Financial Services Technology – now and beyond

New technologies are emerging in the banking and financial services industry as a result of ever-changing customer expectations. Rapid sociological changes and advances in technologies are pushing financial institutions to become transparent and abandon conventional ways of doing business in banking and finance. With transaction processes being layered for privacy and safety reasons, customers are offered a large amount of customization in terms of products and services.

Nowadays, financial institutions are reshaping themselves as technology companies rather than just traditional finance companies. This means that they are becoming more and more successful, agile and competitive. That also ignites the amount of technological investments in the industry overall, and all new developments are closely being watched to be evaluated for practical use in the industry.

Digital transformation in the financial sector has gone beyond being just a buzzword now, as whole business models are being shaped in accordance with the new norms brought to the picture by the digital transformation. According to a survey with financial managers conducted by Gartner, 62% of respondents consider digital transformation as a management initiative, while the remaining sees it as part of optimization.

When we look at now and beyond, it is easy to say that new technologies will transform the banking industry as we know it and will provide both opportunities and challenges for financial institutions. And to achieve high success, institutes must undertake structural reforms between internal and external processes and systems.

Businesses will continue to use FinTech (Financial Technologies) to create new and leading business models. Therefore, innovation, driven by technology in products and services will continue to rise at full speed. According to a report, FinTech's worldwide adoption rate grew by around 64% in 2019. Let's take a look at the trends in global financial services technologies that will help banking, insurance, and other financial institutions increase their accessibility, provide convenience and, most importantly, build trust.

1) BIG DATA AND DATA ANALYTICS

Data plays a key role in the banking and financial services industry and, when used with technologies such as data analysis, offers businesses incredible value in many ways. Data analysis allows financial institutions to successfully process data. This enables them to gain actionable business information that helps decision making, product development, risk management, fraud detection and many more. On the other hand, big data and data analytics also help financial businesses to review past performances, optimize ongoing tasks, processes and functions, learn more about customers and expand their vision by making predictions about the future. This will fuel the AI adoption in the industry which will be mentioned below in the article. Now and beyond, more and more financial institutions are expected to use data analytics as a digital strategy to capture, control and organize data because this will help them create an efficient, smarter business and open up a new world of opportunities.

• To get some further insights, take a closer look on our website. You will find insights on how we embrace the potential of data by exploiting information at each interaction touchpoint with the customer. We optimize client interactions with service offerings of chatbots solutions, innovative robo advisory services and mobile solutions.

2) ARTIFICIAL INTELLIGENCE AND COGNITIVE TECHNOLOGIES

Artificial Intelligence (AI) covers versatile aspects of the global financial services business. Its best use is seen in financial services technologies. According to Forbes, artificial intelligence’s expected potential by 2023 for the industry is $ 447 billion in cost savings. Thus, 52% of executives have already confirmed that they are making “substantial” investments in AI. AI is a very powerful instrument in services technology that allows financial institutions to overcome human-error related security issues and easily detect fraud. The high computing and cognitive capabilities offered by Artificial Intelligence enable financial institutions to work efficiently in risk management, decision making, as well as other technologies such as big data analysis, robotic process automation, and voice interfaces. In addition, it helps consumers customize financial products and services, make budget analyses, receive savings suggestions, and realize the best digital payment and mobile banking experiences.

• For a leading German Retail Bank we conceptualized and deployed an AI-driven Customer Advisory Bot, supporting relationship managers with instant feedback on their inquiries on banking products & services. With the use of the “Botto-solution” a significant reduction in manual efforts was achieved, by leveraging the benefits of AI-driven solutions and processing a volume of up to 800’000 inquiries per year while considering 22’000 different data sources at lower cost and optimized resolution time.If you would like to read more about Artificial Intelligence head over to our site: ki.adesso.ch or you can even read our book "KI verändert die Spielregeln".

3) REGTECH

It is estimated that approximately 15% of the workforce in the entire global financial sector is engaged in "Compliance" tasks. According to some estimates, If 'Regtech' solutions were not available, the percentage of employees that would be hired for these tasks would increase significantly due to the regulatory needs.
Fortunately, RegTech allowed large financial institutions to apply the technology for these tasks, rather than hire more employees. There are already a large number of startup and financial service companies from "Know Your Customer" (KYC) or "Anti-Money Laundering" (AML) area, to regulatory reports, compliance verification, risk management, and transaction tracking.

“RegTech isn’t just adding technology to existing processes. It can change the way you think about regulatory compliance. Once you understand its transformative potential, you may find ways to create a competitive advantage.” David Choi US RegTech Leader

• Did you know? adesso engaged with a leading FinTech company for ensuring a workflow based sanction screening solution and improving KYC and AML requirements in TradeFinance. The TradiAI solution increases compliance checks while reducing manual efforts by 60%. Discover more about how AI-driven tools enable you to optimize document processing, ensure compliance and realise the benefits of operational excellence in banking here: Operational excellence in banking.

4) ROBOTIC PROCESS AUTOMATION (RPA)

Robotic process automation enables financial institutions to save labor and operational costs while minimizing human error. Because at RPA, the software is programmed to enable robots and virtual assistants to complete repetitive and labor-intensive tasks accurately and quickly. Many financial institutions are beginning to take advantage of this technology to create the best possible user experience for customers and stay ahead of the competition. Another great feature of RPA is to help ensure compatibility in a highly regulated industry. Today, thanks to RPA, customers can make quick decisions about many bank transactions because RPA helps banks deal with low priority queries from their customers in real-time through highly popular customer service chatbots. In the 2019 Retail Banking Trends and Predictions report, it is seen that 65% of the banks finally made their digital transformation. And 81% of banks have initiated or planned to start a digital transformation strategy. This number will increase rapidly in 2020 and in the years to come.

• Before automating processes we recommend to analyze, measure and redesign target processes. We are able to explore the unique digital transformation routes of your organization together with you. Our unique consultancy methodologies and deep expertise in banking & finance ensure the success of transformation projects. Are you interested in learning more about our process mining approach with the tool Celonis? Read more here: process mining

5) MOBILE FINANCIAL APPS

Mobile apps have also become an indispensable channel for banks to reach their customers. Digital design ensures that the needs of customers are met in a contemporary way and that innovative, new and attractive services become part of the customer’s everyday life. Our adesso mobile solution team designs and develops solutions in this new communication channel. Maybe you already experienced some parts of our expertise as user of the most downloaded app in Switzerland – the SBB mobile app.

• Discover more about our mobile expertise: Digitally designing mobile financial apps.