BMO Harris recently announced two fintech partnerships that the Chicago bank hopes will be the first of many.
One is with SpringFour, which matches customers in financial distress with local, state and national resources that could help them find a job, obtain financial guidance, pay for utilities and save money on child care, home repair and prescriptions.
The other is with Genivity, an artificial intelligence software company whose algorithms predict how long clients are going to live and how healthy they’re going to be to help plan for retirement and future health care costs.
The $112 billion-asset bank hopes to continue building such partnerships. The end goal: a digitally driven relationship bank.
“We saw these partnerships as an opportunity to drive our digital innovation and accelerate our work in the digital area,” said Purva Sule, director of the BMO Partners team.
BMO Harris set up the BMO Partners team almost three years ago to drive fintech partnerships. Within the team, technology and business leaders collaborate to find fintechs with whom it would make sense for the bank to work.
Last year the team began collaborating with the Chicago tech incubator 1871. (Its name is based on the Great Chicago Fire of 1871 and its aftermath, “a remarkable moment when the most brilliant engineers, architects and inventors came together to build a new city,” 1871’s website says.)
1871 is “well-connected with more than 500 startups as their member base, it’s also well-networked in the Chicagoland community,” Sule noted. “So when we were looking at potential accelerator partnerships, 1871 was a natural choice.”
The bank and 1871 created a program that resembles the
The mentors help startups answer questions about product, pricing, technology and compliance; help them improve their product and value proposition and help them understand how to work with a large organization like BMO. In turn, the BMO mentors get to understand the fintechs and their products better and figure out which ones are a fit for the bank. At the end of the three months, the startups pitch their wares to a panel of BMO executives who evaluate them and give out cash prizes.
This year, the bank singled out graduates SpringFour and Genivity for long-term relationships.
BMO Harris customers can now access SpringFour’s resources through the
“SpringFour had a great proposition for bringing resources to customers who might be facing difficulties with repayment or potential default,” Sule said. “It lets the customers get help where and when they need it and to get back on track with their finances.” The bank pays SpringFour for the service.
On the financial planning side, BMO chose Genivity, whose artificial intelligence software uses proprietary algorithms to project out-of-pocket medical and assisted living costs based on clients’ hereditary factors, lifestyle habits and health risks.
“They use tons of past publicly available data on health to create models where they take inputs from the customer and provide you with that customized output,” Sule said.
Sliders can be used to see how behavioral changes, like exercising more each day or retiring later in life, might change clients’ life expectancy, health care costs and retirement needs.
“This could give you a more realistic forecast and expectation of how much you need to spend in retirement and how far your retirement savings will go,” Sule said.
Genivity is currently piloting its software with BMO Wealth Management’s U.S. business in the Hinsdale and Barrington suburbs of Chicago and in Florida’s Sarasota and Naples markets. BMO pays for licenses for its financial advisers to use the software.
The return on investment for these programs will come in improved customer experience, Sule said. “That’s money to the bank because that’s what drives customers to say good things about us in the market,” Sule said.
There are other benefits, too. When customers use SpringFour, it’s hoped that their loan repayment rate will rise. And when call center agents can provide helpful resources to customers, a better conversation should ensue than strictly talking about the delicate topic of repayment.
Both SpringFour and Genivity should also help the bank differentiate itself from the competition, Sule said.
Both of these partnerships are in pilot mode now, and there are plans to roll them out to more contact center agents, financial advisers and bankers. Genivity might also be integrated into the bank’s digital channels.
“That’s the benefit of rolling out the pilot, to learn from it, see what benefits are coming from it for customers and banks and then make decisions about how to expand,” Sule said.
