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Marcus Johnson: Hey gang, it's Tuesday, September 8th. Tiffany, Rob and listeners welcome to Behind the Numbers e-Marketplace podcast made possible by Verve. I'm Marcus, welcome back from your long weekend, so thanks for joining me for today's conversation. We have living out in California, Principal Analyst, head of our financial services vertical, Tiffany Montes.

Tiffani Montez: Hi there.

Marcus Johnson: Hello. And living upstate, uh, in Upstate New York, we decided that no one calls it upstate unless it's in New York, Head of eMarkets Advisory- ... Rob Rubin.

Rob Rubin: Hello there, Marcus.

Marcus Johnson: Hey fella. Welcome back. Thanks. Uh, welcome back to both of you. Uh, we start of course with the fact of the day

Marcus Johnson: So I had another one about where potato chips, uh, came from. I'll do that one on another episode. B- I pivoted because we were talking before we hit record about why, uh, the Jersey Shore is called the Jer- Jersey Shore and not referred to as a beach, but it is referred to as a beach everywhere else. And so I quickly, whilst the guys were setting up, went and looked, and I found an article, uh, from Yahoo Life.

Marcus Johnson: Um, and it explains why it's the Jersey Shore and not the beach. So, um-

Rob Rubin: Can I take a guess? I have no idea.

Marcus Johnson: Go.

Rob Rubin: I think it's 'cause it has a big boardwalk in there, something to do with that. Basically. '

Marcus Johnson: Cause that's

Rob Rubin: the defining feature of the

Marcus Johnson: Jersey Shore. Basically, yes. Joe Mason from, uh, Asbury Park Press- Oh

Marcus Johnson: uh, in Yahoo Life, um, wrote a piece. He said, "In New Jersey the term shore for the beach comes from a mix of geography, history, and local culture. The word shore refers to the land along the edge of a body of water, like the Atlantic Ocean, which fits New Jersey's coastal region perfectly. Historically English settlers used shore, uh, to describe coastal areas, and it stuck in local usage.

Marcus Johnson: By the 19th century a seaside tourism ... As seaside tourism grew, the Jersey Shore became a catchy way to describe the string of beach towns from Sandy Hook to Cape May. Locals and marketers leaned into the term to evoke a sense of place. Think boardwalks," what Rob said, "amusement parks, and summer vibes.

Marcus Johnson: It's less about the literal sand, what most call a beach, and more about the whole coastal experience, including town's culture and lifestyle."

Rob Rubin: Well done.

Tiffani Montez: Interesting.

Marcus Johnson: That's interesting. Knew this whole time. We were just talking about it. Maybe

Tiffani Montez: I'll try to change it to the San Diego Shore.

Marcus Johnson: Start a movement Tiffanie.

Marcus Johnson: Start a movement. Anyways. It's a

Tiffani Montez: vibe right? It's a vibe.

Marcus Johnson: Yeah. Today's real topic, the AI financial advisor, bank's biggest opportunity or biggest threat

Marcus Johnson: AI is increasingly part of how consumers manage their finances, our colleague Tyler Brown writes. He explains that over half, 55%, of US consumers used AI for financial tasks in the last 12 months according to a Plaid, I think that's how it's pronounced, uh, study. JD Power found 40% of people had turned to AI in the prior three months to help manage their finances.

Marcus Johnson: And according to our eMarketer survey in May, Americans are just as likely to turn to AI for personal finance advice as they are for guidance on home improvement and DIY projects or travel. And Tyler was explaining- Wow ... that banks and neobanks are implementing a new generation of virtual assistants that live within proprietary banking portals instead of outsourcing financial management to general purpose AI tools.

Marcus Johnson: He points to a few examples, Revolut debuting an in-app assistant for UK customers developing, has developed in-house, Starling Bank launching a Gemini powered virtual assistant in March, Lloyds plans to do the same. Tiffany, I'll start with you. Can banks successfully encourage customers to use their AI power tools on their own sites and apps for personal financ- for personal finance management?

Tiffani Montez: I think they can. I mean, if we think about an advantage of a bank over just a traditional LLM, banks actually have financial data. They have ... And through that financial data, they have context, and through that context, they have signals. And I think if you start to look at all of those things, banks are in a great position to be able to offer consumers financial advice and guidance that aligns with their short and long-term goals.

Rob Rubin: But I think it's about visibility though, right? Like, one of the things that he- people who use LLMs is they'll, they'll upload information but a snapshot, right? Like here's what it is today. Mm-hmm. Whereas a bank has a much, as you point to, a much sort of better signals for you than just the last statement.

Rob Rubin: Um, so I wonder how they can leverage that and how they can gain. They've always had sort of tools to enable them to aggregate accounts, but would they need that in this scenario too, to, to really p-

Tiffani Montez: Mm-hmm ...

Rob Rubin: provide that?

Marcus Johnson: Mm-hmm.

Tiffani Montez: Yeah. I, I think absolutely they're gonna need that. Let's think. One of the challenges with giving financial advice today is that banks only have access to their own financial information, the accounts that a consumer owns, but consumers are increasingly spreading their- Yeah

Tiffani Montez: financial accounts across providers. And so unless you actually have aggregation, there's no way for you to ever get a clear picture on a consumer's finances end to end.

Marcus Johnson: Mm-hmm.

Rob Rubin: No.

Marcus Johnson: So it, I mean, is, because they can't, is there a world where, uh, an LLM comes along and says, "We will bring all those things together for you, all your accounts from all those places, and give you one complete picture"?

Marcus Johnson: Is that the advantage that they have?

Tiffani Montez: So I'm gonna step back for a minute, and Rob, I'd love to hear your thoughts on this. But I think that as there's always new al- alternatives that come into place, you start to really see where there's gaps in banking relationships. So what I mean by that is I do think that there's an advice gap in retail banking that's existed for a long period of time.

Tiffani Montez: Banks are really good at giving customers access to their money, showing them what happens, but those experiences always stop short of telling a customer what they should actually be doing next. Mm-hmm. And I think that is where LLMs are stepping in. It's a way for consumers to go and actually ask questions in their own terms, describe their life experiences in the way that they're living their lives, and an LLM can come back with that context and be able to provide advice and guidance that aligns with whatever it is that they're trying to do.

Marcus Johnson: Mm-hmm.

Rob Rubin: I wonder how a bank has to brea- break through the, um, the concept that they're always trying to sell a product. Mm-hmm. So the advice is always a little bit angled to support their position, whereas if you're just using an LLM theoretically that you always use for your DIY projects, and now you're asking it in between when I'm gonna be able to retire, maybe they think that's giving them a bigger view than what a bank is gonna do, which is try to get you to, to buy one of their products.

Marcus Johnson: Yeah. Yeah, that is, uh, a, a preconceived idea that they're gonna have to try to overcome because th- they do have the advantage of people still want to speak to people for big decisions.

Rob Rubin: Sure.

Marcus Johnson: And Lauren, uh, Ashcraft, uh, who is one of our analysts, um, on, on the finance team, she was writing that Gallup research shows AI, uh, search engines, and other digital channels are increasingly becoming consumer's first stop for financial guidance because they're convenient and accessible.

Marcus Johnson: Uh, but this shift doesn't necessarily change who consumers trust to make high stakes financial decisions. They prefer humans when making important decisions, creating opportunity for- Sure ... for, for financial institutions to encourage ... Sorry, to engage consumers early in the decision-making journey. She says 90% of middle income US consumers prefer speaking with a knowledgeable person over AI for major financial decisions.

Tiffani Montez: And I think that, that that is, that speaks more to, um- A behavior versus a preference. So when you think about it- Mm-hmm ... in that context, it's like I don't have any other choice today but to go to- ... a human, right?

Rob Rubin: Right.

Tiffani Montez: Yeah. Because I don't have the digital experiences that are being built. Interesting. So therefore my only choice is to go with an actual, we'll call, a human, whether that's in an advice center or a branch.

Tiffani Montez: But once you start to open things up and you create experiences from a digital environment, does that behavior actually change because you actually have preferences?

Marcus Johnson: Mm-hmm. Yeah. You ask a good question. Um, JD Power, they found over a third of those people using AI for financial advice said they, uh, they found the advice helpful in making smarter financial decisions, um, and it was comparable to the share of those who found their bank's advice helpful.

Marcus Johnson: Now, again, this isn't high stakes necessarily. Maybe this is just, um, you know, things to help them, um, y- with s- smaller, um, decisions when it comes to their own money. But Tiffany, how- h- how can AI tools like ChatGPT, Gemini, Claude, Copilot, others convince people to use their LLMs for personal finance instead of turning to their bank?

Tiffani Montez: I think it's more about building the experiences inside of these LLMS that align with a particular goal. And so what I mean by that is we have NatWest, um, that has built a home buying experience where customers can actually go explore form- home affordability in ChatGPT. We're also starting to see people like Experian that are building experiences that allow consumers to be able to look at credit scores as an example.

Tiffani Montez: So I think one is building it inside. The other part becomes how do you actually allow someone to give permission to share their data inside of these LLMs so that you can take what I would say is zero party data, so the context that the c- customer is giving you in the LLM along with permissioned financial data and bring those two things together to be able to really give, uh, financial advice and guidance.

Marcus Johnson: Mm-hmm I was speaking to a friend about this episode, and I said to her we're talking about, you know, using AI for personal finance help. And I said, um, "W- w-... If you could pick between using your bank and using this, what would you pick?" And, um, she was like, "Well, my bank is where my money is." And I said, "Well, what if an LLM, what if OpenAI, what if Google, what if they bought a bank?

Marcus Johnson: Is it just you're using the bank just because that's where your, where your money is, that's where your checking account is?" And Rob, what do you think about that? I mean, could... Especially 'cause people seem to be turning away from traditional banks more and more. We see the rise of, of neobanks. We got some survey data showing the growth in, in how many people are preferring to do, um, a lot of their banking with neobanks.

Marcus Johnson: I- is that a way that these large language models, that these tools, these AI platforms, um, convince people to start using them more is, hey, not only can we give you a complete picture of your finances, but we can also store your money

Rob Rubin: I don't know. I mean, is, is it one of their goals to actually take the money?

Rob Rubin: Uh, I haven't- Good

Marcus Johnson: question. Yeah ...

Rob Rubin: I, I don't know if that's what... I haven't heard of an LLM specifically sort of becoming like an LLM bank.

Marcus Johnson: Mm.

Rob Rubin: Like building a, like a competitive bank. 'Cause I still think that one of the-- I think that if people are using LLMs but they're not like fa- LLMs can't facilitate whatever they're saying to do.

Rob Rubin: They still need someone to execute, which is they need a bank, right? Like an L- like an LLM can't s- uh, transfer the money unless, like, you know, e- eventually you need to, you need a bank. If the LLM is saying you should open up this new retirement account, is it gonna be able to open the retirement account for you or do you need to go to the bank for that?

Marcus Johnson: Hm.

Tiffani Montez: Yeah, and I think if you think about the experience, I go back to the NatWest thing again, right? So NatWest is bringing banking into AI, and ChatGPT is allowing consumers to be able to explore the home buying experiences and be able to ask specific questions about affordability and mortgages. But then what ends up happening is once they get to a point of actually wanting to take out a mortgage, they're directed back to NatWest.

Tiffani Montez: Mm-hmm. So we don't have that end-to-end process yet. I think it's really more about building experiences that help with the actual advice and guidance part, and then handing off to, uh, a digital asset or some other call to action to be able to finish up that interaction with the consumer.

Marcus Johnson: Mm-hmm. Wonder if this is, uh, therefore an opportunity for banks to say, "Hey, if you are going to..."

Marcus Johnson: Because you had some research in your re- recent report, um, th- the next era of banking, Tiffany, that showed, and it's just staggering but when you think about it makes a lot of sense. There are only a couple of things that people go to their bank for most of the time. Checking accounts, you know, maybe a credit card.

Marcus Johnson: But when it comes to like loans, insurance, they're, they're turning elsewhere. I wonder if this is a good opportunity f- for banks to say, "Hey, imagine if we had a full picture of everything, what we could do." Lauren was pointing to, um, saying banks and card issuers face a new competitive threat as younger self-directed investors increasingly shift everyday banking and spending to trusted investing platforms.

Marcus Johnson: Saying Robinhood, for example, aims to let customers earn, spend, save, invest b- invest, borrow, and manage finances through AI in one ecosystem

Rob Rubin: In the Robin Hood ecosystem.

Marcus Johnson: Yes, exactly. Exactly.

Tiffani Montez: I- I do think that banks will eventually start integrating LLM into their own mobile banking experiences. Mm-hmm. And that's really where they'll have the power to be able to give insight and be able to help consumers manage their finances to achieve their goals.

Tiffani Montez: And then I think in the future well beyond, we'll hit a stage, um, that I've been calling concierge banking, where a customer gives user permission, uh, user permission tasks for the bank to handle on their behalf. And so I think we, we will have this evolution, but I think as of right now it really starts with how do you give financial insight?

Tiffani Montez: And then from the insight, how do you move to goals, and then how do you move to concierge-led baking?

Marcus Johnson: Yeah. What would be an example of what someone would use a concierge banking for first? Because I imagine it's not gonna be a very high stakes decision at first.

Tiffani Montez: Yeah, that's the key word there, right? I don't think it's gonna start with high stakes decision, and that's why I've intentionally created the word concierge because I don't think it's ever gonna control everything on behalf of the user.

Tiffani Montez: Mm-hmm. But you could save, as an example, that, um, let's say I'm going on vacation, and during vacation I wanna be able to use my cash first to pay for things. And then after cash, I want to be able to use the credit card that is gonna give me the highest reward structure. And maybe while I'm gone, I have these bills that are coming in that I want automatically paid, and that I want...

Tiffani Montez: After they're paid, I want someone to be able to set aside money to put in my savings or to set aside that extra money that I can spend on vacation.

Rob Rubin: Mm-hmm.

Tiffani Montez: So how do you actually coordinate those decisions for s- consumers in the background?

Rob Rubin: I was wondering if it was gonna be just more point, like the first version of it is sort of the, the last version of online bill pay.

Rob Rubin: Ri-... You know? Like-

Tiffani Montez: Yep ...

Rob Rubin: it sorta starts there, like something that they're already using as opposed to sort of what they could do with it. It's sort of making it a better, uh, a, a better driver, a better choice, you know, a better way to manage what they're already doing and then work their way into it. And

Tiffani Montez: i- Yeah, that's a good point.

Tiffani Montez: Uh, going from writing checks to paying bills. Yeah, it's li- it's the concept of, uh, channel shifting, right? Yeah. You take a behavior on one channel and you shift it over to another channel.

Rob Rubin: And as far as, like, the LLMs competing, I've been thinking about it as we've been talking, and I think that they're gonna try to sell advertising to all these institutions.

Marcus Johnson: Mm-hmm.

Rob Rubin: Like, they're gonna give, like, the advice, but they're not gonna wanna be the bank. They're gonna wanna sell ads to all the banks.

Marcus Johnson: Mm-hmm.

Rob Rubin: And I... The question is how do they do that and remain that objective

Marcus Johnson: Yeah.

Rob Rubin: Mid- middle, middle person.

Tiffani Montez: The audience. Yeah Yeah, that, that is a great point. I think one of the, the power in an LLM, and I think Rob you and I have talked about this, is that LLMs have the ability to take context, and it's the context that provides the recommendation.

Tiffani Montez: And that is different than banking where we've oriented consumers to learn about our financial products and to ask questions about financial products and solutions in the ways that we've trained them to do so. Where an LLM, you- they can just go ask a question in their own language, and based on the answer to that question, it goes out and evaluates what brand most closely aligns with that consumer's needs.

Tiffani Montez: Mm-hmm. And that's a very different way to think about interactions, um, with the bank.

Marcus Johnson: Yeah. So according to a, a Play study, 30% of folks are using AI for recommendations, 33% for budgeting/investing advice or to solve customer service issues. Half, 52%, of consumers expect fintech apps to use AI, and 50%, half again, say managing money without AI would feel outdated.

Marcus Johnson: Tiffany, uh, what are banking consumers most likely to want to use AI for when it comes to their personal finances at least right now?

Tiffani Montez: I think they're the most likely to use it for things that can help them meet their own financial goals. So when you think about, um, AI, I think it's more around product recommendations, and then I think it becomes about understanding, um, how to use tools that can help them meet their short and term...

Tiffani Montez: long-term financial goals. Mm-hmm. And I think that's really where you're gonna start to see, to Rob's point, maybe it starts at something really small, and then it works itself up to something much bigger.

Marcus Johnson: Yeah.

Rob Rubin: I, I wonder if it's... they use it for something they're worrying about. Hmm. Right? Like, "Oh, my, my credit card-" Hm

Rob Rubin: bills are insane right now." Mm-hmm. "So I better figure out how to deal with that." Or, you know, I keep, you know, uh, "I think I have a car payment that's too much for me now," right? Like, or maybe they're more opportunistic, you know, "How can I retire when I'm, you know, 60?" You know, they, like, they throw things at the LLM to see how it responds, and then to see what it asks back.

Tiffani Montez: Mm-hmm.

Rob Rubin: Like, you know, like, I-- sometimes I use an LLM just to see what questions it's gonna ask me if I give it a big challenge like that.

Tiffani Montez: You actually brought up a, a really interesting point, Rob, and when you think about ... So you're talking about car payment, right? And when you think about a car payment and whether or not someone can afford the car, everyone thinks that affordability is just based on the monthly payment of that vehicle.

Tiffani Montez: But affordability is much bigger than that, right? Affordability means how much did you actually tack onto that monthly payment to get tire insurance, pa- paint insurance, guaranteed asset protection insurance? How much are you spending on fuel? How much are you spending on charging cost if you have el- an electric vehicle?

Tiffani Montez: How much are you gonna spend on registration every year? What unexpected expenses or repair should I have to pay? And so, like, even when I think about just the use- What about parking? ... of AI.... Parking, exactly. Like, it's... You're, you're... Like, when you think about it from a bank's perspective, and this is where I really think that banks have an opportunity to step in as a true financial partner, is how do you actually really help someone understand the complete cost of a decision that they're making?

Tiffani Montez: End to end. And I think that's really where banks could use AI, LLMs in their mobile banking applications to really be able to help consumers think through the financial decisions that they're making and all the actual implications of that decision.

Rob Rubin: It's like a parent.

Marcus Johnson: Yeah . Mm-hmm . Yeah. Have you thought about this?

Marcus Johnson: Have you thought about this? Yeah. It's- Exactly ... I mean, to what you were saying, Rob, it's are people coming ... I think a lot of people initially will come to it for those reactive questions. Something's happened, I need help. Right. Versus the proactive decisions that Tyler was raising. Most US adults are using AI to look for ideas and educate themselves.

Marcus Johnson: Uh, uh, yes, general financial advice, product and service recommendations, investment ideas, questions about which bank is best. But I think most of them initially are gonna be help me questions.

Rob Rubin: Right.

Marcus Johnson: Um, I did find this chart that-

Rob Rubin: I do find that if you ask someone in a survey, um, why are you using AI, and you just say to help you make financial choices, you'd say yes even if the things that you were asking it were based on trouble that you're in- Yes

Rob Rubin: or something that- Mm-hmm ..... you're worried about, right? Like, the question would have to be so specific-

Marcus Johnson: Yep ......

Rob Rubin: to understand that.

Tiffani Montez: And also just understanding why they chose to go to the LLM, and that, and I actually wish that I could... I wish this podcast was in November when I actually will have survey data- Fair

Tiffani Montez: where we ask, like, "Why would you choose-" We'll see you then ..."to do this in an LLM?" I think

Rob Rubin: it's 'cause we're, we're- Where we gotta know right now.

Tiffani Montez: Yeah.

Rob Rubin: Yeah. I, I can't make an appointment with the banker. Um...

Marcus Johnson: Yeah.

Tiffani Montez: Yeah. Um- That is definitely a lot of it.

Rob Rubin: Yeah.

Marcus Johnson: I found this chart from J.D. Power folks can see on the screen.

Marcus Johnson: Um, consumers most often use AI for saving strategies and credit advice, um, 41% to 37%, respectively. But there's a ton of other general financial education, 36; budgeting, 33; taxes, 33; investing, 31, et cetera. Yeah. So there's no clear winner really. They're using, uh, AI for a lot of different things.

Rob Rubin: Sure.

Marcus Johnson: Um, people seem pretty satisfied with AI's personal finance, uh, finance advice.

Marcus Johnson: According to Wells Fargo survey, two thirds of you, uh, of AI users acted on AI generated suggestions of whom 40-... Uh, sorry, not 40, 90% said the ideas were profitable or worthwhile. Mm. Um, does that cover

Rob Rubin: the- I think it's AI so positive.

Marcus Johnson: Well, yes.

Rob Rubin: It's like- Yes ... "We can do this with you."

Marcus Johnson: Mm-hmm.

Rob Rubin: It's also if you give a mouse a cookie, right?

Rob Rubin: Like, if you ask it to do this one thing, it's gonna say, "That's great. I can do that," but ...

Marcus Johnson: Yeah.

Tiffani Montez: Also let me help you with this next thing too. Right. And that, I mean, that's actually the, the beauty in it if you think about it from just generally speaking in an advice perspective, right? Yeah. You ask it one question and then it asks you another question and gets you thinking about the next thing- Uh-huh

Tiffani Montez: and the next thing, and the next thing, and the next thing.

Rob Rubin: Yeah. Probably the best part.

Tiffani Montez: Yep.

Marcus Johnson: Yeah.

Rob Rubin: Until it isn't. Ah,

Marcus Johnson: yeah.

Tiffani Montez: Till two hours later you're still on the same question.

Rob Rubin: Start from the beginning, I'm so confused.

Tiffani Montez: Let's-

Marcus Johnson: Let's look at who's using AI. Uh, our market analyst Lauren Ashcraft writing, uh, recently marketer research shows younger consumers are increasingly comfortable with AI generating financial advice almost half of Gen Z as millennials regularly lean, uh, lean on AI.

Marcus Johnson: As You can see this chart on the screen from Wells Fargo. Uh, Gen Z adults twice as likely to turn to AI for financial advice as the general adult population. Have

Rob Rubin: we called them AI natives yet? Like children that are- We have

Tiffani Montez: not ...

Rob Rubin: children that are born who only know AI.

Marcus Johnson: They would be, yeah, well so Alpha is- That

might

Tiffani Montez: be the Alphas, yeah ...is

Marcus Johnson: almost it's pretty much that but if it's the true version of that would be uh, Beta who I think are like very, very tiny uh, people who literally ha- don't know a world, um, without AI.

Marcus Johnson: But you could argue that Gen Alpha is the AI generation. Yeah. But AI native is questionable. So

Tiffani Montez: th- But close. It's gonna be the LLM beta version.

Marcus Johnson: Yes, yes. Exactly. Well played. Um, an excellent note to end the episode on and then also uh, Tiffany's new report The Next Era Of Banking hot off the press How Banks Create Value Beyond Products.

Marcus Johnson: Uh, you can check that out show no- uh, link in the show notes or you can go to emarketer.com if you're a Pro Plus subscriber it also lives there. That's all we've got time for today's episode thank you so, so, so much to my guests uh, for joining me for today. Thank you to Tiffany.

Tiffani Montez: Thank you.

Marcus Johnson: And Rob.

Rob Rubin: Thank you, so much fun.

Marcus Johnson: Yes indeed and thanks to the production crew Lars and Danny helping us out with this one. To everyone for listening to Behind the Numbers eMarketer Podcast made possible by Verve. Thank you, thank you. Tomorrow Suzy and Skye speak to David's Bridal, and I'll be back on Friday with another episode of Behind the Numbers