The financial crisis of 2008 has left the banking industry stranded in terms of reputational damage. Since then, the industry is striving to imbibe compliance within the IT systems and is rapidly innovating to serve the new generation. The banks are focused at redefining the value they would want to provide for their customers during this phase of change.
The banking industry is currently passing through interesting times as the entire world is witnessing the fourth industrial revolution. We get to see significant technological advances in data science, genetics and computer vision that is rapidly increasing the pressure for change, regardless of the industry. Unlike previous industrial revolutions, this one is proceeding faster and its effects will likely be broader. We are not just seeing automation in manufacturing or service provision, but are seeing a transformation of both services and professions simultaneously.
Consumers in every industry are now continuously connected, digitally savvy, convenience-loving and price sensitive. This is demanding a change in the way banks are doing business. Banks need to find ways to cut through vast stores of data and figure out actionable information that will keep their customers.
Customer insights in banking helps you to take the following actions:
- Act with perfect timing.
- Cultivate the relationship.
- Discover what’s really going on.
- Drill deep into market segments.
- Earn permission to become part of the customer’s life.
- Identify customers by their behavioral characteristics.
- Make the right offer.
- Renew customer loyalty.
- Seize opportunities as they arise.
These technological advancements are particularly relevant for the financial services industry. The industry is currently navigating through an era of fundamental change even as the industry is already coping with a difficult market and interest rate environment. Digital interaction seems to be gaining more importance and is becoming mainstream; client behavior is also changing concurrently. Traditional universal banking is unbundling with new sources of capital, which has become available and erodes benefits of scale. Therefore, the pressure to innovate is continuous and not a one-time event. The ever-growing changing risk and regulatory requirements are also an added demand! We get an idea of the multiple demands that banks have to meet with this.
While technology is a key driver for the ongoing transformation, the speed of development is accelerating the need to adapt and reinvent banking. And, the banks can truly advance their contribution with the adoption of cognitive technologies.
Banking industry is one of the most data intensive industries. This gives them the greatest opportunity to benefit from cognitive and improve their operations and services, from customer support to investment advisory. Most importantly, making use of the digital clues that the customers leave behind is gaining importance to truly understand what they desire from their banking services. Most financial institutions are realizing that the volume of data and analytics required for the future success exceeds current processing capabilities. In order to maximize the potential of Machine Learning (ML), Natural Language Processing (NLP), chatbots, Robotic Processing Automation (RPA) and Intelligent Analytics (IA), new technologies will need to be introduced. In other words, all of the different technologies that encompass robotic and cognitive automation is fast becoming indispensable necessities to the industry’s data challenge. The latest advances in cognitive computing are coupled with new data sources that are readily available through cloud computing, thus creating new innovation opportunities.
The foundation is laid for robotic and cognitive automation technology to grow rapidly in the year ahead. It is also being reflected in the marketplace. According to Deloitte’s 2017 “State of Cognitive” survey, 87% of cognitive-aware financial services professionals say that such technologies are important to their products and services, 88% say these technologies are a strategic priority and just over 35% have invested more than USD 5 million thus far in such capabilities.
Admittedly, the large global players in the banking and capital markets sector are in many ways ahead of the curve when it comes to experimenting with developing and deploying robotics and cognitive solutions. We expect rapid, more democratic adoption across much larger number of banks driven by two major factors:
- Increase in information from unstructured data.
- Increase in the level of automation of every bank process.
The cognitive and analytical element of such tasks is still experimental and siloed.
Finally, we believe that automation as a whole will inevitably become transformative for every business process. We are already seeing examples of such transformation in pockets, from claims processing completed in seconds, to retail accounts opened in minutes, to loan processing in minutes and hours. Typically, these activities used to take days or weeks to complete.
No matter the size of your financial institution, the business case for robotic and cognitive automation is robust. Aside from managing confused levels of data, it can provide a host of other benefits including reduced costs, lowered error rates and improved customer churn. This provides a markedly higher level of service, increasing the scalability of operations, and improving compliance.
Exploring and adopting these technologies is critical in order to maintain an edge over competitors in the marketplace and to stay relevant, both, now and in the years to come.
Cognitive is a new avenue for taking out costs with unique optimization options possible through cognitive tooling and automation. In fact, those in the financial services industry with cognitive capabilities are witnessing productivity improvement in areas around production support and back-office processing.
The benefits of cognitive banking are myriad and with sustained focus, it will continue to change the industry. Taking major industry challenges such as commoditization, discerning customers and disruptive competitors into consideration, we assume that it can be the right time for banks and financial institutions to apply cognitive systems in practice.
It’s important for banks to lay the right data foundation, embrace the right level of technology and determine where maximum benefits can be realized. Do you think cognitive computing is the next best step that banks should embrace to harvest maximum benefits?