Robot bankers to the rescue

RBC's new predictive banking app ups ante among array of digital tools to help budget, save and never miss (hopefully) a bill payment

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Most Canadians don’t know their bank teller by name.

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Opinion

Hey there, time traveller!
This article was published 16/10/2021 (407 days ago), so information in it may no longer be current.

Most Canadians don’t know their bank teller by name.

Heck, they likely haven’t seen one in years.

Yet it’s likely millions are more familiar with a digitized version.

Juan Bernardo / FreeImages

That robot banker goes by the name of ‘NOMI’ — RBC clients’ artificially intelligent assistant.

Canada’s largest financial institution launched NOMI in 2017 to provide clients with insights about their spending along with a Find & Save tool to help them save money for a rainy day.

Now RBC has added another tool, NOMI Forecast.

The bank claims it’s the first financial institution in Canada to offer this artificial intelligence-backed technology, which predicts for clients what preauthorized payments are coming over the next week and, more importantly, alerting them if there’s not enough money to pay these bills.

“This is about giving our customers a view of what’s coming,” says Peter Tilton, senior vice-president of digital at RBC.

“So in using AI (artificial intelligence) we have this enormous computing power where we’re crunching data on every customer we have — about eight to nine million Canadians — and doing a forward view for each client, predicting what bills they are likely to have coming due soon.”

To that end the big bank has spent big money boosting its AI capabilities, funding startups and hiring big brains from universities’ computer science and engineering departments. These efforts have made RBC a global leader in this growing area of financial technology, he adds.

“Every bank claims they’re leading in one way or the other.”

But Tilton points to RBC’s backing of Borealis AI, its world-class AI research centre, that helped build NOMI Forecast, as evidence of its technological superiority.

“We really are one of the first banks in the world to get into (innovations) like AI insights.”

Indeed, few if any other financial apps do exactly what NOMI does, particularly with respect to its Find & Save tool. When activated, it regularly determines how much money to take from clients’ main spending accounts and then puts that sum into a savings account while ensuring clients never fall short on paying bills.

“For some people that amount is $5 a day and for others, it will be $50 a day,” he says.

“It is all tailored to each client.”

Furthermore, a client has never defaulted on a payment since its launch a couple of years ago, Tilton says.

Of course, RBC isn’t the only financial institution spending big on AI.

The Canadian Bankers Association website lists most large tech investments made by the major banks, including CIBC’s Insights.

It provides clients with “personalized, actionable and data-driven” advice based on their financial transactions.

Scotiabank has also invested in a “digital factory” in downtown Toronto where researchers are developing similar applications.

And TD Bank Group recently partnered with a tech company to share its client data safely with third-party financial wellness apps.

By the way, those independent ‘financial wellness’ apps — also providing budgeting and saving help — are abundant, says Enoch Omololu, founder and CEO of the popular financial blog Savvy New Canadians.

He recently listed the top ones in a blog post with Wealthsimple Save, KOHO Financial’s Visa card app and Moka ranking first, second and third respectively.

All three offer round-up savings tools whereby users can set an amount to round up to on every purchase, with that sum then transferred to a savings account.

Different from NOMI’s savings tool, which uses AI to find free cash flow to save, round-up savings can be very effective, say Omololu. He points to his own experience with Moka, which he has used for a few years.

“I just checked recently, and it has just over $5,000 in savings.”

Yet the power of these apps goes beyond saving. They are also useful for budgeting. For those really needing to track every dollar, however, a pure budgeting tool like You Need a Budget (YNAB) may be more suitable, he says.

“It is probably preferable until you get into the routine of managing your money on autopilot.” Its advantage: YNAB forces users to account for every dollar coming into their account. That engagement forces users to be conscious of their spending, says Omolulu, who used YNAB a few years ago to great effect when his budget had little room for error.

Financial educator Jessica Moorhouse — who helps Canadians build sustainable budgets — is more skeptical of these apps’ benefits.

She notes “most don’t work because they generally automate things… (and) don’t build or change habits.”

That said, YNAB is probably most effective, she says. That’s because users are part of a larger user community of support that, when paired with the app’s unrelenting demand for user participation, is more likely to result in lasting change, Moorhouse adds.

Surprisingly, NOMI didn’t make Omololu’s list, despite him being an RBC client and familiar with the service.

Still NOMI is useful “because you don’t have to scrutinize each line of your bank statement as it highlights important trends that are happening from month-to-month.”

Omololu further admits he could explore NOMI a little more, given he has never used the Find & Save tool.

Yet if there’s one clear advantage NOMI has over even highly rated third-party apps, it’s that it’s an in-house solution for RBC clients. In turn they do not need to synchronize their account with an outside company, potentially creating a data security concern, Omolulu says.

This along with NOMI’s other traits has made it popular with more than 1.5 million active users, who have saved more than $1.7 billion since its launch, Tilton says.

What’s more, NOMI’s new Forecast tool is a just harbinger of better predictive powers to come, he adds.

“As this technology develops, NOMI will only get more and more sophisticated.”

History

Updated on Monday, October 25, 2021 10:41 AM CDT: Clarifies wording regarding RBC and Borealis

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