How can institutions enhance the customers end-to-end journey through digitization transformation?

Data, analytics, and AI are foundational to this transformation and the focus of my comments here. There are numerous opportunities to improve the customer journey in financial services – from easier onboarding through improved customer support. At the core of these improvements is a better understanding of the financial needs of customers along with personalization and ease of use of products and services that match the experiences they have in the rest of their digital lives.

Gaining a holistic view of a customer or prospect enables products and services to be delivered in such a manner that is intuitive, simple to use and relevant to what they need. When attempting to acquire customers, it is important to understand who they are and what they may need, for example a student loan or a jumbo mortgage. Data and analytics can assist in recognizing where to cross-sell services such as a line of credit for a cyclical business or enabling cash forecasting tools to assist a small business. Enhanced services such as fraud prevention using AI benefit both the institution and customer by managing losses more effectively.

Digital transformation drives unique personalised services while digitization tends to drive better efficiency that can also yield a better experience. For example, enabling voice recognition may better streamline a customer service call, but passing along the personal information to avoid re-entering and repeating information enhances and expedites that interaction. Institutions that are embracing both digital transformation and digitization will ultimately be more successful.

How has customer demands changed since the introduction of digital banking?

The real-time, instant, personalised information that is present everywhere in digital interactions drives expectations for similar experiences within financial services. Digital banking has been around for quite some time, but it is expected to evolve to keep pace and leverage technology to offer innovative services.

We see our customers focused more and more on “data products.” They are using predictive modelling to improve conversations with customers, offering insights that help better meet client’s financial needs.  This takes various forms for different lines of business. Within the investment community, robo advisors are becoming more prevalent. Chatbots are becoming more sophisticated. Customers expect and are receiving more assistance from budgeting tools, dashboards and financial calculators that are based on information that is specific to them to make the interactions relevant and personalised.

These interactions with the institution are very much focused on a mobile-first approach. The expectation is everything can be done on the digital platform, specifically the mobile phone, and does not require an in-person interaction. This experience crosses over between retail and business offerings as well since the same human has these experiences in both settings.

What are some examples of advancements in technology which have enhanced digital banking?

A range of technologies have advanced digital banking. Specific to the use of data and analytics, an enterprise data platform has become a strategic approach for firms to drive insight and innovations from the vast data that is available. Within the scope of this strategy, specific advancements are in the areas of:

• Streaming, Alternative and Third-party data – real-time data (ex. market data), unstructured data (ex. social media) and Third-party data (ex. credit scores)

• Machine Learning/Artificial Intelligence – models automate next best offers, fraud detection, alerting, etc.
• Cloud – public and private cloud infrastructure enables agility and faster time to market of new offerings, sandbox for trialling and testing, etc.
• GPUs/Improved CPUs – accelerate the speed of processing to address time-sensitive needs such as trading
• Simulations – can be run in fraction of time against large quantities of data in contrast to long running batch jobs of the past
• Efficient Storage – large quantities of useful data can be stored much more efficiently and processed
• Open banking / Embedded banking – open APIs and data sharing has enhanced the user experience and will have a major impact going forward

What is the importance of increased security protocols for mobile banking?

Digital adoption has increased, but a secure environment is critical to maintain the trust of customers.  As we utilise more data to personalise the customer experience, it is critical that security, but also PRIVACY is maintained and managed with priority.

Data governance is an ongoing and evolving topic. GDPR established the gold standard in data privacy rules.  The challenge is that the rules are ongoing and evolving. For example, individual states in the US are driving forward with privacy laws that slightly vary on the data usage and approach. This makes it especially difficult for firms to manage offerings to the customer base. Layered onto this is the need for strong cybersecurity practices to avoid data breaches of sensitive PII data.

Cloudera approaches data governance and security with a holistic approach – the Cloudera Shared Data Experience (SDX).  SDX is a fundamental part of Cloudera Data Platform architecture. Independent from compute and storage layers, SDX delivers an integrated set of security and governance technologies built on metadata and delivers persistent context across all analytics as well as public and private clouds. Consistent data context simplifies the delivery of data and analytics with a multi-tenant data access model that is defined once and applied everywhere. SDX reduces risk and operational costs by delivering consistent data context across deployments. Fully secured and governed data lakes can be delivered faster, giving more users access to more data, without concern.

Why is it important for a bank to develop infrastructure at an enterprise level?

Siloed infrastructures have long existed at banks, and this will continue for some time despite best efforts. It is not an easy task to bring forward the multitude of applications and related integrations that have developed on separate paths for years.

Ultimately though it is critical to strategically reduce redundancy to address industry opportunities more quickly. IT is often the source of frustration when the business cannot move quickly to address business requirements. Furthermore, redundant and unnecessary silos are expensive to maintain and quickly lead to accumulated technical debt.

Enterprise approaches can help a firm focus the effort. On top of this approach, they should seek agile methodologies that are iterative and enable business demands to be more readily. Employing DevOps can help to rollout features in a more automated manner. And finally, keep skill sets sharp.  Ongoing training is critical to today’s fast-moving technology, and it will also help firms retain talent.

Within the next two years how do you believe banking will change?

The financial services industry will continue to evolve across strong digital players including digital only banks, but also with partnerships expanding across the fintech ecosystem to tap creative and personalised service approaches.  Competition will remain fierce for both customers and talent and lines will further blur about where financial services are procured and who wins the high margin services and who is relegated to commodity account holders.

The use of data and AI in this environment will keep maturing. The prevalence of AI in fraud detection, for example, will evolve to be used more in lending and investments. Greater sophistication, gained with experience, will bring more customised data products built around the customer.  Open banking, embedded banking, enabled by data sharing and APIs are all enablers underway already. Exciting times ahead.