Steve Morgan, Global Banking Industry Lead at Pegasystems
We have entered 2024 in the face of continuing economic and political instability and a cost-of-living crisis, all which negatively impacts customer confidence. As such, banks must ensure that they have strong operational processes in place to ensure resilience and improve customer confidence.
What this is going to boil down to is how retail and corporate banks progress AI adoption, transition to a stronger autonomous banking business model and give an even greater leadership role to their chief technology officers (CTO).
Leveraging AI in corporate and retail banking
2023 saw a large number of banks experimenting with AI technologies, including generative AI (GenAI), as more financial service institutions aim to move their processes towards digital-first approaches and to enhance the customer experience, especially on web and mobile applications. This will provide a truly efficient omnichannel experience.
To achieve this, banks will be integrating sophisticated AI systems into their operations. This will put customer decisioning processes and predictive analytics right in the heart of their operations, and continue to be a key theme in 2024. By the end of the year, most financial service operators will have embedded some form of generative and other AI-driven steps into their processes, moving beyond experimentation with this technology.
The ongoing goal for commercial banks to win a greater share of transaction banking and cross-border payment business, will mean more of a desire for more transparency and flexibility in how payments are managed. Also, with inflation hopefully slowly decreasing and continued pressure on budgets and businesses, banks are less inclined to undertake “big bang” transformation projects (in part due to higher hurdle rates for returns on investments). Now, they are focused on making more agile moves to digitalise and automate payment flows. Smaller, incrementally value adding business cases and changes will be the way forward.
This is where AI and low code models could come into play to allow banks to transform their operations through re-imagined processes. It enables banking line of business owners, even those without coding experience, to digitalise operations for themselves, making processes even smoother.
The CTO takes charge!
2024 will be the year of the CTO. They will be at the forefront of operations and coordinating cross collaboration between four key teams of technology, product, operations and risk. As banks aim to streamline their operations, interdisciplinary collaboration of these teams is instrumental in guiding institutions on where to effectively deploy AI, generative AI, or other emerging technologies. All functions need to be focused on the business outcome and benefits of change.
Through combining the expertise and strengths of these teams, financial service institutions can pinpoint those areas which are in need of innovation. This ensures that the bank remains relevant and competitive. However, this will only be able to happen if the role of the CTO is brought out of the shadows and they are able to orchestrate seamless interplay amongst those four core functions.
The autonomous banking business model
Customers have always been promised self-service banking methods, but in reality, these models have not always worked. Usually, customers are unable to complete tasks autonomously, so need customer service agents to fix these issues, which creates more problems for agents and customers alike.
To overcome these issues, 2024 will welcome further advances in the autonomous banking business model. This uses intelligent automation, real-time AI, and event detection, to increase or reduce assistance levels. It is a flexible operating model which adjusts support levels as and when it is needed to create a seamless customer journey. However, it is important to note that this will not replace humans, the autonomous banking business model should work alongside humans to improve customer service and operations.
Financial services in 2024 is all about reimagining the banking experience to be more intuitive and customer focused. With increased use of AI, the deployment of the banking business model and the banks’ CTO having a starring role, financial service institutions are set to change the game in 2024.