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How AI is revolutionising data in the banking industry

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Zahi Yaari, VP of EMEA, SnapLogic

 

It should go without saying that data in the banking industry is some of the most valuable a business can own. Indeed, for many organisations the data they possess is their most valuable asset and as this data grows in both quality and quantity, so too does its value.

However, many businesses, particularly those in the banking sector, are not getting the most out of their data by allowing silos to form within their organisation, whilst also squandering the talents of their most skilled employees.

When data is locked in different locations, it becomes a burden rather than an asset, weighing down the flow of communication within your business and making simple processes complex and time-consuming.

Take, for example, the most basic line of business processes. Where data silos exist between different teams, the most fundamental back-end tasks become unnecessarily difficult, as chains of communication are weighed down by critical information stored in a variety of different places.

Zahi Yaari

Many banks are essentially building data vaults, inaccessible by other teams in their organisation. Not only can this greatly harm the efficiency of a business’s employees but it also restricts the ability of executives to access valuable data insights.

As the quantity of data increases, banks are rapidly becoming victims of their own success, being hamstrung by the amount of data they possess. What should be their most valuable asset ends up weighing them down and ultimately, it becomes the job of an already overburdened IT staff to step in to help glue together data that should flow seamlessly in the first place.

To make matters worse, IT staff are not the only teams under increasing pressure from unnecessary workloads. Banks are also facing the challenge of legacy technology making even the most basic reporting tasks incredibly labour-intensive.

Month-end processes can weigh down entire finance teams in a mass of administrative tasks, whilst executives wait to gather insights from manual reports.

This is clearly not right, banks in particular need to have the most efficient transfer of information possible, whether it is data in-between teams or insights to the C-suite.

Looking to AI

The realisation that AI-driven automation can both integrate different tools and technologies whilst also freeing up a large proportion of employees’ time has helped the banking industry revolutionise their use of data.

Whilst banking and finance as an industry has often fallen short when it comes to digital transformation, relying on legacy systems for far too long, proactive banking groups are beginning to show that the adoption of cloud technology, integrated systems and process automation can push organisations out ahead of the competition.

Banks that adopt new technologies are changing the competitive landscape within the industry. In particular, cloud-based challenger banks are putting pressure on incumbent banks’ revenues and will continue to do so, unless these banks evolve with the times.

With evolution comes innovation, and AI and machine learning have two key roles here. Firstly, AI-powered integration platforms can glue together different areas of a business, not only allowing for data pipelines to be built with ease, but actually suggesting integrations to the business user with up to 90 percent accuracy. This means that every user can be empowered to take full advantage of advanced technology that can make their work lives far easier and more efficient.

Secondly, once these pipelines are built, AI works to automate highly-repetitive, low-skill tasks that otherwise burden talented teams in manual processes. By learning from billions of existing data flows, these AI-powered platforms can eliminate the data and integration backlog.

The dual benefits of an increase in productivity and efficiency, whilst also cutting down costs and employee workloads makes automation and AI a no-brainer to many executives.

This is particularly true as these executives can benefit from real-time access to data, gaining insights that were impossible with legacy tech and manual processes.

Why now is the time to adopt AI

With the rise in self-service, low-code technology, digital transformation no longer requires a difficult adoption process. In fact, platforms are designed for ease-of-use, meaning companies no longer have to factor in skill shortages or training costs.

One organisation that benefited from this self-service technology was Hampshire Banking Trust, who discovered they could utilise a low-code-no-code infrastructure to quickly deploy these technologies, connecting together their various tools and applications with ease. This meant their slim IT team could easily break down silos within the business whilst also relying on AI to help individual users to manage routine tasks by themselves.

AI integration technology is like the nervous system of a business, passing information from one part to another, whilst also responding to changes and challenges, scaling as needed.

Furthermore, given the vast amounts of highly sensitive information that banks handle and as data regulations continue to evolve, the banking sector needs to stay ahead of the curve; or else poorly-managed data could result in fines and serious reputational damage. Adopting a solution that can not only safeguard critical data and ensure compliance with regulations, but also evolve and grow with the business, is therefore critical to any bank’s future.

This speaks to the larger issue – agility. Where the banking industry has failed to adopt these new technologies, there have been growing challenges caused by inflexible business processes and overburdened staff.

The benefits of adopting AI and ML technologies are clear: they can automate the data infrastructure of a business, both freeing up employees and breaking down silos to create an efficient and flexible business.

Now is the time for banks to reevaluate their data needs and look to AI as the key to unlocking the true value of their data.

Banking

The Importance of Digital Trust in Banking and Finance

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By Maeson Maherry, COO at Ascertia

 

With the rising adoption of eSignatures and the acceleration of digital transformation, trust in digital systems is more important than ever before. As a recession looms, the ability to trust digital systems is critical to the stability and security of the banking and finance industry.

So, what should businesses prioritise in an increasingly online world? Information security, data integrity, and digital trust are crucial for ensuring regulatory compliance and customer satisfaction.

Digital trust is empowering banking and finance institutions to effectively tackle issues of identity theft and fraud.

What is digital trust?

On the surface, digital trust refers to a digital system or platform that is secure and can be relied upon to protect and properly handle sensitive information.

Building the confidence that people have in digital systems, platforms, and technologies to handle their sensitive information, protect them from fraud, and function as intended is paramount for decision-makers going forward.

Trust online encompasses various aspects, such as data security, privacy, authenticity and reliability. Digital trust also involves assessing the trustworthiness of digital entities such as websites, apps, and online services, as well as the trust in the integrity and reliability of digital communications and transactions.

Maeson Maherry

Digital trust is a key element of digital transformation, the additional step to ensuring the digital systems in place are secure. This can include the following:

  • Online banking platform for customers
  • Digital document approvals and workflows
  • Secure digital signature solutions
  • Know your customer (KYC) checks
  • Electronic anti-money laundering procedures

Why is digital trust important for banks?

One of the main reasons why digital trust is so important in banking and finance is that it helps to tackle issues of identity theft and fraud. Customers and regulators require reassurance that personal and financial data won’t fall into the wrong hands. This includes customer statements, investment authorisations, legal records and customer personal data.

Online banking is now well established but the technology continues to evolve and so do the potential threats to data security. With phishing and other identity theft a daily concern, establishing digital trust in the industry is key.

Digital trust provides a means to trust in the identity of a person or document online, to the same degree as meeting or signing in person. This requires additional checks and layers of security to verify identities and the security of documents.

The role of eSignatures in banking

Digital trust is vital in the secure implementation of eSignatures.

In the banking and finance industry, eSignatures are becoming increasingly popular as they allow for transactions to be conducted quickly and securely. However, for eSignatures to be effective and to provide digital trust, all parties involved must trust in the transaction. This is done by ensuring eSignatures are valid and that the person signing the document is who they claim to be.

There are global standards to ensure the authenticity of eSignatures for digital signing. This means there is a way to validate the digital trustworthiness of eSignatures if implemented and used in a manner that meets certain criteria for security and authenticity.

For instance, digital signatures that are compliant with internationally recognised standards, such as eIDAS (Electronic Identification and Trust Services) in Europe, can be considered digitally trustworthy. It’s important to understand not all eSignatures provide the same level of security and to ensure the correct eSignature is used for the purpose and security required.

eSignatures that use advanced digital signature technologies such as Public Key Infrastructure (PKI) or biometrics, can be considered more digitally trustworthy as they provide a higher level of security and authentication.

These technologies use cryptographic methods to ensure that the signature is unique to the signer and cannot be replicated or forged. These standards establish a legal framework for the use of electronic signatures and ensure that they are legally binding, enforceable and offer the same level of trust as traditional signatures.

How does digital trust prevent fraud?

If the public loses trust in digital systems, it could lead to a loss of confidence in the financial system. Fraud, in particular, is at the forefront of public concerns.

Digital signatures are well positioned to offset the risk of financial fraud, largely due to three critical factors when assessing the digital trust of an eSignature:

  • Authentication: To verify the identity of the signer, eSignatures employ sophisticated technologies such as PKI. This confirms that the person signing the document is who they say they are and aids in preventing fraud through impersonation.
  • Tamper-evident: Tamper-evident features are often included in high-trust eSignatures, which identify if a document has been changed after it has been signed. This helps to prevent fraud by identifying manipulated papers and giving an audit trail of the signature.
  • Compliance: International standards such as eIDAS ensure that eSignatures are legally binding, enforceable, and provide the same level of trust as traditional signatures.

The banking industry specifically will benefit greatly from investing in digital trust ecosystems that include eSignatures, biometrics and encryption software to provide verification and assurance for customers.

In the future, financial institutions will adopt Know Your Transaction (KYT) as a means of implementing cybersecurity measures at the transaction level in their banking protocols.

By utilizing digital signatures at the transaction level and verifying them upon receipt, the financial industry can achieve KYT, ensuring that the source of information is under the control of the endpoint and that transaction information has not been tampered with.

This level of security will be a crucial aspect of achieving digital trust in the financial industry moving forward.

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Banking

How banks can help customers during the cost of living crisis

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 Lavanya Kaul Head of BFSI, UK & Ireland, LTI Mindtree

 

Surging energy and food prices are significantly driving up household expenditure, which means living standards in the UK will fall to 2.2% this year, according to the Office for Budget Responsibility. This is the biggest drop in any single financial year since the records began in 1956-57.

It’s a tough situation for many consumers who are still struggling with financial hardship following redundancies and pay freezes from the pandemic. According to TSB’s Money Confidence Barometer, 82% of people have experienced an increase in the day-to-day cost of living. This resulted in almost a quarter of them using their savings, while one in five changed their usual spending habits and behaviours.

As the financial situation worsens, consumers are increasingly relying on their banks for help and support. But, while banks can’t control inflation, energy or food prices, they can play a more supportive role by adapting their services to offer stronger customer service, better tools for financial management and be more flexible with loan repayments.

 

Strengthen customer service with intuitive AI solutions

Since the pandemic, consumers have changed the way they bank, using more mobile apps for primary banking rather than going into physical branches. This provided an opportunity for banks to accelerate their investment in digital services including automation and offer customers more support during the cost of living crisis.

Lavanya Kaul

Effective tools include AI-powered chatbots which respond intelligently to customer enquiries to quickly help troubleshoot problems and provide useful advice. But to be successful, you need to ensure you strike the right balance between an efficient and convenient process and creating a personalised experience. Customers need to feel like you understand and care about their problems and are here to help, rather than just fobbing them off with a monosyllabic bot. To avoid this, banks need to embrace intuitive AI solutions to ensure that empathy comes across in all automated interactions with customers. While doing that, messaging is key. In times of stress, we don’t function as well and financial struggles are a huge stressor. The clearer the message and the simpler the instructions, the better.

Financial education, when combined with technology solutions such as open banking, can offer more long-term solutions for people to navigate their finances. This can help put more information into the hands of the consumer to help them grasp their financial situation better. Some banks have cracked this with innovative solutions like HSBC’s Financial fitness score tool that can analyse your money habits and signpost you towards ways to improve your financial health. This may include joining one of the financial education webinars run by the bank or having a ‘financial health check’ with a member of staff.

 

Launch money management features & apps

Introducing money management features and apps to increase the visibility of a customer’s financial situation, empowers them with the information they need to make smarter choices.

TSB offers Spend & Save and Spend & Save Plus current accounts which include a savings pot that enables customers to put extra money aside when they can and an auto-balancer feature that automatically transfers money from the savings pot into their current account if their balance falls below a certain level. This allows them to start building up savings and protects them from unnecessary overdraft charges.

Personal financial management (PFM) apps also help customers get a better understanding of their finances. These connect with a customer’s bank account and enable them to keep a close eye on their spending habits and track upcoming bill payments. An example is Prism, a PFM app which allows customers to manage bill payments by sending them reminders about due dates. It also provides a summary of their income, account balance and monthly expenses at a glance, therefore consolidating all their financial information in one place and saving time on bill payments.

Lloyd’s Banking Group and HSBC launched a subscription management tool for all customers on mobile, allowing them to see and cancel recurring card payments for things like TV subscription services. HSBC says that during the first quarter of the year, it led to customers dumping around 200,000 subscriptions.

 

Introduce payment holidays

While improved customer service and financial management tools are important support tactics, they might not be enough for more vulnerable customers. For example, those who are about to default on mortgage payments or loans due to redundancy or periods of ill health need banks to do more, like offering payment holidays. Banks relaxed the rules for payment holidays during the pandemic, so they should consider doing it again to help more vulnerable customers through the crisis. Customers need to understand that they are not alone when experiencing financial difficulties and that help is available

 

Ride out the crisis together

As inflation reaches a 30-year high, customers are now more reliant than ever on banks for guidance and support. But to provide the right level of service, they need to move away from their traditional ways and behave more like technology companies by embracing automated solutions to create the right products and services for customers. Then layer on top of that the need for more personalised and empathetic customer interactions, as well as consider additional support for more vulnerable customers.

While we don’t know how long the cost of living crisis will last, what we do know is that the pressure on household finances is likely to get worse before it gets better. Therefore, banks need to step up, be the supportive partner and do whatever they can to help customers. After all, the only way we can ride out the crisis is by supporting each other and working together.

 

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