by Mark Hermeling, CTO, Alveo
Heading into 2024, the financial services industry is at the threshold of a transformation driven by technological advancements, especially in artificial intelligence (AI). Here, we highlight our predictions for financial data management, emphasizing the critical roles of AI, cloud computing, enhanced data governance and staff training.
The rise of prescriptive analytics and decision automation
2024 is set to mark a significant leap in financial analytics, with an acceleration of the shift from descriptive and predictive models to more sophisticated prescriptive analytics and automated decision-making. This shift will be driven by the expansion of AI and automation capabilities, enabling financial institutions to support decision-making and automate routine decisions increasingly integrated into their day-to-day workflows.
This transition will be particularly pronounced in areas such as loan approval for consumers and small businesses, where the speed and efficiency of automated systems offer a clear advantage over human intervention. However, this shift will also necessitate a change in the role of humans in the decision-making process, with a greater emphasis on supervision and oversight.
To ensure companies use this shift to support more informed as well as consistent decision-making within the business, financial institutions will need to invest in staff education, focusing on technical skills, data literacy and ethical usage.
Generative AI enhancing customer experience
2024 will bring a transformative shift in client interactions in finance, driven by the rapid adoption of generative AI and large language models across chat, voice, and video. These technologies will become integral components of customer service platforms, evolving from traditional call centres to more sophisticated AI-driven systems where AI agents will field most inquiries. This transition will not only enhance the client experience by providing more human-like interactions before they connect with a real person, but also optimise operational efficiency by reducing the need for human intervention in routine enquiries.
Financial institutions will invest significantly in training their AI models to understand and respond to a wide array of customer needs, ensuring that technology is not just a novelty, but a true enhancement to customer service. This will require a substantial amount of data and metadata management to ensure that AI driven systems and workflows have access to up-to-date, accurate, and relevant information. As a result, there will be a heightened focus on data governance and compliance to ensure all interactions are conducted in a secure and ethical manner.
Metadata management will come more to the fore
2024 will also underscore the importance of metadata management, as automation necessitates enhanced tracking and management of data context, including refresh dates, permissions, and provenance. Financial firms will invest more in tools and training for effective data and metadata handling, as they look to achieve their goals around proactive data management and compliance with regulations. Data quality management and financial data engineering will become increasingly critical capabilities for firms to make sure models are appropriately trained.
Cloud migration will increasingly be a catalyst for innovation
The shift to cloud infrastructure will continue to be a key trend in 2024, driving innovation and re-evaluation of processes. At the same time, we would expect to see financial institutions adopting cloud-native solutions to a greater extent, leveraging the cloud’s flexibility in order to optimise operations.
This migration will demand a selective approach to application transition, ensuring that only those applications that are truly fit for the cloud environment are moved. This will lead to a rationalisation of the application landscape, with outdated or redundant systems being phased out in favour of more efficient, cloud-compatible solutions.
Prioritising good data citizenship
2024 will heighten the focus on staff responsibility in data handling, emphasizing awareness of metadata aspects to ensure appropriate data usage. This goes further than content licensing restrictions and legal restrictions such as privacy legislation and should include quality aspects such as data accuracy and completeness as well as an understanding of a ‘use by’ date.
Staff training should cover both the responsible and considered use of generative AI in decision-making processes as well as an understanding of the different metadata aspects. It may also be helpful to take the perspective of the data itself and think about what ‘rights’ it should have and what it could reasonably expect from its caretakers. Questions on whether data as well as models are fit for purpose and used within the right context need to be addressed and permitted use cases carefully tracked. Legislation on the use of AI is only getting started.
Looking ahead
The financial services industry is headed into a transformative period, with a range of innovative new trends set to transform the sector. This transformation will be marked by sophisticated AI analytics, improved client interactions via generative AI, comprehensive metadata management, cutting-edge cloud solutions, and a dedication to responsible data handling.
Those firms that successfully embrace these rapidly emerging new technologies will be well placed to achieve enhanced operational efficiencies and keep themselves one step ahead of their peers not only in 2024 but also in the years to come.
