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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 Customer Experience (CX) for retail banks today

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By James Isaacs, President, Cyara

 

Today’s retail banks face considerable challenges. Open banking initiatives –  that make it easier for customers to switch accounts – and increased competition from emerging fintech brands, are making it harder for them to attract and retain customers. This challenge is particularly acute for traditional banks which are seeking to attract younger people, who are drawn to the range of innovative services offered by digital-first emerging ‘neo’-banks.

To stay competitive, traditional banks must improve the customer experience  they offer account holders. They also must look for more efficient ways of working, so they can service all customers in a consistent way, regardless of which banking channel they use – whether it’s banking online, at a physical bank branch, through a contact centre, using a mobile app, or (most often) using a combination of all these channels.

The challenge of consistency

The argument for an omnichannel strategy is compelling. Fuelled by the pandemic, demand for digital banking services has grown. McKinsey suggests that 71% of European banking clients prefer multi-channel interactions, whilst 25% express a desire for a fully digitally-enabled private banking journey with remote human assistance when needed.

The delivery of such systems, however, is not without its challenges. Embracing omnichannel often means transitioning to a cloud-based infrastructure – away from the legacy on-premise systems prevalent in banks. Even when this hurdle is overcome, delivering banking services through multiple channels requires a significant investment of time and resources. Due to these common barriers, many banking CX projects fail to get off the ground.

James Isaacs

At the other end of the scale, there are the banks who have sought to implement numerous channels to cater for every possible customer demand, with varying degrees of success. The key to the delivery of a stellar CX is consistency – ensuring that every stride a customer takes in their journey is seamless, irrespective of the path or the channel they choose to take. The chance of ensuring a consistent service across all these channels is negatively impacted if organisations attempt to simultaneously deploy services to mobiles, website, in-person channels, messenger, chatbots, contact centres, alongside the adoption of newer open banking services.

Selectiveness is key

Organisations looking to optimise CX through the adoption of an omnichannel strategy are therefore advised to be more selective in their approach – adopting one or two new channels or approaches before expanding their omnichannel offering further.

An ideal starting point for retail banks is to look at automation within the customer journey. When applied correctly, automation can be used to help improve customer service in a way that also delivers efficiency gains.

The power of automation

Automation can have a significant impact on the CX delivered within retail banking, which saves valuable time for the customer and enhances the customer journey. Most customers getting in touch with their banks have fairly routine queries, such as a change of address, so the need to speak to an advisor is often unnecessary.

Automated customer-facing support solutions, such as chatbots, offer a faster way for customers to self-serve and secure the answers that they need to certain problems without having to phone an agent. Chatbots are programmed through a knowledge bank that can easily be updated with new information, enabling customers to source the information they need quickly and easily. Chatbots can also be used to direct customers to an agent if they are unable to resolve the issue.

For those customers who do still need to speak to an agent, there are Interactive Voice Response (IVR) systems, which capture information from a customer when they call into the contact centre. IVRs help customers complete simple tasks themselves and route them automatically to the right department. This directly reduces average call handling time (AHT) for agents and the length of time that a customer is on the phone.

The importance of automated CX testing

Yet, offering omnichannel and automated journeys is not enough to satisfy customers. These journeys must be flawless if they are to deliver a seamless customer experience. Forward-thinking organisations understand that the only way to assure perfect execution is through adopting automated testing that places a spotlight on the omnichannel customer journey from the customer’s perspective.

Automated testing can be enabled by leveraging an intuitive testing solution that develops test cases based on existing customer journeys. Retail banks can use automated testing to track various paths through IVRs, chatbots and then base test scripts on those journeys to ensure their flow or functionality is as it should be. Using this strategy, financial organisations can create thousands of automated test cases that cover the full swathe of customer journeys, shortening testing operations to a fraction of the time of equivalent manual tests.

While automated testing provides easily measurable benefits, certain alerts flagged by automated testing are more critical than others. Distinguishing a true failure that requires immediate action as opposed to failures that can be addressed in time is essential to achieving the true return on investment (ROI) of test automation. In doing so, banks can ensure that the customer journey remains smooth, and the CX delivered remains outstanding.

The path to good CX is paved with automated testing

Delivering omnichannel services for banking is key to satisfying customer demand. However, whether it is the delivery of a chatbot, IVR or an open banking model, retail banks are well advised to stagger the roll-out to ensure the delivery of a consistent service to customers. Automation plays a critical role here – both in the delivery of omnichannel services to customers, but also ensuring its ongoing success through rigorous, frequent and automated testing.

Financial organisations that want to remain frontrunners in the market will stand out against the competition by delivering stellar digital and in-person experiences for customers. To assure high-quality CX, walk in the shoes of your customers, testing their customer journey in each and every scenario to confirm there are no cracks in the road. Of course, there may be bumps along the way, but when those are addressed in a timely manner, retail banks will continue to attract and retain customers for the long haul.

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Banking

Challenging the challenger: Why the digital transformation of traditional banking is key for competing with challenger banks

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By Sam Schofield, Senior Vice President: Global Enterprise at Udacity

 

Monzo and Revolut are only seven years old. Starling, which is often thought of as one of the first challenger banks, is just eight years old. Much of what we consider the ‘challenger’ or ‘digital’ bank sector came into being in 2015/2016. It’s a brand new industry and yet it has had an outsize impact on how we all manage our finances.

Back then, the legacy banks looked vulnerable. Most were still reeling from the global financial crisis of 2008/2009, and the narrative was focused on the new banks potentially taking meaningful market share.

As a reaction, the legacy banks embarked on wide-ranging and often expensive digital transformation efforts to keep pace with the challengers. Fast forward to 2022, and much of the functionality pioneered by the challengers has been successfully implemented by the legacy brands. An instant phone notification when you make a transaction? It felt pioneering in 2016, now it feels ordinary and expected.

The challenge that neo-banks have is not around adding more and more features (arguably there are only so many different ways we want to interact with our bank), but that to become profitable and survive, they have to become the very thing they used to fight against – a financial services provider that offers profitable services like loans, overdrafts, and mortgages. This is a process that many have undertaken already, with some success.

So, the battle for market share can be summed up like this: either the challenger banks reorientate their business models to focus on profitability, or the legacy banks innovate them into irrelevance.

Legacy banks might feel dramatically unprepared for the fight. But that ignores their greatest strength: people.


The shift away from high-street banking presents opportunities

The legacy banks are still grappling with digital transformation, but this presents opportunities as well as potential threats. Last month, Santander Group became the latest retail bank to scale back its high-street customer-facing operations presence when it unveiled plans to shorten its branches’ opening hours.

The news came a month after Lloyds Banking Group also closed more than 60 UK-based branches. While the withdrawal of retail banking from the high street has not come without resistance from the public, both banks cited a decline in branch usage as the cause for the scale back.

As of January, more than a quarter of British adults had opened a digital-only bank account – three times more customers than in 2019 – and this rise doesn’t seem to be slowing down.

Ultimately this feels like the right approach, and traditional banks have some way to go before their digital offerings can keep pace with the challenger banks. In the same month that Santander announced it would be scaling back customer-facing operations, the Spanish bank also revealed that it had migrated 80% of its IT infrastructure to the cloud. Whilst clearly a positive step, it will come as a surprise to those not in financial IT that this is news in 2022 when most non-banking companies have a well-established cloud strategy.

Encumbered by ageing and creaking tech stacks, the legacy banks will struggle to keep pace unless they can speed their digital transformation efforts. All the while, the likes of Starling are doubling in valuation. In this case, the proceeds of a recent £130.5m funding round will provide “a war chest for acquisitions” as the challenger continues to scale.

Legacy banks have an enormous, diversified workforce, while challenger banks take pride in their ‘tech-first’ approach to hiring. Recently, the CEO of challenger bank Revolut stated that its “headcount is mostly genius data scientists, product and business people rather than bankers”.

Legacy banks can’t necessarily compete with that hiring strategy, which is no surprise given the findings of a recent Udacity study where 55% of UK businesses claimed they couldn’t hire the right job-ready talent, resulting in the slow down of digital transformation efforts.

However, the solution may be closer to home. Banks must look inwards and utilise the invaluable talent that they already possess. As the trend of branch closures continues, legacy banks should look to retain and retrain staff with digital skills via talent transformation initiatives. For instance, Lloyds recently stated that it would try to find new roles for the 124 staff that have been impacted by recent bank closures, recognising the “need to adapt to the significant growth in customers choosing to do most of their everyday banking online.”

With a range of talent transformation services already on the market that provide ready-made technical skills training, traditional banks such as Lloyds have the option to seamlessly retrain their branch staff into more digital-focused roles. For instance, an underwriter could utilise their existing industry knowledge to make better credit and lending decisions with the help of AI and data analytics. Equally, future-thinking banks are beginning to leverage data science to help their fraud departments improve customer security.

By enrolling existing employees on talent transformation initiatives in AI, ML, and data science, traditional banks can tap into a readily available talent pool that possesses invaluable industry knowledge that can then be combined with the technologies of the future.

It was once accepted that traditional and challenger banks have different offerings to serve different demographics, but this view has all but vanished. To keep on top, legacy banks must remind themselves of this fact, while also recognising that their people are their biggest asset. Amid a digital skills crisis and the Great Resignation, banks must equip their staff with the necessary skills to remain valuable as we journey into a new age of digital-first banking.

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