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CONVERSATIONAL AI: WHAT IS IT AND HOW CAN IT DRIVE GROWTH IN THE FINANCIAL SERVICES SECTOR?

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Charles Sutton, Financial Services and FinTech Lead EMEA, NVIDIA

 

Over the last seven years, there has been a significant shift towards digital engagement. Its growth shows no signs of slowing, with consumers becoming more accustomed to using digital channels for all aspects of life. They’re using mobile banking apps, artificial intelligence (AI) infused virtual assistants to get real-time security alerts, and they’re even moving money between accounts using just their voice.

And in many cases, consumers are interacting with AI without even realizing it. From waking a home voice assistant with a simple “Hey” to using speech-to-text functions for hands-free typing, both are built using Conversational AI.

 

What is Conversational AI?

Conversational AI is the application of machine learning to allow humans to interact naturally with devices, machines, and computers by simply speaking to them. As a person speaks, the device works to understand and find the best answer, providing a response with its own natural-sounding speech.

It may sound simple, but the technology behind conversational AI is complex. It involves a multi-step process that requires a massive amount of computing power. Delivering a seamless user experience requires several complex models that need to run in less than 300 milliseconds.

Charles Sutton

Conversational AI is primarily based on three key processes:

  • Automatic Speech Recognition (ASR), which takes spoken words and converts them into readable text.
  • Natural Language Processing (NLP), which reads written text, understands the context and intent and then generates an intelligent text response.
  • Text-to-Speech (TTS), which converts the NLP text response to natural-sounding speech, with human-like intonation and clearly articulated words.

 

Transforming the Customer Experience with Conversational AI

The Financial Services Industry is under pressure, with rising levels of risk, higher volumes of customer service enquiries, and the need to develop digital channels to balance the closing of branches, especially in a post-COVID-19 environment. Just a one-point decline in a business’ customer experience score can equal $124 million in lost revenue for multi-channel banks.

Conversational AI can significantly improve the customer service experience throughout the customer journey. AI can enable customer service agents to deliver an improved customer experience, providing them with real-time insights to reduce their workload and deliver a speedier interaction for customers. It can generate personalized, recommended offers and next-best actions for each customer based on their individual data. It can even transcribe calls and take notes for the agent, reducing their post-call reporting time and allowing the agent to quickly and accurately support more customers.

With growing volumes of customer calls, a virtual AI assistant can be available day and night to assist with simple enquiries such as account-related questions or product applications. Customers can have conversational, human-like dialogue with intelligent, instantaneous responses, customized for the user it’s talking to. AI virtual assistants can also support customers with disabilities who might not be able to interact with the keyboard or screen.

UK-based NatWest’s digital assistant, Cora, is handling 58% more inquiries year on year, completing 40% of those interactions without human intervention. According to Juniper Research, 90% of customer interactions will be automated by 2022, saving banks $7 billion by 2023.

Agents should be focused on delivering the best customer experience, which means that fraud can go undetected at the call center. In fact, there’s a reported 80% of fraud going undetected today. As a call takes place, conversational AI can spot fraudulent activity like identity theft by using sentiment and confidence analysis, pattern recognition and voice-based identity authorization.

 

Conversational AI for Document Extraction and Risk Monitoring

Financial applications/market monitoring pulls unstructured data from many sources such as the news, customer applications, events, documents, proprietary data, market moves or filings. To collate such a large amount of varied data, businesses can use NLP to extract data from documents, regardless of language or layout. It can perform text analytics, entity and event extraction, and relevance and sentiment analysis to extract the most important information for decision making.

This type of AI document analysis can detect early warning signs of risk, like defaults, bankruptcies, lawsuits, or fraud. It can also improve lending decisions, be used for investment risk management and accelerate due diligence for Anti-Money Laundering (AML) and Know Your Customer (KYC) compliance.

By making this monitoring automatic, risk mitigation can minimize costs, and businesses can target investment opportunities with alpha returns and can gain operational efficiencies by customizing NLP for specific use cases. Banks and insurers can also use document processing to process all types of applications across unstructured document types, speeding up document turnaround time, reducing error rates and significantly improving document processing costs.

 

Accelerating Business Performance with Conversational AI

While AI continues to become more mainstream, there’s a shift towards e-commerce and a digital-first customer experience, where people are using AI in their day-to-day activities — in fact 46 percent of people are using it every single day.

Throughout the customer experience, conversational AI can deliver a smoother, faster experience, it can be on-hand to help all day, every day, enable agents to do their best work and reduce fraud — all at the same time.

 

Business

TAKE THE NO-CODE LEAP TO DIGITAL INNOVATION WITH A FUSION TEAM

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Chris Obdam, CEO, Betty Blocks

 

In the last couple of years, a new sector has emerged alongside enterprise financial organisations—an ecosystem of fast-growing Fintech startups that develop innovative solutions for the banking sector. These small, flexible startups and scale-ups began filling a gap the ‘big boys’ left quite some time ago. Then, they gained even more ground during the pandemic. According to KPMG, Fintech investments worldwide amounted to $98 billion USD in the first half of 2021, compared to $121.5 billion over the whole of 2020[1].

 

The massive surge has financial regulatory bodies scrambling to balance the benefits of modernising the industry with the necessity of strong oversight. But, what if traditional financial enterprises could combine their durability, reliability and years of experience with the flexibility of a startup? They can! More and more enterprise organisations are becoming agile, empowering digital-savvy colleagues and improving competitive value.

 

Fusion teams

Their approach? They break through patterns and almost literally through walls in their organisation. The most successful organisations team up with genuine problem solvers. It’s a solution-oriented approach, which can be really successful if governed the right way. We like to call it a fusion team, a team that empowers digitally-skilled and solution-oriented employees to work side-by-side with the IT department while using a low-code and no-code development platform.

 

Citizen development

A fusion team brings together people with diverse professional backgrounds who use data and technology to achieve shared business outcomes. Ideally, a fusion team combines pro-developers with citizen developers. A citizen developer is a business person without coding experience that builds apps using a no-code or low-code platform.

The purpose of the professional developer, in a fusion team, is not to train the citizen developer to become a pro-developer but to bring guidance and governance to the project. Before building successful software, a fusion team will require knowledge and guidance through the software development life cycle (SDLC) phases. IT feedback is crucial to helping a fusion team understand what makes good software and how new platforms can (or cannot) integrate into an existing system. Citizen developers should receive coaching to make decisions that lead to architecturally sound, value-adding applications.

 

What are the challenges that a fusion team can tackle?

  • Modernisation of legacy systems. Many banks have been around for years, expanded their software, but regularly have to deal with legacy systems or even a vendor lock-in.
  • Regulations can change fast; that’s why financial organisations need to increase flexibility and improve adaptability. A flexible layer on top of core systems or legacy systems can profit the whole organisation.
  • Counter shadow IT. Thousands of employees means that a lot of solutions are single handedly-built. All these solutions can be beneficial for the employees and even for your customers, but the thing is that they are not checked and governed by IT. For example, you run the risk that they are not meeting all your security requirements.
  • Digitisation of processes, like the onboarding process for customers, is still a long paper process within financials. What if this could be 100% digital and automated? This could save you a lot of repetitive work, energy and money.

 

Create an environment for innovation

Banks tend to have difficulties setting up the right conditions to empower the workforce to innovate towards the future. Our first reaction to possible security risks is to impose more rules and restrictions, while the solution lies in a coaching attitude, independent of strict regulations. You can empower digital transformation by using a no-code or low-code platform.

A fusion approach encourages better software governance, allowing IT to help mitigate the risks of shadow IT projects. With a no-code or low-code platform, you can combine existing secure systems, extract data more efficiently, effectively communicate and convey between systems and thus better manage qualitative information. Governance is not a simple process or a task to check off and forget about; the essential governance feature for low-code or no-code development is a platform provider with the flexibility to adapt to specific needs of an enterprise. The provider should be a partner in expanding the role of citizen developers within the organisation.

Taking the leap into no-code software development with a fusion team will empower the entire organisation in digital transformation. It’s a strategic move that helps enterprises become more resilient against unexpected challenges – such as a pandemic or new consumer demands. Furthermore, you create a modern and innovative working environment with digitally-capable and engaged employees.

 

[1] Source: KPMG:

https://home.kpmg/nl/en/home/media/press-releases/2021/09/record-fintech-investeringen-in-eerste-helft-2021.html

 

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IDENTITY SECURITY IN THE ERA OF SOX

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By Steve Bradford, Senior Vice President, EMEA, SailPoint

 

The Sarbanes-Oxley Act (SOX) is a federal law that mandates practices in auditing and financial regulations for public companies. Its original intent being to restore trust in a corporate and financial system that had been rocked by major accounting scandals such as Enron, WorldCon and Tyco. Legislators believed if there was no trust in the major corporate institutions of America, then the whole fabric of capitalism could be brought into question.

Initially only applying to American companies, every major institution that dealt with America had to comply with SOX. It was a huge a success with the number of financial scandals emanating from the US dropping dramatically since compliance. But can The UK follow suit?

 

Preparing for “SOX UK”

The UK has had its own high profile business collapses – notably BHS and Carillion. So, the government has launched a consultation programme that mimics the US SOX rules. The consultation on reforms aims to ‘restore trust in audit and corporate governance’ and applies to auditors, companies, directors, audit committees, investors, other stakeholders, and the regulator.

A focus is on companies with a significant public interest, otherwise known as Public Interest Entities (PIEs). These include financial institutions, banks, insurance companies, underwriters, and alike – many of which are already familiar with a high degree of financial scrutiny. A noteworthy difference is the stated preference to expand the UK SOX controls beyond public interest companies, which could include large companies in retail, manufacturing, logistics and automotive.

UK SOX may seem like a massive undertaking if unfamiliar, but with the right technologies in place manual tasks can become automated, reducing time which can be then redirected to greater priorities or risks, and everyday operations will be guided by a strong set of well-defined controls.

 

A growing threat

The Sarbanes-Oxley Compliance 9-Step checklist provides a series of recommendations to protect the validity of all reported information and help businesses to ensure they are following the rules. This includes the need to establish controls to prevent data tampering, track data access, test the effectiveness of safeguards and detect security breaches – any of which need to be reported to SOX auditors on time.

As both physical and digital information are affected, accurate management is an integral part of compliance. Remote working, blockchain integration, and the emergence of cloud-based banking (Banking as a Service) have led to growing cyber threats, privacy concerns and compliance requirements through the complexities of connectivity.  For example,  multiple devices now connect to networks from different locations, accessing the vast amount of information in the cloud. There is now critical need to close security gaps outside the perimeter.

Some of the greatest threats lie within an organisation – either human error or more likely, the rise in risk facing the access today’s workforce has to technology. Complex corporate structures and departmental silos hinder management’s visibility into workforce roles, responsibilities, and data access. Traditional reliance on spreadsheets and manual processes for tracking data access and user identities leads to inaccuracies and inconsistencies.

Apart from being an auditing and reporting nightmare, the situation creates system gaps that are ripe for exploitation by threat actors.

 

Maintaining security through identity

To meet security and compliance regulations, companies and organisations must act smarter in how they protect their “perimeter”, which is centred on its people – the new threat vector of choice. Companies must prepare to automate business processes and embrace new security practices that fully protect the workforce and the tools they need to  do their job.

Staying in compliance with regulation is important for the safety of the company, but it is crucial that the right safety measures are in place. Identity access management can reduce the risk of insider threat, data breaches and human error for financial reporting – enabling automated logging and report generation for companies to make smart decisions whilst uncovering and remediating hidden or unknown issues that pose inherent risk.

 

The countdown to SOX

One commodity companies don’t have is an abundance of time. With less than 18 months to go until the SOX recommendations deadline, any form of automated access system is an essential first step in ensuring companies are prepared. Starting early is critical – given an implementation programme can take 18-24 months for a company that is used to stringent financial regulations. It’s time to get identity and access compliance right – automation can save a significant amount of effort and money, whilst improving the accuracy of identity management processes.

As seen in the US, UK companies not used to financial compliance procedures will have to catch up or ask for help – learning from the financial sector – and scale up their auditing and control to comply with more stringent regulations. The rules are there to help provide the security that regulators need for a secure commercial environment. Now is the time to act in order to reduce the risk.

 

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