Editorial & Advertiser Disclosure Global Banking And Finance Review is an independent publisher which offers News, information, Analysis, Opinion, Press Releases, Reviews, Research reports covering various economies, industries, products, services and companies. The content available on globalbankingandfinance.com is sourced by a mixture of different methods which is not limited to content produced and supplied by various staff writers, journalists, freelancers, individuals, organizations, companies, PR agencies Sponsored Posts etc. The information available on this website is purely for educational and informational purposes only. We cannot guarantee the accuracy or applicability of any of the information provided at globalbankingandfinance.com with respect to your individual or personal circumstances. Please seek professional advice from a qualified professional before making any financial decisions. Globalbankingandfinance.com also links to various third party websites and we cannot guarantee the accuracy or applicability of the information provided by third party websites. Links from various articles on our site to third party websites are a mixture of non-sponsored links and sponsored links. Only a very small fraction of the links which point to external websites are affiliate links. Some of the links which you may click on our website may link to various products and services from our partners who may compensate us if you buy a service or product or fill a form or install an app. This will not incur additional cost to you. A very few articles on our website are sponsored posts or paid advertorials. These are marked as sponsored posts at the bottom of each post. For avoidance of any doubts and to make it easier for you to differentiate sponsored or non-sponsored articles or links, you may consider all articles on our site or all links to external websites as sponsored . Please note that some of the services or products which we talk about carry a high level of risk and may not be suitable for everyone. These may be complex services or products and we request the readers to consider this purely from an educational standpoint. The information provided on this website is general in nature. Global Banking & Finance Review expressly disclaims any liability without any limitation which may arise directly or indirectly from the use of such information.


By Simon James, Global Lead, Data Analytics, SapientRazorfish UK

Data is the key to winning in digital transformation in a time of regulatory change.

If Wells Fargo CEO, John Stumpf, is to be believed, this generation will be the last to use the term debit or credit card.  Our physical relationship with cash, cards and wallets will soon be as alien as floppy disks and CD-ROMs to our children. Whilst the effect of digital transformation in many industries has been imperceptible, in retails banks the impact for millions of customers is conspicuous.

New legislation is accelerating the change

To add further fuel to the fire, European banks are undergoing this transformation against a backdrop of new regulation. The Revised Payment Service Directive (PSD2), in part designed to reduce the barriers to entry for new financial operators and improve security of digital payments, will fundamentally change the nature of competition amongst financial service providers.

For some financial service companies, already mired in the process of restructuring unprofitable aspects of their business, compliance with the new regulation is the goal. This means development of robust application program interfaces (APIs) to allow companies to build financial service applications on top of high street bank data. The obvious danger here, is that this reduces the role of the high street bank to a commoditised product provider, or leaves them only with complex products that require highly regulated advice, with little control over the customer experience or distribution channel. For other businesses who are more forward thinking or in ruder health, compliance is the floor not the ceiling. As they recognise that the data itself is a significant source of insight to explore and develop new products, services, open new customer segments and create new business models. It is likely that those that seek to thrive in this environment will have a greater opportunity for speculative growth than those who merely seek to comply.

Legislation in conflict

Ironically, at a time when the PSD2 regulation is encouraging the wider use and distribution of data, a second regulation is seeking to limit the use of consumer data, and widen the definition of personal data. The General Data Protection Act (GDPR), the first substantial new data privacy law since the explosion of high speed internet, promotes the notion of privacy and data protection by design. In particular the definition of personal data has been expanded to include many previously anonymous digital signals(e.g. your IP address), the rights of individuals to be forgotten and the right to access data held on yourself. Additionally penalties for non-compliance have been set at EUR 20million or 4% of global revenue.

This represents something of a dilemma for decision makers. PSD2 is increasing the flow of data between financial services providers and other wider third parties, particularly the tech giants who are perceived as a future threat. GDPR is seeking to limit the flow of consumer data without their express permission. What is clear, is that those businesses that have invested in data both in terms of people and strategy, APIs, scalable hosting and advanced analytics are in the best position to exploit the value being created by this perfect storm of digital transformation and new legislation.

But what about the role of Artificial Intelligence?

Much has been made of the opportunities from artificial intelligence for high street banks. Both GDPR and PSD2 are catalysts to creating a modern data platform, free from legacy technology limitations to exploit the speed and scalability of cloud computing. Without investment in de-siloing customer data and making it available through APIs, it is extremely difficult to capture value from artificial intelligence.

There are three key focus areas for exploiting AI in high street banks. The first is virtual assistants. Whilst today, the virtual assistant space is dominated by chatbots which predominantly focus on flowchart problem solving, knowledge retrieval and replacing call centre interactive voice response (IVR), as technology matures and competence levels increase, virtual assistants will take on more complex roles in customers’ daily finances.

The second area of application is attaching AI to back office operational improvements, particularly the current trend of robotic process automation (RPA). Just because a bank has a voice activated mobile app or robo-investment advisor, that doesn’t mean there isn’t a mountain of paperwork to be manually sifted through to ensure the correct documentation was submitted in the back office. Automating processes is nothing new, but going beyond automation and allowing machines to find better ways to complete processes

Finally, a less well defined opportunity is the killer application for AI, creating new products and service propositions from data. Only those companies that have hired the right data talent, coupled with an obsession with identifying and solving real customer problems are in a position to generate business innovation consistently from their data. To these businesses, legislation to open their APIs to the world is an opportunity to study what information is being ingested by which companies, spotting new competitors and innovative uses of data in real time.

Data and having the people to unlock its value are the two key ingredients to succeeding in such a volatile period of change.