Opportunities and Risks of Conversational AI for Credit Unions: Empathy and Intimacy in Automated Financial Customer Service

by Scott Mainwaring, UCI and Melissa Wrapp, UCI, Filene's Center for Emerging Technology

As the use of digital channels continues to grow for credit unions, conversational artificial intelligence (AI) technologies provide an opportunity for improved service delivery and the potential for new service offerings such as financial advice.

EXECUTIVE SUMMARY

Conversational AI technologies create new ways for credit unions to serve their members, from providing alternatives to interacting with human agents to creating new channels for more tailored financial services. They provide opportunities to build upon the trust and appreciation members place in credit unions as more human-centered, nonpredatory, and community based. But conversational AI technologies risk invading members’ privacy and being frustrating and opaque.

WHAT IS THE RESEARCH ABOUT?

This exploratory study looks at existing consumer relationships with conversational AI and digital assistants, on one hand; and with credit unions, banks, and other businesses, on the other, to begin to sketch the dimensions of, and provide examples of, points within a “design space” of possible financial digital assistants. While operational hurdles remain high for credit unions to deploy these new technologies, the opportunity will continue to grow in coming years. 

Through ethnographic research with consumers, this report anticipates how credit union members might come to value, or reject, digital assistants. For this exploratory study, we focused on one main question: What are the implications of digital assistant technologies for how members and credit unions could relate to one another in the next five years?

Interviews covered three broad topics: experiences using banks and credit unions; experiences using digital assistant technologies; and reflections on the idea of a financial digital assistant and issues of privacy, trust, and potential bias. This report summarizes findings on these themes and provides insight into how credit unions could take advantage of digital assistants to improve service delivery and differentiate offerings by incorporating elements from their mission and value proposition into their digital assistants. The way forward is to develop particular product proposals and related data transparency policies that can provide members with a new understanding of what they could achieve by relating with their credit unions through “talking computers.”

WHAT ARE THE CREDIT UNION IMPLICATIONS? 

Credit unions have an opportunity to deploy digital assistants in ways that improve service delivery and member experience and provide new types of service offerings. In thinking about what types of digital assistants would provide the best fit for your credit union and member needs, keep the following research findings in mind: 

• People like the promise of bots as part of a modern, organized, and simplified life.
• The realities of existing bots fall short of expectations and can limit imagination.
• People are resigned to the constant advance of technology without transparency or the ability to meaningfully opt out.
• Relations with credit unions are valued for their human element and trustworthiness, even if this means older, clunkier tech.
• The design space is complex, including diverse combinations of technologies, member needs, and business opportunities worth considering.
• The idea of talking with/through bots is becoming mundane, but credit unions could pleasantly surprise members with unique service features.
• Credit unions could tailor these technologies to show their strengths and to educate members not just about finances but also about data. 

In order to create a competitive advantage, credit union digital assistants would have to not only be useful and usable but also embody and express the core values of the credit union system. By building upon these core values of empathy and respect, credit unions could focus their development of digital assistant technologies in a way that creates differentiation, even with fewer resources than are available to larger financial services providers. 

We use findings from our research to generate design ideas that are meant to illustrate pathways worth exploring, developing, and evaluating: 

• Build a helpful, always-accessible agent. This kind of digital assistant could serve as the voice of the specific credit union and provide basic support but also demonstrate the “members not customers” ethos of the credit union value proposition.
• Provide an assistant to help members maintain, augment, and monitor their personal financial support systems.
• Provide robot counsel. This financial digital assistant could serve as a “second pair of eyes” as members conduct transactions with any financial services provider, intervening if necessary but always being available for reassurance or advice.
• Connect members to each other. This assistant would embody the credit union as a member cooperative, helping connect members to each other.

Access complete report, summary slides, and design principles here.

Trust and Social Capital in the Old City of Hyderabad: A Study of Self-Help Groups of Women, India

by Rosina Nasir, Jawaharlal Nehru University

"Trust and Social Capital in the Old City of Hyderabad: A Study of Self-Help Groups of Women, India,"  The Oriental Anthropologist: A Bi-annual International Journal of the Science of Man, Vol 21, Issue 1, 2021.

ABSTRACT

Why do people trust each other? Do people form groups through mutual trust or self-interest? How does the theory of rational choice and accompanying individualism affect the concept of social capital? Are social cohesiveness in groups and financial success related? Such questions generate interest in conditions promoting association and group emergence, such as trust, reliability, reciprocity, and shared values, which are inherent factors for cohesion. Self-help groups (SHGs) in an urban context are used to comprehend the aforementioned questions. The proposed study is based on the following hypothesis: the formation of groups is not based on trust but on material- and non-material- need-based individual rational choices that force them to cooperate with each other. It is found that a sense of insecurity among migrant women, an emotional need, led the formation of the imagined communities and has paved the way to construct trust. Thus, trust is found to be secondary in construction and sustainability of social capital. Castes, regions, and religions are strong factors; however, they are found to be less effective for the migrants than native SHG members. Therefore, among migrants, trust channelized itself vertically around a sense of fear.

Access the full article at the following sites:
https://journals.sagepub.com/doi/10.1177/0972558X211004752
https://jnu.academia.edu/rosinanasir

Beginning July 1, 2021 IMTFI Blog email will be delivered from MailChimp

Administrative note: Google has announced it will be shutting off its Feedburner application for email subscriptions beginning July 2021.  

The IMTFI Blog will be sending new posts through MailChimp beginning July 1st, 2021. Current subscribers will be receiving an email from “IMTFI Blog” from a MailChimp email address – please be sure to add this address to your contacts to avoid messages being diverted to junk mail.

Don't worry! The IMTFI Blog you know and love will still be here, we are just changing how you will receive email notifications.

Apo-cash-alypse Now!

by Andrew Crawford, Doctoral Researcher (GIGA, Universität Hamburg) and IMTFI Fellow

It’s embarrassing to admit as a finance academic but I’m bad with money. Not bad like I’d lose it all on a blackjack table, or have no money to buy lunch, but bad with payments. I have bank accounts in different countries, multiple Paypal accounts, a cryptocurrency hardware wallet and various ATM cards that lurk around my bedroom. I have only a vague awareness of how much money is in each and mostly go with the flow when I pay for things. Needless to say, I am being shafted by a bunch of payment providers in terms of fees, but I neglect to resolve the issue. Usually, apart from wasting money, this constant state of organised chaos never causes problems. But sometimes things go wrong, and my fragile payment ecosystem spirals out of control. This happened during my recent trip to Cambodia. 

I’m in Cambodia for 4 months working on a research project to measure the effect of COVID-19 on the microfinance sector. Two months in, I realised that it was time to pay my semester fees at the German university where I am doing my PhD. Thanks to the inexpensive nature of German universities this only amounts to 360 euro. I logged into my German online banking to do the bank transfer (the only means of payment accepted). The bank requires two-step authorisation so I brought with me an old Samsung phone with my German simcard set to roaming. I submitted the bank transfer and stared at my old phone, but then nothing. There was cell signal and the phone seemed to work fine. I asked online banking to resend the code then to my delight an SMS came through. I entered the code and it was rejected. Oh, maybe I made a typo. I entered it again. Still wrong. How could I type this wrong twice? I very thoroughly entered it one more time. Wrong. Then my phone beeped again. A second message had come through with a new code. The first message was the first code so it was no longer valid after I asked for a second code! I quickly went to enter the second code but my German account was now blocked due to three wrong codes. Crap. To reactivate the account I would need to take ID to my local branch in Hamburg. Sigh. As an alternative I transferred money from my Australian account (that I’ve had since I was 12 years old). This turned out to be 10% more expensive but at least the semester fees would be paid! 

The next day the Cambodian government suddenly announced that due to the spike in COVID cases a hard lockdown and curfew would operate from 8pm that day. It was sudden so I rushed to supermarket. Chaos. Like most countries panic buying was in full force so I decided I would go to my local convenience store instead.[1] Before I left, I took a video of all the panic buying because ‘hey it feels dramatic and I need to video it’. At this point you need to know that I keep all my ATM cards in a ‘card sock’ in the back of my phone. This is because I’ve been pickpocketed before and thought why do I need a wallet? I’m always conscious of my phone and never lose phones. If I never lose phones and my cards are attached, I will never lose my cards. Smart. While I was recording the panic buying I dropped my phone. Not so smart. It crashed onto the pavement and the screen cracked. I was so annoyed with myself I picked up the phone and quickly left while looking at the damage. I arrived home at 7.50pm and went to watch a movie, specifically Hunger Games, since the three-finger salute used in the Myanmar protests had reminded me of the film. I went to rent it from Amazon using my Australian ATM card and realised it was gone from my phone’s ‘card sock’. Damn. It must have fallen out when I dropped the phone. There was only 10 minutes left until curfew so I couldn’t leave, lest I be beaten with sticks by the Cambodian police which is their punishment for breaking curfew. Since my German account was also blocked all I had left was PayPal. Of course, Jeff Bezos doesn’t like PayPal so to rent the movie I bought an Amazon gift card from an online gift card website with PayPal. They charged $23 for a $20 gift card which was another hit to my hip pocket.

I cancelled my Australian ATM card and had a new one ordered which would go to my mother’s house in Australia and she would express post it to me in Cambodia. But for now, I had no ATM card. What would I do? You need cash in Cambodia![2] Apple Pay is here but it’s not so common yet. Thankfully, I still had a Cambodian bank account that I’ve had for years due to being paid consultant fees in Cambodia. I knew there were a few hundred dollars left. But I didn’t have the ATM card for this account (I assume it’s lurking in my room in Germany) but I did have the good ole passbook. All the local branches were closed during lockdown so I ventured to the head office to withdraw the money. This meant crossing 4 roadblocks and trying to explain to police my predicament. After finally making it to the head office I had my hands disinfected, temperature checked and wore my face mask to head inside the deserted bank and withdraw my money at the friendly teller. Relief. I had cash again. I was safe.

My brief experience not having cash made me concerned about some others in Phnom Penh that could no longer work. Specifically, I was worried about my friend and regular Tuk Tuk driver Ara who was completely dependent on his Tuk Tuk income. I called him and offered him some money but he lived in a part of the city that was too difficult to visit. Thankfully, Cambodia has an extensive mobile money network, named Wing, so I went to the Wing office on my street, opened an account, deposited some cash then transferred him some money that he very much appreciated. I didn’t realise at the time but using Wing would be my saviour in the end. 

A few days later I had a Zoom presentation of Loy Loy: The Financial Literacy Board Game that I co- created at IMTFI. The presentation was to the Beall Center for Innovation and Entrepreneurship and I was nervous. We expected at least 60 people to attend, possibly, some very important folks. Plus, it was midnight in Cambodia time and so I was worried about staying alert. I sat at the laptop and joined the zoom call. Internet can be patchy in Cambodia and as more and more people joined the meeting I could see my home connection become more and more unstable. I had planned for this and my phone was ready to hotspot with its faster cell network connection. I switched to the hotspot and felt safe just asthe meeting was to start. Then I received a message, “your data for the  month is about to be consumed”. CRAP. In Cambodia you usually buy cellphone credit from shops through the little scratch cards where you scratch off the number and enter the code. But it was midnight, shops were closed, and police with sticks were patrolling the streets. What could I do? I opened the Cellcard app and saw a small Wing logo. Ah perhaps I could connect the accounts. I hurriedly went through all the pins, SMS confirmations and fingerprint scans to connect the two, topped up and renewed the data plan, just as they were calling my name to present. Phew!

So, what have I learned from this whole experience? Well, firstly, be patient with two-step authorisations when you’re overseas, don’t film panic buyers because that’s mean, ‘card socks’ are not foolproof, mobile money accounts are useful during a pandemic, and it’s even handier to have lots of cash when all else fails. I mean with cash I bet I could have paid the policeman to not beat me with a stick and instead lend me his phone for a hotspot.

[1] Panic buying in Cambodia mainly involves eggs, rice and canned fish. Toilet paper is not essential thanks to ubiquitous bidet bum guns.

[2] Cambodia runs on both US dollars and the local currency – the Riel. This is due to the central bank being destroyed by the Khmer Rouge in 1975, with all currency then eliminated and a lack of faith in the reintroduced local currency ever since.

5/18 (Tues) 9-10amPT: Book Talk – Reimagining Money: Kenya in the Digital Finance Revolution

IMTFI, the Global Africa/Global Blackness Research Cluster in UCI's Department of Anthropology & Institute for Humanities in Africa (HUMA) present the following book talk:

Reimagining Money: Kenya in the Digital Finance Revolution by Sibel Kusimba

May 18th, 2021
Tuesday, 9-10amPT/12-1pmET/6-7pmSAST

Introduced by
Bill Maurer, UC Irvine, IMTFI Director

Panelists
Sibel Kusimba, University of South Florida
Olufunmilayo (Funmi) B. Arewa, Temple University Beasley School of Law
Nina Bandelj, UC Irvine

Webinar registration

https://uci.zoom.us/webinar/register/WN_lvsq2MvXStCuVfONYxlzYQ

JOIN US for a discussion with Sibel Kusimba to talk about her new book, Reimagining Money: Kenya in the Digital Finance Revolution, Stanford University Press.

 Available online: Chapter 1 and Table of Contents

About Reimagining Money: Kenya in the Digital Finance Revolution
Technology is rapidly changing the way we think about money. Digital payment has been slow to take off in the United States but is displacing cash in countries as diverse as China, Kenya, and Sweden. In Reimagining Money, Sibel Kusimba describes the rise of M-Pesa, and offers a rich portrait of how this technology changes the economic and social landscape, allowing users to create webs of relationships as they exchange, pool, borrow, lend, and share digital money in user-built networks. These networks, Kusimba argues, will shape the future of financial technologies and their impact on poverty, inclusion, and empowerment. She describes how urban and transnational migrants maintain a presence in rural areas through money gifts; how families use crowdfunding software to assemble donations for emergency medical care; and how new financial groups invest in real estate and fund weddings. The author presents fascinating accounts that challenge accepted wisdom by examining the notion of money as wealth-in-people—an idea long-cultivated in sub-Saharan Africa and now brought to bear on the digital age with homegrown financial technologies such as digital money transfer, digital microloans, and crowdfunding. The book concludes by proposing a new theory of money that can be applied to designing better financial technologies in the future.

About the author
Sibel Kusimba has conducted over twenty years of ethnographic research and archaeological fieldwork in Kenya. She is Associate Professor of Anthropology at the University of South Florida and is the author of African Foragers (2003). You can read her bio here.

For questions email imtfi@uci.edu.

Reimagining the ATM: From Cash-out to Curbside Banking

by Bill Maurer, UC Irvine and Kate Larson, Kate Larson Writes, LLC with Filene's Center of Emerging Technology

With so many options for ATM service delivery, how can credit union leaders make wise decisions to meet their members’ needs? Set against the backdrop of rapidly changing consumer behavior and expectations during COVID-19, this report explores the past, present, and future of the unpretentious automatic teller machine—and how its evolution impacts credit union strategy today.

Image Credit: Filene

EXECUTIVE SUMMARY

As our financial lives increasingly take up residence online, the ATM may be one of the last physical touchpoints between credit unions and their members. This creates a key opportunity for credit unions to delight members, provide convenience, and create a consistent brand experience across channels. But ATMs can also be an institutional pain point. As physical machines in dispersed locations, they require ongoing maintenance, upgrades, and replacement. Because ATMs touch nearly every part of a credit union’s operations, it can be difficult to view the full impact of an aging fleet, a new strategy, or a potential partnership. Faced with this mix of obstacle and opportunity, how can credit union leaders make the best decisions for their organizations?

WHAT IS THE RESEARCH ABOUT

In the wake of the social and economic changes wrought by COVID-19, ATMs have become an essential way for credit unions to provide members access to cash, deposits, and assistance. Tracing the history of the ATM from early twentieth-century agricultural shows to our pandemic-constrained present reveals a technology that is both deep-rooted and innovative. 

While ATMs may not seem particularly groundbreaking, they have extended the reach of most financial institutions far beyond their branches—and they may provide a blueprint for how credit unions can rethink those branches entirely. We spoke to leaders from credit unions and supporting organizations about their ATM experiences, challenges, successes, and strategies and drew from those insights to offer recommendations and a roadmap for success.

WHAT ARE THE CREDIT UNION IMPLICATIONS?

ATMs are one piece of a member’s full experience with the credit union and should be viewed in that context. Serving as a billboard, a marketing opportunity, and (hopefully) a positive interaction between member and institution, an ATM transaction can leave the member feeling satisfied, or frustrated by a machine that is laggy, limited, or out of service. Credit unions have a variety of options for offering ATM services to members, from owning and servicing their own machines, to partnering with a third- party provider, to joining a shared network, and some organizations may choose several of these. Because any approach will have benefits and drawbacks, each organization must define what success will look like before pursuing a new ATM strategy.

Finally, credit unions should beware of chasing after shiny technology and instead seek to understand their members’ unique needs and preferences in order to design a compatible and accessible ATM experience. But there is plenty of emerging technology to get excited about: contactless payments may render the plastic ATM card extraneous, and open-source software could simplify future upgrades. 

Making decisions about ATMs may never be easy, but given the variety of available choices, credit union leaders can and should find opportunities to generate value for their members.

Link to download report and summary slides.

Link to Infographic: Strategic Contexts for ATMS by Melissa K. Wrapp, PhD Candidate, Department of Anthropology, UC Irvine

HUMA & IMTFI Book Launch (4/19) Disrupting Africa: Technology, Law, and Development

Join us! This Monday (4/19) 9amPT/12pmET/6pmSAST
HUMA-IMTFI book talk of the forthcoming Disrupting Africa: Technology, Law, and Development by Funmi Arewa, published with Cambridge University Press

Disrupting Africa: Technology, Law, and Development

"Elites, Ornamentation, and Future Visions" with Olufunmilayo B. Arewa 

Monday 19 April 9amPT/12pmET/6pmSAST

Register: https://uct-za.zoom.us/j/97775121915

Introductory Remarks

Divine Fuh, HUMA Director

Panelists

Olufunmilayo B. Arewa, Temple University Beasley School of Law

Bill Maurer, UC Irvine, IMTFI Director

Rogers Orock, University of Witwatersrand

About the book

In the digital era, many African countries sit at the crossroads of a potential future that will be shaped by digital-era technologies with existing laws and institutions constructed under conditions of colonial and post-colonial authoritarian rule. In Disrupting Africa, Olufunmilayo B. Arewa examines this intersection and shows how it encompasses existing and new zones of contestation based on ethnicity, religion, region, age, and other sources of division. Arewa highlights specific collisions between the old and the new, including in the 2020 #EndSARS protests in Nigeria, which involved young people engaging with varied digital era technologies who provoked a violent response from rulers threatened by the prospect of political change. Using materials from extensive archival research, Arewa demonstrates how lawmaking and legal processes during and after colonialism continue to frame contexts in which digital technologies are created, implemented, regulated, and used in Africa today.

About the author

Olufunmilayo (“Funmi”) Arewa is the Shusterman Professor of Business and Transactional Law at Temple University Beasley School of Law. She received an M.A. and Ph.D. (Anthropology) from the University of California, Berkeley, an A.M. (Applied Economics) from the University of Michigan, a J.D. from Harvard Law School, and an A.B. from Harvard College. Her research focuses on technology, music, film, business, and Africana studies. 

For enquiries and optional readings contact: huma@uct.ac.za or imtfi@uci.edu.