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Some 40 percent of Wells Fargo ATMs now near-field communication or NFC enabled, letting customers start a transaction by holding their phone near the terminal. IMAGE: WELLS FARGO

Personal banking’s future: Smarter faster better – while keeping a personal touch

Banking has changed dramatically since the introduction of online services in the 1980s. And the pace of innovation is picking up as the industry continues to transition from paper-based to electronic service.

Perhaps the most disruptive change in recent years – one evident in institutions throughout the Northern Plains – is how banks are using technology to take their services to customers. Offices remain important for some services, but mobile devices are increasingly popular platforms for transactions.

The most recent developments in banking include voice-activated equipment. Banks’ interest in providing useful information in real time also continues to advance.

“I’ve been in banking for 25 years, and I think technological changes will continue coming at a faster and faster rate,” said Maureen Jelinek, executive vice president–director of technology and operation services for Fargo-based Gate City Bank, which has 36 locations in North Dakota and western Minnesota.

“We have a lot of mobile capabilities. I think we’ll see more and more of that.”

Mobile technology

Among the mobile services offered by Gate City is Card Valet, a phone app that lets customers turn ATM and check cards on or off. Palm Vein Authentication is among other services that might become available in the future. The bank is going to test the identification method on a teller screen at one of its locations.

With the spread of mobile technology, in particular, there is no longer any reason for customers to change banks when they move, Jelinek and other bankers said.

“I’ve been banking for 35 years, and I may have built my last branch,” said Dana Dykhouse, CEO of First PREMIER Bank in Sioux Falls.

First PREMIER has 18 branches in eastern South Dakota, but the number of offices a bank operates almost has become irrelevant, Dykhouse said. “We’re doing so much business remotely that it’s not even a factor anymore.”

Then again, the Watford City, N.D.-based First International Bank & Trust is “bucking trends a little bit” by opening new branches, said Peter Stenehjem, president. In North Dakota, the bank opened a new office in Rugby in October, and it will open one in Grand Forks in November and one in Bismarck in March. In all three communities, the new branches are replacing temporary facilities.

First International has 27 locations, primarily in North Dakota but also in Minnesota and Arizona. “You have to go where your customers are,” Stenehjem said. “You can’t completely go away from bricks and mortar.”

Missy Keney, director of customer experience for Alerus, said the role of branch banks has evolved in recent decades from transaction hubs to help centers. Alerus is based in Grand Forks and also has offices in Fargo, the Twin Cities area and Duluth as well as in Arizona, Michigan and New Hampshire.

“Technology has really, dramatically changed financial services in the last five years, and we see that continuing in the future but at a much quicker pace,” said Chris Wolf, president of the Northern Valley Market for Alerus. “We’re listening to our customers. We want to do business the way they want to do business.”

Wolf expects online banking will continue to grow. However, customers often want to discuss significant financial moves in person with a banker, he said.

Many of the nation’s largest banks are based in New York. Minneapolis-based US Bank is one of the exceptions. Based on assets, it ranked No. 7 in 2016. It has 136 branches in Minnesota, 23 in North Dakota and 16 in South Dakota.

US Bank is among the large financial institutions in the United States that recently started offering Zelle, an app that lets users send a payment from a connected account to someone else via email.

“That’s really the very beginning of solving the problem that ‘I don’t have enough cash on me,’ ‘I can’t find my checkbook’ or ‘I can’t be bothered to go to an ATM’,” said Gareth Gaston, omnichannel executive vice president for US Bank.

US Bank also has enabled banking services by voice through Amazon’s Alexa, a table-top device.

“What we’re beginning to see in the industry is that some of the much more complicated things are becoming digital,” Gaston said. A person can apply online for a mortgage, for example.

Going card-free

Wells Fargo & Co., the nation’s third-largest bank, is based in San Francisco. But it has corporate roots in Minneapolis, Sioux Falls as the site of its main office and a strong presence in the Northern Plains.

In March, Wells Fargo announced card-free access to its 13,000 ATMs. Users are provided a one-time code to access services. Wells Fargo is also testing a “chatbot,” an automated communications program, on Facebook Messenger. A chatbot uses artificial intelligence to helps answer customers’ questions account balances, for example, or the location of the closest ATM.

“Our job is very straightforward: How do we make things simpler for our customers,” said Bipin Sahni, head of innovation research and development at Wells Fargo’s Innovation Group in San Francisco.

Banking transactions have moved from paper to keyboards to touchscreens to now speech, Sahni said. The future will bring more voice-driven transactions conducted in real-time, Sahni said. The biggest technology challenge for banks, in his view, is how to make better use of artificial intelligence.

“I think that’s the biggest frontier,” he said.