Connect with us

Top 10

AI IN THE FINANCE SECTOR: WHAT’S NEXT?

By Rui Vasconcelos, Product Manager for AI/ML at Canonical – the publisher of Ubuntu

 

The last few years have seen the promise of general AI acclaimed across multiple industries and this vision has been particularly strong in the finance sector.  We’ve currently hit the trough of the hype curve and it will take some time for engineering solutions to deliver on the touted promise. The potential is so great, that hope for general AI will require a longer term and collaborative investment, rather than a quick ROI for a single financial company. As a result, we need to see a continued collective effort from organisations in the direction of making general AI a reality – whether that is in the near future or further in time.

 

Artificial intelligence within financial organisations has developed from an almost unfathomable vision into tangible deployments, with applications ranging from back-end decision making to front-end customer-facing services. Financial services companies are now placing a much greater focus on AI/ML and are rearchitecting their IT and business operations to take advantage of what this new technology can offer. However, these implementations are what is known as ‘narrow’ AI, which is focused on a single or limited task and operates within a pre-programmed state. Almost all of the AI that surrounds us today is narrow AI. Everyday examples within the financial industry range from Robo-advisors to tailored credit and insurance tools. In distinction, general AI is a progression of this and is often described as an AI solution that can solve a wide range of financial services issues – from natural language understanding to anticipating risk and detecting fraud  – with the additional advantage of self-learning to solve any problem without human intervention.

 

Rui Vasconcelos

Narrow AI is goal-oriented and solves a particular problem, which is not necessarily bad. We have seen AlphaGo perform a singular task (playing the complex game of Go) and beat the top human expert at it. Organisations focused on being highly competitive in specific use-cases, should concentrate on narrow AI, however it is a short-term win. Those looking at wider-range problems and planning to gain long-term competitive edge need to consider investing in work that will make general AI more accessible, benefitting both the company and society in the long run. Getting there will harness tools and insights that will be very  valuable to other financial services applications, even if we do not reach general AI in our lifetime.  Where a ‘narrow’ AI would take into consideration historical stock prices to make time-series predictions, general AI would look into all types of accessible data that might influence the mood of investors on that day.

 

It’s unsurprising that AI development is a resource heavy and challenging process, and general AI development will be even more so. However, we possess an unparalleled capacity today to move it forward, both in terms of computation and human collaboration. The open source community may be able to help tackle some of the hurdles to general AI development by encouraging collaboration as well as pooling knowledge and resources. For instance, open source software allows IT teams in finance companies to benefit from frameworks, data sets, workflows, and software models in the public domain at reduced costs. In addition, the open source community sees projects as a shared responsibility, so provides an extra layer of security by continually monitoring source code for potential flaws and vulnerabilities.

 

A further advantage of the open source community is that it assists financial businesses to overcome the AI skills gap – one of the most frequently discussed obstacles to AI adoption. In fact, recent research shows that  a third of IT teams cite a lack of skilled people and difficulty hiring for required roles as the third most-common challenge. The first hurdle is a lack of institutional support from within the business. In another study, technology’s lack of transparency was also cited as a major hurdle. With collaboration promoted at its very core, an open source approach to AI allows smaller IT teams to benefit from the wider expertise of the much broader community.

 

Open source will be fundamental to democratising the development of general AI. Financial services organisations who are invested in refining and improving AI for the benefit of their own operations and society will look to open source for future development. However, realising general AI will require long-term  investment. Without it, the likelihood of reaching  general AI in our lifetime is low. So, it’s up to financial services businesses to start concentrating resources into general AI now to make this future a reality in a short timeframe.

 

Banking

TRANSFORMATION IS NON-NEGOTIABLE FOR BANKS LOOKING TO DELIVER VALUE IN A POST-PANDEMIC WORLD

Andrew Warren, Head of Banking & Financial Services, UK&I, Cognizant

 

In addition to responding to changing customer expectations, higher operating costs, new technology, and an evolving regulatory landscape, financial services organisations now also face the uniquely challenging business environment created by COVID-19. The economic consequences that are unfolding rapidly and unpredictably mean that banks must double-down on both their efficiency and customer experience agendas. In light of this, the need to modernise legacy banking platforms will gain sharper focus as banks emerge into the post COVID-19 landscape, driven by the need to focus on value for customers and agility to change and shift operations quickly.

 If banks are to remain strong and stable and make real progress with their efficiency and experience agendas, transformation is non-negotiable – but it can be risky and have high rates of failure. So how can banks pursue their transformation agenda, while addressing the very real risk that modernisation of legacy banking platforms presents?

 

Communicating value across the business

 Banking transformation may have traditionally been the domain of the IT function, but the impact on current and future value means it should be on the agenda of a much wider set of senior executives. This includes the CIO and COO but should also be as far reaching as the Chief Risk Officer, Chief Financial Officer, Chief Digital Officer, and Chief Experience Officer.

When we talk about value in the context of transformation it can mean multiple things. In monetary terms, transformation can reduce the total cost of a bank’s IT infrastructure, with legacy equipment 55 per cent more costly than cloud data. More importantly however, transformation often results in moving from highly manual orientated processes to more efficient, automated – and therefore accurate – processes. In turn this can lead to more informed and tailored products and services, internal process efficiencies, enhanced cybersecurity, advanced analytics, and reduced risk, especially around fraud and malicious activity. These all add significant value to customers, as well as operational and regulatory imperatives.

Furthermore, viewing transformation through a value lens should tie it to a range of specific financial and accounting metrics that ultimately measure success. That includes both those that reflect the protection and extension of current value, as well as measuring the extent to which transformation will support the capture of future value. Financial services organisations have a huge opportunity to create greater value for customers from innovation in products and services. Changing market dynamics are creating a basis upon which banks and others in the industry can evolve their offerings and organisations.

In much the same way as we have already seen in retail, for example with Amazon and AliBaba, and media platforms, such as Facebook and Netflix, customers are adjusting to a new way of banking that is changing expectations. To keep up, banks need to increasingly provide easy-to-use digital-first services across their products, as well as introduce new tools to help customers manage their money in the 21st century. And there is no doubt that the fall-out from COVID-19 will likely further drive the degree and extent of digital adoption.

Traditionally, financial institutions take many different approaches to transformation, such as developing sleek new customer experiences to compete or developing new platforms and partnering with fintechs. But achieving success for more mature banks is more challenging given the obstacles presented by their legacy platforms. Comprising complex, customised systems, these are expensive to run and very costly to change.

 

The inevitability of change

To truly transform operations and experience, many banks are now having to face up to the reality that they cannot move forward without banking platform transformation. That means they must – in one way or another – replace their historic systems with more modern, cost-effective, and flexible platforms. That is going to be essential to stand up the capabilities required to enable digital products and deliver the truly revolutionary experiences that customers demand.

Recognising this, many banks are now considering their options. Some have already started down the challenging path and hit bumps in the road. A very small number have successfully executed their ambition to create a platform for the future. All banks contemplating transformation should take lessons from both the successes and the mistakes. These will be critical to inform their plans.

 

What are the next steps?

There are a number of essential transformation steps to consider that will help realise value from investment as rapidly as possible, provide an appropriate level of delivery confidence and manage exposure to the operational risk normally associated with such changes. These include:

1. Business strategy must inform every step of transformation – ensure that the approach to platform transformation is tightly aligned to the wider business strategy.

 

2. Design a strategy-aligned roadmap for delivery – a transformation roadmap should clearly set out the logical order in which business outcomes will be delivered. Here again, that needs to align with the value that the organisation is seeking to achieve, with incremental progress determined by business priorities. This involves making appropriate use of modern delivery methods, such as agile, and making sure that everything that is done satisfies and is frequently assessed against the relevant value criteria.

 

3. Assess technology selection against business value – organisations often undertake detailed and exhaustive market, functional and technical assessments when reviewing new products and suppliers. This often means either the technical assessment dominates proceedings and / or new technology platforms are selected without a clear line of sight to the value required. Poor product selection is a risk as a result, as well as a lack of understanding of how products should be deployed to inform the sequence of delivery required by the transformation roadmap.

 

4. Assess your readiness for change – unsurprisingly, given the sheer scale and velocity of change that business leaders must deal with, resistance to change is often a key reason given for the failure of banking transformation projects. However, it is crucial that the ability of the organisation to deliver and adopt the operational, technical, and cultural changes required to support transformation is comprehensively assessed and done early.

The impact of COVID-19 paired with and the demands that financial services organisations face from all directions, make change an inevitable necessity for the most. The approach to delivering a successful banking transformation, underpinned by a modernised platform, will vary dramatically from bank to bank. However, above all, businesses need to ensure that value drives every aspect of change explicitly linking transformation strategy and investment with the realisation of value.

 

Continue Reading

Top 10

THE INDICATION OF A DEEP RECESSION AND HOW TO PLAN

Nick Gold, MD of Speakers Corner

 

All the indicators are that the UK will be heading into a deep and painful recession come the Autumn. How bad, and indeed for how long, are the unknowns, but businesses need to use this time to start to look ahead and plan for the future. But how can a business plan when the future is uncertain? 

Nick Gold will discuss why the planning needs to start now by creating an entrepreneurial culture within the business that liberates employees to come up with new ideas, to test the market, speak to their customers and find new opportunities. He will also explore how this needs to go hand in hand with a creative employee reward and incentive programme.

The Entrepreneurial Mindset seems, over time, to have become confused and assimilated with a ‘start-up culture’.  This might be the case in an actual start-up of course but an entrepreneurial mindset should exist in all businesses, whatever size or heritage.

Even more so, in times of crisis and uncertainty, the entrepreneurial mindset is a necessity for any business to survive and more so, thrive.  It allows both leaders and employees to embrace the unknown, accept the uncertainty we find as being part of the challenge, rather than being a blocker to progress.

The ‘Start-Up’ mode is an aura where the vision or idea is clear but the direction of delivery is uncertain, an agile approach and wrong directions are not only common place but welcome within a business where they are learning the path for the successful growth of their business idea and company

As businesses grow and mature, the processes within the business are refined and developed and the mindset shifts to an environment where the whole picture can be captured, analysed and evaluated at the outset.  This, from a strategy and planning perspective is a much more attractive and robust offering, it gives greater visibility to the outcomes and risks of a project, it ensures the effective monitoring of the project and it means the future is clear.

The business landscape is a fascinating place now where there is no historical precedent as to what the future holds. At whatever stage of the lifecycle of the business, in marketplaces which are at different levels of maturity, business leaders need to embrace this new mindset and allow their employees to to rediscover, or even just discover, their entrepreneurial mindset.

This will require a change in the way businesses operate. Employees will start to feel liberated, spending less time developing the business plan which has a hypotheses, method, outcome and conclusion, and transition to a culture where the path to an idea is embraced as a test bed for possibilities.  It is a place where budgets aren’t clearly allocated in advance but rather the opportunities are continually assessed so resources are refined and directed to areas as ideas open up.

The obvious challenge is that this fluid approach might work for businesses who are not established in a marketplace or defending a position as they have no legacy to protect. It is much harder and more complicated where customers are expecting certain service levels and ways of working.  But with an entrepreneurial mindset, this should be seen as an opportunity to build closer relationships, to test new ideas, to spot problematic trends and develop solutions.

The truth is that an entrepreneurial culture has always been presented as a polarised extreme to established business or process) culture.  This is simply not true. While there is no doubt that a business trying to marry up different cultures to create a hybrid model has a much more challenging task, but the rewards are so much greater.

The starting place has to be the right vision, delivered from the top level of the business and then implemented so every employee not only buys into the vision that has been laid out before them but they actually start owning the vision too.

In the case of the established business with a secure customer base, the customers also own the vision.  Effectively the vision is no longer a top down approach but is actually the values and purpose of the business itself.  This ownership means that employees will be more willing to make decisions and take risks in the areas that they are focussed on as they can see how the choices they make can and will effect trying to attain the vision.

The entrepreneurial mindset means that every employee, regardless of role within the business, feels that they are able to contribute to the vision. It means employees are not restricted by job title or role, they are liberated by the vision. It means skill sets are transferred to exploit opportunities.

Business leaders which understand this will develop an incentive and professional development plan for employees. As time moves on and employees start to see the opportunities for themselves within the business, the entrepreneurial mindset we have talked about now starts to become deeply embedded within both the business and employees.

The single most critical aspect to this, the one change that is required for any business as the landscape looks ever more fraught and even more so uncertain is that the business trusts it employees.

It requires leaders to understand that any IP that it owns, any products that it has developed, any brand loyalty or reputation it has developed and maintained over the years, this is now secondary to empowering its people within it.  The employees are both the custodians of the brand and responsible for delivering the vision.   Above all else, this is the critical aspect for business leaders trying to create an entrepreneurial mindset for the company at a time when forecasting and planning has never been so abstract.

 

Continue Reading

Magazine

Partner Events

Trending

Banking9 hours ago

NO SAFE HARBOUR FOR DIGITAL BANKING

by Konstantin Bodragin, Business Analyst and Digital Marketing Officer at Bruc Bond   At the beginning of 2020, the future...

Business9 hours ago

CAN TECHNICAL INNOVATION HELP FINANCIAL SERVICES FIGHT BACK AGAINST FINANCIAL CRIME?

By Charlie Roberts, Head of Business Development, UK, Ireland & EU at IDnow   It’s no secret that the financial...

News9 hours ago

ARE MIDDLE EAST ENTERPRISES PREPARED FOR THE FUTURE?

Deloitte releases 2020 tech trends report   Deloitte’s 11th annual report on technology trends captures the intersection of digital technologies, human...

Wealth Management21 hours ago

ONLINE STOCK BROKERS ARE BENEFITING IN 2020

2020 has changed our lives in dramatic ways. Thanks to COVID-19, many of us now work from home. Rather than...

AI AI
Finance3 days ago

COULD COVID-19 BE THE CATALYST FOR DIGITAL TRANSFORMATION IN FINANCE?

By Simon Bull, Sales Operations & Business Development Manager at Aqilla   We are all now living in a new...

Banking3 days ago

WHY OPEN BANKING SHOULD BE EVERY MARKETER’S BEST FRIEND

By Kathryn Wright, CSO, Upside   To date, Open Banking has been mainly utilised to help consumers with account switching...

Finance3 days ago

TOP TECHNOLOGY TRENDS FINANCIAL INSTITUTIONS SHOULD INVEST IN TO BRIDGE THE GAP IN REMOTE WORK

Chirag Shah, Senior Vice President, Fintech & Innovation Lead, Publicis Sapient   More than ever before, technology is critical to...

Business4 days ago

TOP 5 LINKEDIN PROFILE OPTIMIZATION HACKS FOR ASPIRING BANKERS

According to Firmex, finance professionals cannot afford to be not on LinkedIn. A significant number of organizations acquire talent in...

Wealth Management4 days ago

TAPPING INTO THE DATA GOLDMINE: THE FUTURE OF DATA-DRIVEN CREDIT MANAGEMENT

Willand Brienen, product owner at Onguard   Data, and the insights it reveals, can offer organisations a vast number of...

Finance4 days ago

ENLISTING TECHNOLOGY TO HELP FIGHT FINANCIAL CRIME

By Rachel Woolley, Director of Financial Crime Fenergo   Million-dollar properties, private jets and parties on luxury yachts with celebrity...

Banking4 days ago

TRANSFORMATION IS NON-NEGOTIABLE FOR BANKS LOOKING TO DELIVER VALUE IN A POST-PANDEMIC WORLD

Andrew Warren, Head of Banking & Financial Services, UK&I, Cognizant   In addition to responding to changing customer expectations, higher...

Business4 days ago

HOW MILLENNIALS CAN GET AHEAD WITH THEIR MONEY

Granville Turner, Director at company formation specialists, Turner Little.    Millennials are often painted as globe-trotting creatures that spend more...

STRUCTURED DATA STRUCTURED DATA
Business4 days ago

STOPPING THE CHARGEBACKLASH

By Gabe McGloin, Head of Intl. Merchant Sales @ Verifi   Brands have been encouraging consumers to move their shopping...

Business4 days ago

CONSUMERS ARE READY FOR BIOMETRIC PAYMENT CARDS

Lina Andolf-Orup, Head of Marketing at Fingerprints   We’ve come a long way in the evolution of digital payments. Magnetic...

Finance5 days ago

WHY IT PAYS TO MAKE CYBER SECURITY PART OF THE M&A DUE DILIGENCE PROCESS

Anurag Kahol, CTO at Bitglass   Mergers and acquisitions (M&As) enable business leaders to adapt fast to new opportunities. Whether...

Interviews5 days ago

GOING FOR INVESTMENT IN CENTRAL EUROPE: START-UP LIFE OUTSIDE A TRADITIONAL TECH HUB

A Q&A with Bence Jendruszak, Co-founder and COO at SEON   At what stage did you realise you were going...

Banking6 days ago

CLOUD ALLOWS BANKS TO BASK IN CHANGE

by: Elliott Limb, Chief Customer Officer at Mambu   As a new era of banking takes off, the cloud is...

Finance7 days ago

COVID-19 WILL DRIVE FINTECH ADOPTION – BUT AT WHAT COST?

By Ian Bradbury, CTO – Financial Services at Fujitsu UK   Even before the impact of Covid-19, the financial services...

Business7 days ago

HOW TECHNOLOGY IS POSITIVELY IMPACTING COMPLIANCE AND HOW IT IS HELPING TO STREAMLINE PROCESSING TIME AND COST FOR FIRMS

By Joe Woodbury, Director – Investment Management Solutions at Lawson Conner (part of IQ-EQ)   Private Equity & Real Estate...

News7 days ago

TECHCOMBANK AND COMPASS PLUS CELEBRATE 15 YEAR MILESTONE IN BANKING PARTNERSHIP

Since issuing the first Visa card 15 years ago using solutions provided by trusted partner Compass Plus, Techcombank, one of...

Trending