Inside TD’s strategy to embed proactive advice into its app experience

Bank's digital activities gained additional momentum during the coronavirus pandemic

As consumer banking shifts increasingly digital, Toronto-Dominion Bank (TD Bank) is adding anticipatory capabilities to the Canadian version of its banking app, thanks to AI-based prediction tools.

In late 2020, TD, which operates in Canada and the U.S., rolled out new insights-based features for Canadian customers, including low-balance alerts and notifications when upcoming bills are due.

“We want to create more personalized experiences for the customer,” Imran Khan, TD’s head of digital customer experience, told FinLedger. “In the past, the customer might have to look at all their transactions to figure out what [expenses are] coming up. Now we can do that math for them and give them some advice.” 

Interactive digital experiences have long been part of TD’s plans, but digital activities gained additional momentum during the coronavirus pandemic, Khan said. In the fourth quarter of 2020, TD, which boasts 14.5 million online and mobile digital customers among 26 million customers globally, saw its number of mobile users grow 11% year over year in Canada, and 14% year over year in the U.S.

Other nudge-based use cases that will launch in the future include saving, investing and international money transfers.

The ability to study transaction patterns and deliver tailored advice is the product of technology the bank gained through its acquisition of Toronto-based AI startup Layer 6 in 2018, in a deal reportedly worth more than $100 million. Layer 6 provides a toolset to deliver insights based on customer behavior patterns. 

“We brought in an engine that was very good at creating recommendations out of massive amounts of data,” Tomi Poutanen, TD’s chief AI officer, told FinLedger. “Three years later, we’ve been able to deploy that system in every single line of business.”

By studying all of customer’s touch points with the bank – including online and mobile banking, branch interactions and ATMs – the bank can construct a “story of the customer” and an understanding of their needs, he added. Other capabilities include fraud detection and lending decisions.

TD did not comment on whether the predictive features launched in Canada would also be added to its U.S. app, but Khan said the bank often releases new features in one of its markets before applying those lessons to a rollout in another. 

The proactive nudges are designed to complement conversational tools the bank supports through digital assistants, which are live in both Canada and the U.S. Digital assistant Clari was launched in Canada in 2019, while a similar feature was launched in the U.S. in 2020 to help customers get their financial affairs in order during the pandemic. 

TD’s digital assistants are the product of a collaboration with conversational AI-focused fintech Kasisto. They use Kasisto’s “banking brain” KAI, which allows financial institutions to build virtual assistants and chatbots. Through KAI, TD customers interact with the bank through a chatbot interface and ask questions.

“KAI is designed for financial services, consumer banking, corporate banking and investment management,” said Zor Gorelov, CEO and co-founder of Kasisto. “[TD supports] two different use cases: KAI consumer banking powers Clari in Canada, and another use case [in the U.S.] is a virtual assistant built on our platform, but it was designed specifically and rolled out very quickly to handle Covid-specific inquiries.”

TD’s digital assistants, along with insights-based nudges function alongside MySpend, a personal finance app for Canadian customers that was rolled out in 2016 and supported by banking technology startup Moven, and a Canadian investing app the bank launched last year called TD GoalAssist.

Of course, digital assistants, and the ability to study transaction patterns aren’t unique to TD. For example, Royal Bank of Canada’s NOMI tool (supported by fintech Personetics) offers customers reminders and tailored insights into their banking habits. In the U.S., Bank of America’s Erica and Capital One’s Eno offer in-app conversational capabilities, transaction analysis and alerts.

The rush to evolve digital personal finance tools is motivated by a need to keep customers within bank product ecosystems as a growing number of third-party platforms develop similar capabilities.

“Banks are obviously looking at ways to move personal finance management to the next level and retain that customer facing side of business with a growing crop of fintechs that are trying to try to do the same,” said Stephen Greer, a senior analyst at Celent. “One of the interesting contexts for all of this is that the barriers to entry for fintech have been going so far down with banking-as-a-service.”

For its part, TD, which partners with several fintechs to deliver its consumer banking products, said it sees fintechs as partners rather than competitors. Regardless of the growth of third-party personal finance offerings on the market, the bank suggested a key differentiator is its holistic view of the customer.

“We have unique advantages if you look at Layer 6 and AI, and if you look at our Innovation Centre of Excellence –  these are capabilities that we’ve invested considerably in,” said Khan. “We also believe it’s important for us to work within an ecosystem because we know our customers are using other fintechs [and] big techs. But we think it’s critical for us to have our own capabilities because not all of our customers are using these other third party [tools].”

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