Rob Mason, Chief Technology Officer, Applause
Banks and financial services companies play their cards close to their chest when it comes to IT, and Artificial Intelligence (AI) is no different. They prefer to rely on bespoke systems built internally, which can be a drawback for chatbots and smart voice assistants designed to interact with customers. The Machine Learning (ML) algorithms driving these systems need exposure to diverse data sets to prepare them for real-world interactions. Building AI systems behind closed doors might make them exclusive and secure, but without the proper training and testing, they could cause friction with the customer.
Today, most digital experiences, such as streaming or online shopping, are simple and intuitive, but digital banking is perceived to be slow and complex. Smart apps, chatbots and voice assistants are designed to streamline customer services, but all too often, they lack the training data ML algorithms need to respond to real-world situations. This can be corrected by sourcing vast amounts of data to improve an ML algorithm’s capacity to learn, successfully interact with human beings and make accurate predictions. The source of that data is people. As many are required to fulfil any number of customer use cases. In the case of a bank or a financial services company that could apply to any number of services that cater for a customer’s digital finance needs.
Financial services companies place their trust in crowds
The pandemic has accelerated digitalization across all walks of life, the financial services space is no exception. As already mentioned, there are many areas of cloud and IT where financial services companies excel. You only have to look at the innovations in mobile and online banking. The constant stream of new digital banking products and the countless links to merchants and other service providers through API platforms that make paying for goods simple and straightforward. However, with so many banking, insurance and credit card customers now dependent on digital channels, self-service capabilities have become central to the digital banking experience. That process is reliant on the performance of AI chatbots. If they’re unable to interpret customer requests correctly or fast track them to a specific website, application or customer service agent, they can have a detrimental affect on a brand’s reputation.
Financial services companies can reduce that risk and increase levels of customer engagement through a process of rigorous crowdtesting that identifies any gaps or flaws across the different digital channels customers use. This technique involves a global community of vetted testers trialing new products before they’re released or helping to refine current applications and services. Either way, crowdtesting provides businesses with valuable insights about how customers interact with their products, improve user experiences and deliver frictionless customer journeys. It also augments in-house QA and testing resources within financial service companies and boosts the smaller, more disruptive fintech brands that tend to have limited resources.
A one-size fits all approach doesn’t really apply here. Banks and financial services companies have different tiers of customers, each with complex requirements and different expectations of what they want from digital services. Crowdtesting can be tailored to suit the needs of a specific company, by selecting vetted testers that match the profile and characteristics of their customers. They can quickly identify any bugs or processes that are causing friction and feed that data directly back to in-house QA teams. However, the impact of crowds on AI/ML is much more far reaching.
Data diversity is key to training ML algorithms
It takes time and effort to train and test an ML algorithm. The training process shouldn’t be restricted to a lab either. For a start, in-house teams of developers, data scientists and QA specialists tend to be from the same age range, gender and background. They’re not representative of the wider population and despite their best intentions their inherent biases will feed into the underlying algorithm. The best way to avoid this is to widen the net and ensure the training data has a high degree of a quantity, quality and diversity.
Crowdtesting allows financial services companies to source data at scale. Enabling them to select from a diverse pool of participants made up of specific demographics, including gender, race, native language, location, skill set, geography and any other filters that apply. The key is to expose the algorithm to different data sets and inputs, made up of authentic voices, documents, images and sounds. This tried and tested model ensures that the AI that doesn’t suffer from bias and has the capacity to continuously learn and improve.
For example, a recent project to train a smart voice assistant required over 100,000 different voice utterances. These utterances were delivered by 972 different people assembled remotely to train the algorithm. For another project 1,000 people contributed handwritten documents to provide the unique samples needed to ensure an algorithm could read human handwriting.
AIs show real intelligence
When you combine the diverse sets of training data with the community’s ability to spot any bias or other deficiencies inherent in AI-powered services during the test phase, the value of the crowdtesting model becomes clear. It can help banks and financial services companies to develop ML algorithms that can adapt to real-world conditions, reduce testing costs and release faster. By drawing on real-world experiences it’s possible to deliver exceptional levels of quality to customers across global markets, paying careful consideration to local language and culture. Gaining the well-earned trust and loyalty of those customers in return.
Digital Banking – a hedge against uncertainty?
Ankit Shah, Head of Digital Banking, Apex Group
The story of the 2020’s thus far is one of crisis. First the world was plunged into a global pandemic which saw the locking down of people and economies across the world. Now we deal with the inevitable economic consequences as currencies devalue and inflation bites. This has been compounded by Russia’s invasion of Ukraine and subsequent energy politics.
And the outlook remains uncertain. Tensions continue to build between China and Taiwan and inflationary conditions are forecast to continue well into 2023. This uncertainty is impacting everyone, and every sector. And finance is no exception with effects being felt everywhere from commodity and FX markets to global supply chains.
But it’s not all doom and gloom. Rollercoaster markets and an ever-evolving geopolitical situation have made 2022 a tricky year far, but, despite the challenges, digital banking has proven resilient. In fact, the adoption of digital banking services has continued to grow over the last few years, and is predicted to continue.
So, what are the forces driving this resilience?
In an increasingly digital world and economy, digital banking comes with some advantages baked in, which have seen the sector continue to succeed despite the tumult in the wider world. In fact, the crises which have shaped the decade so far may even have been to the advantage of digital banking. Just as during the pandemic, technologies which could facilitate remote working saw a huge uptick in users, so to digital banking is well suited to a world where both people, and institutions demand the convenience that online banking services offer.
And while uptake of digital banking services is widespread amongst retail consumers, a trend likely to continue as digital first generations like Gen Z become an ever-greater proportion of the consumer market, uptake amongst corporate and institutional customers has been slower. This is largely down to a lack of fintech businesses serving the more complex needs of the institutional market, but, in a post-Covid world of hybrid working business, corporate clients are looking for the same ease of use and geographic freedom in their banking that is enjoyed by retail consumers.
This is not just a pipe dream – with the recent roll out of Apex Group’s Digital Banking services, institutions can enjoy the kind of multi-currency, cloud-based banking solutions, with 24/7 account access that many of us take for granted when it comes to our personal banking.
One significant difference between retail and business accounts however, for banking service providers, is the relative levels of compliance which are needed. While compliance is crucial in the delivery of all financial services, running compliance on multi-million pound transactions between international businesses brings with it a level of complexity that an individual buying goods and services online doesn’t.
For digital banking services providers, this situation is further compounded by guidance earlier this year from HM Treasury – against the backdrop of the Russia-Ukraine conflict- requiring enhanced levels of compliance and due diligence when it comes to doing business with “a high-risk third country or in relation to any relevant transaction where either of the parties to the transaction is established in a high-risk third country or with a sanctioned individual.”
So, can digital banks meet these standards while also providing institutions with the kind of easily accessible, mobile service which retail customers enjoy?
The answer is yes and again, once initial hurdles are overcome, digital banking brings with it features which give it the edge over traditional banking services. Paperless processes, for example, mean greater transparency and allow for better and more efficient use of data. This means AI can be employed to search documents, as well as provide verification. It also means compliance processes, often notoriously complicated, become easier to track. Indeed, digitising time intensive manual process means the risk of human error in the compliance process is reduced.
Digital banking can also better integrate transaction monitoring tools, helping businesses identify fraud and irregularity more quickly. This can be hugely important, especially in the times of heightened risk we find ourselves in, where falling foul of a sanctions regime could have significant legal, financial and reputational consequences.
Our world is increasingly globalised, and so is business. For corporate and institutional banking customers, being able to operate seamlessly across borders is key to the operation of their business.
This brings with it challenges, which are again compounded by difficult geopolitical and economic circumstances. In recent weeks for example, we’ve seen significant flux on FX markets which can have real consequences for businesses or institutional investors who are buying and selling assets in multiple currencies and jurisdictions. The ability to move quickly then, and transact in a currency of choice, is vital. Advanced digital banking platforms can help – offering automated money market fund sweeps in multiple core currencies to help their clients optimise their investment returns and effectively manage liquidity.
Control admin uncertainty
In times of uncertainty, digital banking can provide additional comfort via customisable multi-level payment approvals to enhance control of what is being paid out of business accounts, with custom limits available for different users or members of a team. Transparency and accountability are also essential, with corporate clients requiring fully integrated digital reporting and statements and instant visibility with transaction cost and balances updated in real-time.
For some, the perception remains that digital banking is the upstart industry trying to offer the services that the traditional banking industry has built itself upon. Increasingly however, the reality is that the pressure is on traditional banks to try and stake a claim to some of the territory being taken by digital first financial services.
With a whole range of features built in which make them well suited to business in a digital world, digital banking is on a growth trajectory. Until now, much of the focus has been upon the roll-out of services to retail consumers, but with features such as automated compliance, effortless international transactions and powerful AI coming as standard for many digital banks, the digital offering to the corporate world looks increasingly attractive.
Security vs online payment convenience: which one is tipping the scales for customers?
Chirag Patel, President of Digital Wallets at Paysafe.
While keeping their payment details safe is a top priority for customers when shopping online, they’re not willing to jump through endless hoops or accept poor user experiences as the inevitable price of greater security.
Online payment security has been top of mind for merchants since the very first internet purchase: a copy of Sting’s ‘Ten Summoner’s Tales’ CD. Even though payment technology has become more sophisticated over time, the eCommerce explosion has brought about an ongoing battle between increasing security and ensuring convenience.
Customers are ever more aware about the risks of online shopping and concerned about their financial details falling into the wrong hands. Simultaneously, demand for a good user experience has also risen steadily. But greater security typically introduces friction into the checkout process, which continues to be one of the leading causes of cart abandonment.
In our latest Lost In Transaction report, we surveyed 11,000 consumers in 10 countries across Europe and the Americas regarding the balance between security and convenience in online payments.
Here are the key take-aways for online merchants moving forward.
How concerned are consumers about online fraud?
According to our research, customers continue to grow increasingly worried about online fraud.
59% of respondents are more concerned about it today than they were 12 months ago. Not feeling comfortable sharing financial details online has increased from 49% in 2021, to 70% in 2022.
More to the point, our research shows that, when they have a choice, 44% of respondents will invariably pay with the method they perceive as safest while only 21% will choose the most convenient payment method, and even fewer (14%) will choose the fastest one.
These findings aren’t surprising considering that fraud has become more frequent and more serious during the COVID-19 pandemic. For example, in 2021 the average US fraud victim lost $500 and the average UK victim lost £806.
However, what merchants need to keep in mind is that, even though security typically dictates the choice of payment method, there’s a limit to how much friction customers are prepared to tolerate. And our research suggests this limit is close to being reached, with 42% of customers reporting that they would prefer more payment security but only 19% open to accepting whatever measures are necessary for increased protection against fraud. The other 23% would only accept a minimal increase in inconvenience.
A fine line to walk
If you’re a merchant, the situation is positive but challenging to navigate.
Fortunately, 44% of consumers think merchants are getting the balance between security and convenience right — up from 26% in 2021 – and trust is also high. 53% think online payments are more secure than they were twelve months ago. And 64% of respondents are more likely to shop from merchants who already have their payment details on file, compared to 54% in 2021.
The challenge is that security risks are ever evolving. Cybercriminals are constantly refining their techniques, which means measures that are highly effective today can become inadequate tomorrow. And regulation is constantly developing, at times at odds with consumer sentiment. The introduction of Strong
Customer Authentication rules, for instance, sparked fears that the deliberate friction they required would hurt sales, which, admittedly, has had less of a negative impact than anticipated.
Consequently, while security enhancements are inevitable if merchants are to continue meeting high standards, there’s margin for error now that more consumers are reaching the limits of their tolerance for friction.
For every new security measure they introduce, merchants must be increasingly mindful of the impact on the streamlined payment experience customers expect.
Finding a common ground: boosting security with trust and technology
While maintaining – or even improving – the current balance between security and convenience might seem impossibly tricky, payment technology has evolved to a point where it’s doable.
With embedded payments, for instance, the consumer pays through a user-friendly interface at the point of need. And because financial details are stored securely in tokenized format, there’s no need to share them every time you make a purchase.
eCash is another such solution that enables customers to buy online quickly, securely, and privately.
A unique barcode is generated at the checkout which customers can then get scanned at one of one million points of sale in 55+ countries to pay in cash. Which means they can buy online without having to share or even store any financial details.
This presents a great opportunity for merchants to take advantage of the high levels of trust these payment solutions enjoy. While our research shows that there’s still a significant knowledge gap, particularly in embedded payments, consumers are becoming more open to both technologies. So now is the time to explain the benefits clearly to customers and, more importantly, address concerns.
Online payment security is crucial, but not at all costs
Keeping their financial details safe is the most important element of the payment process for most customers. But while fraud protection may be winning the battle against convenience hands down, merchants need to carefully navigate the process of increasing security without adding too much inconvenience.
As critical as it is for merchants to protect customers’ data, a zero-fraud strategy would also likely cause way more friction than most customers are prepared to tolerate. A smooth, seamless payment experience remains as important as ever.
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