Regions AI tool helps steer cross-selling

Who says you need a $10 billion tech budget to compete with the big banks?

Since the summer of 2017, Regions Financial has been experimenting with a system dubbed ROSIE to help its bankers suggest the best new product or service for customers. Powered by artificial intelligence and big data, it is one of the high-tech tools the Birmingham, Ala., bank is counting on to compete against its deep-pocketed rivals.

“The value of ROSIE is the personalization of a unique offer that is relevant,” Chief Operating Officer John Owen said. “It also equips our bankers to have a really good, robust conversation with a customer.”

Short for Regions Optimal Solutions Intelligence Engine, ROSIE pulls information from more than 350 data elements and suggests a new product or service best suited for a particular customer. For example, a branch banker talking with a customer might get a nudge to offer a credit card that the customer has already qualified for. Or if the customer has a card already, the banker might get a prompt to talk about a new feature that lets him or her lock the credit card from the bank’s website or mobile app.

ROSIE relies on big data, artificial intelligence, cloud and other technologies and was one of several recent tech investments that Owen highlighted at Regions’ investor day in late February.

Regional banks have faced investor pressure to rein in tech spending, particularly in an environment with sluggish commercial loan demand and rising deposit costs. Bankers, however, defend that spending as necessary to compete, particularly with deep-pocketed big banks. Regions may not have a $10 billion tech budget like JPMorgan Chase, but at the very least, it can be a fast follower.

Regions will also face stiffer competition in some of its key markets if BB&T and SunTrust complete their merger as planned. Executives of both those banks have said that scale – specifically, the scale needed to invest huge sums into technology – was one of the chief motivations for the deal.

The $125.7 billion-asset Regions plans to spend $625 million, or 11% of its total revenue in 2018, on technology this year, Owen said. Of that, 42% is earmarked for new technologies, 48% for maintenance of existing infrastructure and 10% for cyber security and risk management.

To be certain, Regions is not alone in experimenting with AI and data analytics to broaden its customer relationships. Bank of America saw early success with its chatbot Erica, for example, and Morgan Stanley also uses an AI-powered system to aid its advisers.

If done well, that kind of feature can be an important differentiator for a financial institution, said Tiffani Montez, senior analyst at Aite Group.

“The difference really becomes around personalization,” she said. “How can you take what you know about a consumer — about how they spend money, where they spend money, what their financial goals are — and use all that information to deliver personalized experiences?”

But doing that well means showing the customer the right offer at the right time and place, and banks do not always accomplish that, she said.

Montez gave a recent personal example: She called her financial institution to report fraud on a card and when the call wound down, the contact center rep offered her an auto loan refinance.

“Wrong place. Wrong time. And I had a lease, so there was nothing to refinance. Wrong offer,” she said.

ROSIE’s results so far have been promising, Owen said.

Last year, ROSIE made 65 million recommendations. Bankers passed 38 million of those suggestions on to customers. Regions ultimately earned 7% more revenue from the customer group that used ROSIE than the control group that did not.

Currently, Regions is using ROSIE mostly in its branch network and call center and plans to increase its usage of ROSIE in its online and mobile banking channels, Owen said.

Regions has also made several other tech investments. One is an “AI virtual agent” called Reggie, which it uses in its contact center. It differs from ROSIE in that it directly serves customers. Regions estimated that Reggie can do the work of roughly 50 full-time employees and said that last year it handled 1.5 million customer calls involving routine matters.

The bank has also invested in its digital mortgage application process, which it says has reduced the number of questions it asks of customers and has sped up its decision-making time. Executives said those investments are critical to the growth of Regions’ mortgage business, which it views as a better cross-selling opportunity than, say, indirect auto loans.

Owen said he feels confident that Regions is investing the right amount of money it needs to stay competitive.

“From a technology-spend standpoint, if you were to pile up a lot of money on the table here and say, ‘You can spend more,’ I really can’t point to a lot of areas where I would say I need to spend more,” he said.