The AXFI conference isn’t the most intuitively named financial services conference. But that’s about the only thing it doesn’t do well.
Designed to address the intersection of data analytics and financial innovation—with a decidedly credit union leaning—AXFI (Analytics and Financial Innovation) recently wrapped up its fourth annual event in suburban Minneapolis with about 300 highly engaged attendees.
What really struck a chord with me—aside from the ragtag band of credit union veterans who performed Tuesday night—were a pair of presentations from gentlemen whose expertise resides well outside the realm of financial services.
Their perspectives reinforced the extent to which the issues facing financial institutions are universal, and how we can benefit from reaching outside our comfort zone for fresh ideas.
Eric Berlow is an ecologist by trade, and a TED Fellow whose talks on simplifying complexity have garnered over two million YouTube views. He led the University of California’s Science Institute inside Yosemite National Park, focusing on data-driven solutions for preserving wildlife ecosystems.
His 3D graphic representations of these ecosystems look remarkably like the ones business types now generate using sales and social media data.
In his opening keynote, Berlow focused on both the power and limitations of the wealth of data at our disposal. He exhorted us not to treat artificial intelligence (AI) as value-agnostic.
“If AI chose meals for you, you’d only be eating dessert,” he sagely points out, citing the inherent skew of online recommendations toward the popular.
“We’re still trying to replicate the customer intimacy we had in the era of the general store,” Berlow says.
He suggests that if a local known for excessive drinking walked into his community store in the 1930s and tried to buy crates of booze, the clerk would have likely functioned as a set of guardrails.
Berlow worries that unchecked e-commerce algorithms may inadvertently maximize on a myopic goal (“only a small slice of a person’s identity is what they purchase”) in the case of the vulnerable.
Some might decry protecting against such results as an example of the “Nanny State.” Others would call it “people helping people.”
Berlow isn’t arguing against ecommerce—far from it. However, he advocates for the need for a human layer to inform AI.
“Non-experts won’t know when the model returns an answer that makes no sense,” he says, pointing to a series of nonsense charts that register statistical correlations. “You’ll always spot errors in the data once you drill in,” making the case for continuous improvement.
At the same time he encourages credit unions to pursue co-marketing avenues with other businesses based on counter-intuitive correlations of unrelated purchase categories.
It’s a nice opportunity for collaboration rather than competition, and one for which financial institutions are uniquely positioned thanks to the wealth of payment data at their disposal.
Berlow’s context-setting thoughts made for a great bookend paired with those of Alpharank’s Brian Ley, who presented during the Killer Fintech Apps session on AXFI’s third and final day.
Alpharank has pivoted into the financial services space (check out their spring Finovate demo). But Ley’s initial target market was nightclub promoters as he explored leveraging social data to identify the true influencers in networks to maximize club attendance.
According to Ley, 76% of millennials make their financial decisions through word of mouth. He contends that when an influencer changes financial institutions, the banking relationship of anyone in their orbit comes into play as well.
Knowledge of such a change would afford institutions the opportunity to pre-emptively reach out to members you wouldn’t otherwise have realized were vulnerable.
According to Ley, Chase used similar logic to fuel last fall’s absurdly successful launch of its Sapphire Reserve card.
There’s plenty of value to be had from watching fellow financial services professionals share industry insights. Another AXFI session featured case studies from three credit unions that have already applied data analytics to address their real-world problems.
But Berlow’s and Ley’s outside-the-box perspectives were an inspiring reminder that financial services are no island, and that we should cast a wide net in our continued search for breakthrough ideas.
GLEN SARVADY is managing partner at 154 Advisors and senior payments expert with Best Innovation Group, a CUNA consulting partner. Follow him on Twitter via @154Advisors. His views do not necessarily reflect those of Credit Union National Association.