By Ed Lane, VP Sales EMEA, nCino
Artificial intelligence (AI) is quickly transitioning from a “nice-to-have” technology to a key business driver for financial services organisations. Over the past few years, financial institutions (FIs) have begun to think about AI beyond the abstract and are discovering the many practical and profitable use cases for this emerging technology. A growing number of FIs have started truly understanding the importance of using AI to enhance the customer and employee experience.
As AI becomes demystified and valuable use cases emerge, FIs are becoming more attuned to the idea of adopting these technologies across a wide range of key business functions. In 2021, the time has come for FIs to evolve beyond agility and embrace intelligence by incorporating cognitive technologies into their operations. When FIs fully harness the power of AI to capture deeper customer insights, make informed, data-driven decisions, manage risk and increase efficiencies, they transform themselves into Intelligent Enterprises and bring more value to their customers and teams.
Agility is the Launchpad
Any discussion of the Intelligent Enterprise begins with an understanding of the Agile Enterprise as the necessary foundation. The idea of the Agile Enterprise centers around the industrialization of banking, the idea of turning every core banking function – from product development and customer acquisition to account opening and commercial lending – into a systematic, fast and seamless process. It necessitates a configurable and flexible system of engagement that allows multiple users – including executives, staff and customers – to collaborate in real time, with full transparency and visibility into every step of the process.
To fully leverage the Intelligent Enterprise, it is essential to first enable the Agile Enterprise. It would be incredibly difficult for an institution to effectively and efficiently make the leap into AI without first having established a strong foundation to support the myriad of back-office processes, including customer relationship management (CRM), document management, collateral analysis, covenant tracking, loan origination, portfolio analysis, regulatory compliance, customer service, the digital channel and on and on. Once an institution has established a foundation of agility through a single system of engagement, it can begin the journey toward becoming an Intelligent Enterprise.
AI is the Rocket Fuel
AI and related technologies, including machine learning, natural language processing and cognitive computing, serve as the foundation of the Intelligent Enterprise. There is a broad array of current and potential use cases within financial services for AI and related technologies, ranging from robo-advice and next-product recommendations to anti-money laundering (AML) compliance and credit card fraud protection.
Within the Intelligent Enterprise, cognitive technology can be utilized to bring a true return on investment to the institution. FIs need actionable insights to maintain competitiveness and serve their customers’ needs. The successful deployment of the Intelligent Enterprise checks one or more of these boxes to varying degrees, depending on the specific use case: increasing revenue, growing profitability, improving efficiency, reducing costs and mitigating risk. Embedding cognitive technologies into core banking processes can present FIs with measurable results, a positive ROI and benefits that continue to increase over time.
Challenges Along the Flightpath to the Intelligent Enterprise
All of this is not to say that widespread transformation to the Intelligent Enterprise will come easily. Incumbent financial services firms of all sizes come burdened with long-held processes and systems that serve as barriers to change. The industry faces a number of daunting challenges, including the burden of legacy systems, slow adoption rates, talent acquisition, competition from Big Tech and fintech upstarts, regulatory overreach and connecting the prediction with the customer.
The key is to focus on seamlessly incorporating cognitive technologies into existing processes while also maintaining a human touch with customers, i.e., to build AI solutions that engage employees and put the customer first. The most effective way to achieve this ideal is through the deployment of a single platform, a system of engagement that seamlessly integrates and analyzes data from all customer channels and across the organization. Only with the foundation of a truly holistic platform, which allows every employee to have access to the same information, can the Intelligent Enterprise really begin to take flight.
Achieving Orbital Flight Requires a System of Engagement
For FIs, the journey to the Intelligent Enterprise begins with defining the value you desire to achieve through the implementation of AI and related technologies. Too many FIs begin by building the rocket mid-mission – by creating the infrastructure without first understanding the true ROI of the endeavor. Start by choosing one use case that will return value to the organization – whether it is streamlining the financial statement data capture in commercial lending, employing next product to sell capabilities in retail customer onboarding or implementing risk-based pricing to help meet consumer fair lending compliance requirements.
Next, decide whether to buy or build the technology. For FIs that do not have the benefit of massive resources to create their own software, partnering with a vendor like nCino that has the expertise, experience and a track record of success working with AI-driven data insights may likely be the better option. Our AI application suite, nCino IQ (nIQ®), supercharges the nCino Bank Operating System® by leveraging AI, analytics and machine learning to enable FIs to become more predictive and proactive. nIQ offers an FI’s employees the opportunity to do more for the institution by, for example, saving valuable time through automatic data extraction and analysis of tax returns and financial statements. It’s no longer just about convenience, it’s about increasing profitability, safety, soundness and growth in a customer-centric banking world.
AI and cognitive technologies are transforming banking. They are enabling FIs to increase revenue, gain operational efficiencies and fully meet customer expectations. With this type of technology in place, FIs no longer have to spend time on cumbersome, manual tasks but can offer employees the opportunity to do more for the institution by saving valuable time. 2021 will be an exciting year as FIs continue to adopt new AI tools to transform the customer experience.
DATA: THE MUCH-NEEDED PROCUREMENT ADRENALINE SHOT, HELPING BANKS REMAIN COMPETITIVE IN THE RACE FOR INNOVATION
By Toby Munyard, Vice President, Efficio Consulting
Like a flip-switch, the pandemic saw many industries pushed over the innovation tipping point, accelerating digital transformation efforts at a pace never seen before. After all, consumer behaviour has changed dramatically – a lack of face-to-face contact with businesses has meant that organisations are having to turn to digital methods in order to keep customers engaged. Meanwhile, the sudden shift to remote working has put immense pressure on organisations to digitise internal processes.
For the world of banking, the need to continuously drive innovation has been a key pressure point for many years. And now, that pressure is building. Challenger banks, such as Monzo, Revolut and Starling, continue to cause huge waves within the financial services industry, due to their digital-first approaches. These, often start-up brands, have the advantage of operating nearly solely online, with none of the legacy systems in place to hold them back from innovation. However, even these brands haven’t been immune to the vast impacts of COVID. Consumers are getting increasingly tech-savvy, and operating on a digital-first model is no longer enough in its entirety. In today’s increasingly competitive environment, banks must modernise their entire technology functions to support both the front and back ends of their businesses.
That said, in such a competitive environment with rising cost pressures, innovation of this kind can feel out of reach for banks. After all, banks are often a low-growth environment, and optimising the cost of operations can typically take at least five years or more. Another key sticking point for banks when pursuing innovation is the added complexity and costs surrounding regulation. Unfortunately, regulation is part and parcel for any financial service. And new innovations and product offerings will only increase the need for compliance.
So, with myriad challenges facing the industry, how can banks compete in the race to innovation?
To be able to invest in a digital-first future, the journey begins with the procurement function. Whilst it is impossible to have complete control over revenue, one thing a business can control is cost.
Effectively optimising operational and business costs will be key to freeing up valuable liquidity to fund new digital initiatives. But this requires a proactive approach to supplier management. Rather than relying on supplier rebates once a deal is done, the CPO (Chief Procurement Officer) must effectively influence and ensure efficiency from the beginning of a relationship to achieve significant savings.
For existing suppliers, a step change may be required in order to steer this initiative. Getting the right supplier onboard and having forward-looking conversations about new trends in the market will be pivotal. After all, these suppliers will be key to driving digital plans forward. Suppliers providing products and services where demand is declining should not be neglected. Chances are that because of the trends in the market, they are keen to maintain and gain as much business as possible, meaning preferable deals may be available.
In addition to effective supplier management, a review of internal systems is urgently needed to aid cost-reduction on a long-term basis. Traditional banks are often made up of a range of complex legacy systems that allow for very little flexibility in a new digital age. The key here will be to simplify these systems, whilst integrating solutions such as robotics, AI, and SaaS to ensure they are running as efficiently as possible.
Data – procurement’s secret weapon
To be successful on any cost-reduction mission, however, the CPO must be aided by accurate, up-to-date, intelligent data. Without it, the long-term, sustained change needed to outmanoeuvre new market entrants, simply cannot be achieved.
After all, the intelligence derived from good, high-quality data provides the CPO with much-needed visibility in which informed decisions over cost-reduction can be made. It is only with this visibility that organisations can identify opportunities and deliver efficiencies that lead to sustained cost savings.
Architecture that can effectively connect to anything, anywhere, will be an essential tool to ensure the CPO is presented with all the relevant data – for example, linking enterprise databases, data warehouses, applications, legacy systems, and Cloud services to comparable systems at partners and suppliers. Integrating with apps, wearables, and mobile devices at an individual user level, and using an enterprise mobility strategy to link to employees and contractors and third party ‘big data’ sources, will also help to provide a complete view.
Harnessing the power of data
Whilst a necessary tool for procurement, being faced with a mountain of data can be overwhelming and actually hinder performance if it is not captured and interpreted correctly. Typically, within financial services, there is a huge amount of data being captured within Enterprise Resource Planning (ERP) and other finance-based systems that is not being analysed. As a result, efficiencies are missed, and the organisation remains stagnant in the digitalisation journey. To truly harness the power of data, the procurement team must ensure it has access to the right skills and have the right talent in place. This may require additional training, or consultancy to leverage data effectively and to execute successfully in today’s agile and fast-paced environment.
Ultimately, to remain competitive, banks must put the power back into the hands of procurement. By providing the CPO with the right tools and responsibility, the procurement function can align to the strategic targets set out across the business.
Good data, when teamed with effective procurement capability, will be a much-needed adrenaline shot for finance companies. Whilst challenger brands may only be running a 400-metre sprint in terms of digitalisation, in comparison, traditional banks are running a marathon. Stamina and the need for long-term efficiencies will be pivotal to win in a race of innovation.
GLOBAL STUDY: PEOPLE TRUST ROBOTS MORE THAN THEMSELVES WITH MONEY
Research shows growing confidence among consumers and business leaders that robots handle finance tasks better than people
The study of more than 9,000 consumers and business leaders in 14 countries found that the COVID-19 pandemic has increased financial anxiety, sadness, and fear among people around the world and has changed who and what we trust to manage our finances. In addition, people are rethinking the role and focus of corporate finance teams and personal financial advisors, according to the research.
COVID-19 has created financial anxiety, sadness, and fear
The global pandemic has damaged people’s relationship with money at home and at work.
- Among business leaders, financial anxiety and stress increased by 186 percent and sadness grew by 116 percent; consumer financial anxiety and stress doubled and sadness increased by 70 percent.
- 90 percent of business leaders worry about the impact of COVID-19 on their organization, with the most common concerns centering on a slow economic recovery or recession (51 percent); budget cuts (38 percent); and bankruptcy (27 percent).
- 87 percent of consumers are experiencing financial fears, including job loss (39 percent); losing savings (38 percent); and never getting out of debt (26 percent).
- These concerns are keeping people up at night: 41 percent of consumers reported losing sleep due to their personal finances.
People see robots as a better way to manage finances
The financial uncertainty created by COVID-19 has changed who and what we trust to manage our finances. To help navigate financial complexity, consumers and business leaders increasingly trust technology over people to help.
- 67 percent of consumers and business leaders trust a robot more than a human to manage finances.
- 73 percent of business leaders trust a robot more than themselves to manage finances; 77 percent trust robots over their own finance teams.
- 89 percent of business leaders believe that robots can improve their work by detecting fraud (34 percent); creating invoices (25 percent); and conducting cost/benefit analysis (23 percent).
- 53 percent of consumers trust a robot more than themselves to manage finances; 63 percent trust robots over personal financial advisors.
- 66 percent of consumers believe robots can help detect fraud (33 percent); reduce spending (22 percent); and make stock market investments (15 percent).
The role of finance teams and financial advisors will never be the same
To adapt to the growing influence and role of technology, corporate finance professionals and personal finance advisors alike must embrace change and develop new skills.
- 56 percent of business leaders believe robots will replace corporate finance professionals in the next five years.
- 85 percent of business leaders want help from robots for finance tasks, including finance approvals (43 percent); budgeting and forecasting (39 percent); reporting (38 percent); and compliance and risk management (38 percent).
- Business leaders want corporate finance professionals to focus on communicating with customers (40 percent); negotiating discounts (37 percent); and approving transactions (31 percent).
- 42 percent of consumers believe robots will replace personal financial advisors in the next five years.
- 76 percent of consumers want robots to help manage their finances by freeing up time (33 percent); reducing unnecessary spending (31 percent); and increasing on-time payments (31 percent).
- Consumers want personal financial advisors to provide guidance on major purchasing decisions such as buying a house (45 percent); buying a car (41 percent); and planning for retirement (38 percent).
Our relationship with money has changed, it’s time to embrace AI to manage finance
The events of 2020 have changed the way consumers think about money and have increased the need for organizations to rethink how they use AI and other new technologies to manage financial processes.
- 60 percent of consumers say the pandemic has changed the way they buy goods and services.
- 72 percent of consumers say the events of 2020 have changed how they feel about handling cash, with people feeling anxious (26 percent); fearful (23 percent); and dirty (19 percent). More than a quarter (29 percent) of consumers now say that cash-only is a deal-breaker for doing business.
- Businesses have been quick to respond as 69 percent of business leaders have invested in digital payment capabilities and 64 percent have created new forms of customer engagement or changed their business models in response to COVID-19.
- 51 percent of organizations are already using AI to manage financial processes, compared with 27 percent of consumers.
- 87 percent of business leaders say organizations that don’t rethink financial processes face risks, including falling behind competitors (44 percent); more stressed workers (36 percent); inaccurate reporting (36 percent); and reduced employee productivity (35 percent).
Felicity Burch, Director of Digital and Innovation at the CBI, said: “The pandemic has been a watershed moment for technology adoption. The financial services sector has innovated swiftly to support customers at a difficult time, and it’s fantastic to see businesses and consumers alike recognising the potential AI has for managing money. Trust will underpin the successful adoption of emerging technologies, and so firms must be taking steps like embedding robust governance processes, engaging employees, and addressing unfair bias in data.”
“Managing finances is tough at the best of times, and the financial uncertainty of the global pandemic has exacerbated financial challenges at home and at work,” said Farnoosh Torabi, personal finance expert and host of the So Money podcast. “Robots are well-positioned to assist – they are great with numbers and don’t have the same emotional connection with money. This doesn’t mean finance professionals are going away or being replaced entirely, but the research suggests they should focus on developing additional soft skills as their role evolves.”
“Financial processes in our personal and professional worlds have become increasingly digital for many years and the events of 2020 have accelerated that trend,” said Juergen Lindner, senior vice president, global marketing, Oracle. “Digital is the new normal and technologies such as artificial intelligence and chatbots play a vital role in managing finance. Our research indicates that consumers trust these technologies to accelerate their financial well-being over personal financial advisors and business leaders see this trend reshaping the role of corporate finance professionals. Organizations that don’t embrace these changes risk falling behind their peers and competitors; hurting employee productivity, morale and well-being; and struggling to attract the next generation of AI-empowered finance talent.”
WHAT BANKS NEED TO KNOW ABOUT OBSERVABILITY
By Abdi Essa, Regional Vice President, UK&I, Dynatrace More aspects of our everyday lives are taking place online –...
FINANCIAL SERVICES MUST FIX THEIR MISSED OPPORTUNITY AS CONSUMERS DEMAND MORE ENGAGING DIGITAL EXPERIENCES
Less than one-third (30%) of consumers believe the Financial Services firms they interact with now deliver a better digital experience...
FINANCIAL INCLUSION WITHIN DIGITAL PAYMENTS
NICK FISHER, GENERAL MANAGER, SALES AND MARKETING UK, JCB INTERNATIONAL (EUROPE) LTD. The shift towards an economy that removes...
THE EFFECTS OF JOB HOPPING ON YOUR RETIREMENT OUTCOME
By Neli Mbara, Certified Financial Planner at Alexander Forbes Job hopping – defined as spending less than two years...
VIRGIN MONEY EXPANDS PARTNERSHIP WITH FINTECH LIFE MOMENTS
Virgin Money is expanding its partnership with FinTech data expert company, Life Moments, to focus on the development of the...
THE MAJOR CHANGES SET TO RESHAPE THE WORLDS OF FINANCE AND FINTECH IN 2021
By Michael Magrath, Director of Global Regulations & Standards at OneSpan 2020 was a formative year for the world of...
FORMER HSBC COO JOINS BOARD AT REGTECH DISRUPTER
Andy Maguire takes seat on Napier’s Advisory Board Fast growing RegTech company, Napier, which provides next-generation anti-money laundering (AML)...
DISRUPT TO SURVIVE IN FINANCIAL SERVICES, BUT BEWARE: YOUR TEAM MUST BE IN SHAPE FIRST
Michael Chalmers, MD EMEA at Contino COVID is forcing extraordinary change in the financial services industry. It’s happening fast, already...
NEARLY HALF OF BUSINESSES NEED MORE ASSURANCE ON DATA SECURITY TO ADOPT OPEN BANKING
Financial services businesses in the UK and Netherlands call for better education, training and increased guidance on data security issues...
THE FUTURE OF THE UK’S FINANCE FUNCTION
By Ryan Demaray EMEA MD for SMBs at SAP Concur With businesses feeling the pressure of both the pandemic...
BUDGET 2021: PREDICTIONS
The spring Budget announcement is next week, with the Chancellor Rishi Sunak set to reveal new measures on March 3. After...
CAN SELF-SERVICE BANKING SAVE THE BANKING INDUSTRY?
Mark Aldred, Banking Specialist at Auriga 2021 should be about making the lives of customers easier by tailoring the...
FINANCIAL HEALTH PLATFORM LEVEL SECURES LANDMARK ESG DEAL WITH TRIPLE POINT
First-of-its-kind credit facility will incentivise Level to drive positive financial behavioural change for UK employees Level Financial Technology has...
FORECASTING FINTECH IN 2021
Fady Abdel-Nour, Global Head of Investments and M&A at PayU 2020 will go down in history as a pivotal...
2021 — THE YEAR FINANCIAL SERVICES COMPANIES WILL NEED TO DRASTICALLY RETHINK THE WAY THEY MANAGE DATA
By Douglas Greenwell, Head of Commercial Strategy, Duco There’s no denying that 2020 was a year of historic change...
HOW DO YOU ADAPT YOUR INSURANCE PRICING STRATEGY IN THE FACE OF INCREASED PRICE COMPETITION?
By Ketil Kristensen, Senior Advisor, Insurance, SAS Many countries in Europe have in previous years experienced increased price competition...
THE CHANGING ROLE OF TODAY’S CHIEF FINANCIAL OFFICER
By Laura Wiler, Vice President, Finance and Business Operations at Sage Intacct The CFO role is changing. Today, the...
DATA: THE MUCH-NEEDED PROCUREMENT ADRENALINE SHOT, HELPING BANKS REMAIN COMPETITIVE IN THE RACE FOR INNOVATION
By Toby Munyard, Vice President, Efficio Consulting Like a flip-switch, the pandemic saw many industries pushed over the innovation...
2021 FINANCE SPEND PREDICTIONS
by Andrew Foster, VP Consulting EMEA, AppZen As we enter a new year filled with ongoing change and uncertainty,...
FIVE PITFALLS PROFESSIONAL SERVICES MUST OVERCOME DURING THE PANDEMIC
By Andy Campbell, global solution evangelist at FinancialForce The pandemic’s impact on the global economy has, and is continuing...