Future of banking

Customer-focused new technology is critical for financial institutions to remain relevant

In this era of global, interconnected financial systems, a ripple in one nook of the world can create a shock wave in the entire economic ecosystem. This has led to increased scrutiny and more stringent regulatory requisites for financial institutions. Regulators have not only shortened the time but also doubled up the information they sought from customers. Risk, financial data and technology are becoming hot topics, and banks are looking for crucial and viable solutions that can help them sail through compliance. To become more agile and remain relevant, banks in India are exploring technological options with more focus on insights into customer behaviour.

Data analytics helping banks in compliance

The world’s top investment banks have been fined close to $43 billion over the past few years due to not adhering to compliance rules in areas such as customer reporting, making it the single most expensive compliance issue. Regulators continue to put more pressure on financial services firms by adding constant reporting and more regulations to maintain data compliance.

Banks are still behind other industries in deploying new analytics techniques which is why they face many data challenges like data overload, inadequate data management systems, increasing customer demand for information and increased regulatory reporting. As banks continue to become more complex, technology radically changes the speed of operations and data production. To ensure compliance, banks need to apply big data processing and reporting tools to process data from new and legacy sources. The platforms should be sophisticated enough to process all types of structured and unstructured information such as internal documentation, voice mails, customer correspondence and transactions.

AI transforming compliance

Innovations in data analytics empower banks with systems that are smart in automatically refining their algorithms and improving results over time. We are not talking about the old school approach to data analysis — spreadsheets, data tables and crunching numbers on a calculator — the new age transforming access, which is artificial intelligence (AI).

Advances in automation and data-led intelligence have put sophisticated AI technologies within the reach of traditional institutions. This is because the modern AI platform can stand on the shoulders of the data and process automation technology trends that precede it. AI is a collection of technologies such as Natural Language Processing and machine learning that is now being applied across banks to further automate processing of information to better interpret and contextualise the information. It has the potential to refurbish the compliance process at a bank.

Improving customer experience

Banks have access to more consumer data than other businesses.With frequent use of web and mobile banking channels, the volume and variety of data that banks hold about their customers has steadily increased, driving an increase in the number of customer interactions. Banks hold detailed profiles, information on spending and income, and a clear picture of where people spend their time, banks are in a unique position to paint a clear picture of each of their customers. Big data offers banks an opportunity to differentiate themselves from the competition. Using advanced big data techniques to collect, process and analyse information, banks can provide better personalisation and relevant information to customers across all areas of retail banking. This can ultimately make banks more customer-centric.

Big data can also play an important role in customer retention by minimising churn. Loyalty has become a top issue with the millennial generation. It costs banks significantly more to acquire new customers than retain existing ones, and it costs far more to re-acquire deflected customers.

The writer is global head of transformational outsourcing solutions, VirtusaPolaris