Who would you rather talk to, a virtual banking assistant whose life goal is “helping people overcome drama with style and a pout”, a “born charmer” chatbot whose special skill is “modelling a zillion looks in one paparazzi flash” or a “fast n’ curious” AI who wants to “bridge the gap between humans and bots” and “can type faster than the speed of light”?
Liv, the two-year-old “digital lifestyle bank” spun out of Emirates NBD, put all these choices and more to their customers in a bid to create something that has eluded virtually every other bank — a chatbot their customers actually want to deal with, instead of one that’s viewed as a job-stealing menace to be endured in the name of progress.
Close to 60,000 people watched a Facebook video of Liv's management “interviewing” the five potential chatbots. Viewers were then encouraged to vote, via the comment stream, for who should be hired (an offer that around 600 of them took up, lured in part by the chance to win $140).
Jayesh Patel, head of Liv, admits that the game was rigged. Olivia, the empathetic but fun bot with the lightning-fast typing skills, was the one who'd been developed for deployment, and the others gave such obviously inappropriate answers at their "interviews" that they were unlikely to win the popular vote. Liv was never going to unleash “born charmer” Matchio Bot or “geeky cheeky” Gizmo Bot to its 210,000 customers (though Matchio was a surprising hit with some Facebook commenters).
The integrity of the voting process was secondary to the true purpose of the process of engaging Liv’s customers, making them feel like they were active participants in their bank’s decision to transfer the handling of their day-to-day queries from real-life humans to a machine.
Some 3,000 of those Liv customers signed up to “mentor” Olivia by engaging with her and helping her to learn the skills she'd need to serve them when she finally began work this week. (The customers also get the chance to win prizes including an iPad for their participation).
Olivia wasn’t starting from scratch. She’s built on Kai, the artificial intelligence platform built by cutting-edge US AI firm Kasisto, which is already in use across eight global financial institutions including Singapore's DBS, Standard Chartered, JPMorgan Chase, TD Bank and Wells Fargo.
Zor Gorelov, head of Kasisto, says this project was different because Liv doesn’t see itself as a bank in the traditional sense. “The idea is lifestyle assistant first, banking assistant second, that’s the vision that the bank has and that’s what we helped them execute on.” Or, as Mr Patel puts it, the key is "positioning Olivia as a buddy that our customers rely on, like and trust".
For Mr Gorelov and his team, that meant teaching Kai about spending habits, saving habits and goal setting, and developing a visual and conversational way of presenting the information.
The build-up for Olivia was also unique. “What they’ve done is . . . groundbreaking in many ways,” says Mr Gorelov, who expects to roll Kai out across another eight banks in the next year. “We’re watching the space very carefully.”
Mr Patel is refreshingly upfront about the fact that using Olivia means fewer human jobs. The man versus machine tension is an easier one at Liv, which has a headcount of just 63 and is acquiring new customers faster than any other bank in the UAE, than it is at massive banks who employ tens of thousands in their call centres and are growing slowly. "We will not hire as many new agents," says Mr Patel. "We still have a lot of growth."
The initial feedback from users testing Olivia has been so positive that Mr Patel sees her as a "prime contender" to provide similar services at Liv's parent bank, Emirates NBD, though likely under another name. Whether they'll go for an X-Factor style contest to find that name is anybody's guess.
One to watch: Raisin
Raisin, the German group that raised $114m in funding from PayPal last month to become one of the best-financed fintechs in Europe, announced on Thursday its purchase of its longtime German service bank, MHB.
A retail banking marketplace, Raisin lets customers place their money in international banks to take advantage of global interest and currency rates, writes Madison Darbyshire in London. It calls itself a “schengen experience” for banking, and has rapidly ballooned to 165,000 customers across nearly 70 European banks. The tie-up with MHB, Raisin hopes, will accelerate plans for expansion.
When Raisin was founded, interest rates were poised to rise from their record low levels, but the ECB has pushed back, forcing Raisin to look for other ways to drive growth.
The young company wants to end its dependency on service providers, accelerating the implementation of its technology and speeding up processing. “It’s good to have full influence on the payment and customer due diligence side,” Raisin co-founder Tamaz Georgadze says.
Raisin didn't disclose what it paid for MHB (your estimates welcome!). However, the bank purchase, Mr Georgadze said, allows Raisin to utilise the bank's licenses. Previously it relied on its partner banks, primarily challenger banks Starling and Keytrade, to fill the void.
“We didn’t have financial institutions license that would allow us to work across Europe,” Mr Georgadze said. “The driving factor was the increasing complexity in our business model. We needed a license to operate other than [a] brokerage license.”
MHB is not a bank the Raisin customers place assets with; Mr Georgadze brushes off questions about competition among the banks on its marketplace.
On the MHB’s price tag, Mr Georgadze joked that MHB thinks they overpaid, and Raisin thinks they underpaid. “We are a happy buyer,” he says.
Number of the week: 65 per cent
Proportion of British peer-to-peer lender Lendy’s outstanding loans that are distressed or in default.
Further fintech fascination
Crypto chronicles: #fintechFT’s friends over at Alphaville are arch crypto-skeptics, and we detect a little schadenfreude in their report that blockchain firm Setl has appointed administrators. Along with developing blockchain software, Setl has been building a securities depository and a fund record keeping platform. Companies involved in market infrastructure need to hold regulatory capital, however. When that became hard to fund, the company decided to sell the latter two businesses. That has proven difficult to do, and the two units have been handed over to administrators, who'll sell them on behalf of creditors. Setl was founded by Peter Randall, who also founded the Chi-X alternative equity exchanges; several big shots of traditional finance sit on its board.
Regulators' advance: On Thursday the UK’s Financial Conduct Authority published research arguing that many customers don't know what they're buying when they purchase cryptocurrencies. Those interviewed were often looking for a way to “get rich quick”, citing external influences such as social media, and often performed little to no research before purchase. Shocking absolutely no one, the most likely to know what a crypto asset was, of UK residents, were men aged 20 to 44. The FCA is looking to address the potential harm of cryptoassets on a public that understand little about them.
Trend watch: Islamic finance keeps on keeping on. On Thursday TheCityUK and Borsa, the Turkish stock exchange, released a joint report examining the market’s potential. The World Bank estimates that 6 per cent of the world’s population opt out of the financial system for religious reasons, a number that is dramatically higher in Islamic countries — as high as 19 per cent in Turkey. Yet two thirds of the unbanked have smartphones. This is an opportunity for fintechs offering Shariah-compliant products — those that, among other things, charge no interest, make no investments in gambling or alcohol, and rely on equity rather than debt. The $2tn market has been growing 10 per cent a year or more, according to the study, and this is poised to continue.
Follow the money: Augmentum, the London-listed, Lord-Rothschild-backed fintech investment fund, had its investor day this week. The company said it has invested £71m and has committed another £15m to companies in its portfolio — meaning effectively all the proceeds of the IPO a year ago have been put to work. Zopa (personal lending and investing) BullionVault (online precious metal investing) and iwoca (small business credit) make up about half the portfolio. The stock market seems to like the progress: the (very illiquid) shares have risen 15 per cent since November.
AOB: Nigerian fintech start-up Paylater will transform into a digital bank after securing $5m from Nairobi-based Lendable, a move to reach the unbanked in Africa's most populous country *** Revolut launched Autoexchange, a service that lets everyone become a currency trader, in order to utilise the company's free international transfer service at a fixed conversion rate. Yes, crypto is included *** MoneyConf, the fintech-focused tech conference led by Dublin-founded WebSummit, will be joining its parent conference in Lisbon, a move aimed at integrating the two conferences and deepening the conference group's presence in Portugal. The conference was to have been held in Dublin in June, and has been pushed back to November.