How Tech Innovations are Defining New-Age Banking

To avoid any turbulence post covid-19 era, banks are now compelled to embrace continual reinvention of their business models and solutions with the help of flexible and agile technologies which will not only make them resilient to uncertain situation but can boost their revenues as well.

In order to bring differentiation Banks are working on new technology architectures which comprises components like hybrid multicloud, micro services, API platforms, blockchain, Intelligent automation and AI at scale. These technologies will make larger impact when paired with an agile approach to design thinking and organizational integration. These new architectures are being made security-rich and compliant with effective risk reduction and more efficient compliance operations.

Of all advanced technologies, it is believed that Artificial Intelligence will bring the major transformative impact hence future success will depend on how organisation will be leveraging advanced analytics, AI, and automation to make operations more resilient and secure, addressing financial crimes, conduct risk, compliance, and risk management.

Companies are becoming more and more customer-centric by following data-centric approaches by using the customer experience as a competitive differentiator. Advanced cognitive systems and AI will help in evolving the customer experience, creating more cohesive and personal digital journeys by harnessing data environment renovated with structured, unstructured, alternate, and internal data. AI-powered solutions like chatbots, cognitive routing, and smart search will help in customer experience and engagement.

Banks are focusing on improving customer experience through Hyper-personalization which is based on intuitive, self-learning software, which allows offerings to be enhanced and added in response to customer needs. Such technology brings new value and an entirely new customer experience. Many banks using advanced investment algorithms to strengthen their portfolio management. Since digital transformation is an end-to-end process, banks are targeting deployment in fraud detection and back-office functions in their future business plans.

Financial institutions will also have to continuously re-calibrate Risk models based on new data to reflect current market scenarios. Banks need to deploy AI driven risk mitigating actions for potential delinquencies, security, and fraud, both on a temporary and long-term basis. Market and operational differentiation can be achieved by using unique advanced scorecards and AI on large internal and external data sets, differentiated through NLP, machine learning, and cognitive functionalities. Essentially, these new scorecards can go beyond the available quantitative data from banks and assess qualitative concepts like – behavior, willingness, ability, etc.

AI to make deep impact in banking requires more explainability from the models. If AI helps a bank decide not to offer a product, then one must know the reasons. Explainability also provides an opportunity for banks to build better relationships. It allows business to understand why a negative decision was reached and could help optimize their policies.

Along with customer experience and business processes, Financial institutions are enabling a flexible workforce model with the help of virtual assistance, digital engagement, Cloud-based tools, including video, voice, and chat capabilities which will help facilitate interactions and meetings with teams, vendors, and customers.

By applying advanced technology and custom solutions in processes, customer engagement and workforce management banks will be able to reduce risk, adapt change quickly, strengthen operations, lower costs, and drive efficiencies.

(The author is Chief Innovation & Analytics Officer, SMEcorner and the views expressed in this article are his own)