk to a human being. How does the digital channel overcome the need for a human being in that moment? The reality is we don't want it to be either/or. So we recently launched click-to-dial. You do everything in the mobile channel but if the moment comes when you need to talk to a human, you touch that button and call into the call center. We already know who you are, we already know what you're calling for and you're right into the agent.

I think as digital channels go, getting a better customer experience, making sure navigation and layout improves and improving how we integrate with the other channels because they are here to stay. It is just a question of how do you make it easy to go from mobile to anything else.

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