Contributed by Simon Spring, Account Director, WhereScape
The banking industry is ripe for disruption – new start-up banks are challenging the traditional monolithic high street institutions to find more agile ways of working, to do more, smarter, with less. Al can be an attractive prospect, but deploying such an advanced technology is not a plug-and-play scenario.
The reality of the situation is that, for many banks, we’re still at an interim stage when it comes to Al. There are examples of incredibly sophisticated systems being used in fraud detection and loan authentication, but it would be a push to say this was the norm.
So why should banks be making the move to AI a strategic priority? And what steps can a bank take now to ensure success with AI systems further down the line?
Regulatory pushes and consumer pulls
The short answer is that AI is becoming a matter of necessity – from all sorts of perspectives – cost, risk, and market competitiveness forming just some.
A new generation of consumers expects services to be available 24/7, to be intuitive, instantaneous, and catered to them. For banks, this means providing services that cater to an individual’s spending patterns, device preferences, and current life situation. It’s a tall order for businesses to provide manually, but all the data on customers is there to provide those kinds of services – banks just need to find a way to access it.
Successfully accessing, and then analysing, data will lead to more streamlined services for customers and quicker time to insights for businesses means quicker service delivery to customers. Banks can also capitalise on their insights around customer spending patterns to provide tailored recommendations on financial wellbeing to clients – boosting their customer experience.
At the same time, legislation changes are adding additional complexity. As part of the shift towards these hyper-personalised services, the Second Payment Services Directive (PSD2) mandates that customers are able to request that third party providers can access their banking data to provide new services for the customer. The upshot of this is that banks will need to find a way to categorise, group and structure that data so that other services can plug in on request. Achieving this requires automation of the data structure to pull together, and analytics to determine which information is relevant for the required service.
And then there is the need for compliance with legislations like the IFRS 9 and GDPR. Both of these require the creation of “single points of truth;” the first on financial assets and liabilities, and the second on customer personal data. Both of these are exceptionally onerous tasks, if not outright impossible, to complete manually, and banks need some sort of system that can intelligently pull together all the insights into one, clearly representative, report of compliance.
Stepping stones to AI
If AI is a necessity for consumer personalisation and legal compliance, why aren’t banks everywhere simply investing and deploying it? It has emerged that, while there is great appetite for more analytics, more AI and more insight in general, all of these require banks to overcome significant legacy infrastructure hurdles. You can’t plug Al into an old system like a USB drive and expect it to churn out the results you want; instead, you need to get your data into a more searchable, agile framework before you can add AI over the top.
To do this, banks need to ensure they are predominantly focusing on stepping stone technologies – such as data warehouse automation. Data warehouse automation can provide a vital bridge between the legacy infrastructure that is holding many organisations back, and the future of cloud-based, data agility, by automating a lot of the manual, time consuming migration tasks.
This is particularly useful for traditional banks, who have substantial legacy infrastructure environments. These banks tend to have a very large number of old mainframe systems, with little or no modern analytics capabilities – something that they are, or should be, seeking to change as quickly as possible. The more diverse the IT infrastructure landscape, and the more sprawling the legacy and modern systems, the greater the need is to find a way to streamline all this and deploy more sophisticated, quicker, analytics capabilities.
Data warehouse automation can help with this – streamlining and accelerating the migration process. In addition, correctly deployed automation can reduce many of the different potential risks that come alongside modernisation: risk of error, risk of doing things slowly, risk of human oversights. And, in addition, the cost savings of automating data ingestion processes with data warehouse automation can allow banks to be more competitive, and more innovative. In the greater scheme of things, where the monolithic high street banks are feeling the push from newer challenger upstarts, it’s never been more important to find ways to become more agile with data and insight technologies.
IT infrastructure, and particularly analytics and AI capabilities, are going to evolve significantly in the next few years. At the same time legal requirements like the GDPR, PSD2 and IFRS 9 change frequently –and will continue to do so. In order to keep pace with these changes, banks will require increasingly comprehensive data ingestion, ways to manage their data landscape, and faster, cheaper time to insight/value systems. During this transition, data warehouse automation will be a critical stepping stone between current legacy environments, and a bank’s AI-driven future.
How new trends are creating the perfect recipe for rapid digital transformation throughout the world’s oldest institutions
By Wayne Johnson, CEO, Encompass
Digital banking has drastically changed the landscape of financial transactions over the last few years. Technologies used to be limited when it came to banking, however, now they cover every step of banking or investment services, from behind the scenes due diligence checks to customer facing channels. Embracing this change through emerging technologies is the future for the financial industry.
In recent years, financial technology (FinTech) has developed to facilitate online payments, instant banking, trading, lending, and more.
This new era of digital transformation has been driven by technologies such as artificial intelligence (AI), APIs, blockchain, process automation, and internet of things (IoT) technologies, which have provided vital upgrades to the outdated legacy IT systems institutions historically relied on. The aforementioned technologies streamline and enhance processes, consequently generating a much more reliable and pleasant customer experience. These technological advancements have transformed modern banking operations, changing how the banking industry operates today.
Every new advancement in technology in the finance sector, like expanding a financial service offering to business customers, brings with it new risks and compliance obligations, but the latest trends are creating the perfect recipe for rapid digital transformation throughout the world’s oldest institutions.
The acceptance of new-age technologies
Technology is already driving massive changes in the banking landscape as we know it, and it will be an influential contributor to shaping the industry of the future.
Focus on improving customer experience
One of the areas that banks are increasingly trying to improve through digital banking is customer
experience. Customer expectations for online services are constantly being influenced by the experience provided by big tech companies like Google, Amazon, Apple, and Facebook. With their influence, everyone is looking for a similar experience from their own providers. While digitally savvy Millennials are mainly responsible for the rise in expectations across the board, the wide-spread use of digital technologies in most industries has meant that it is more important than ever for banks to be on top of their delivery at all times.
Interactive banking channels
There has been a huge decline in branch visits in recent years, with some re-evaluating their very role, and an increasing shift from just providing transactional services to allowing for a practical banking experience. This was initially done by moving banks to key locations in town centres, investing in video chat services and offering self-service points – all of which has only been possible through the use of digital technologies. Financial institutions have realised that customers, with their busy and demanding lifestyles, like to have a choice and rely on a full range of channels, online access and 24/7 availability.
The rise of open banking
The increased popularity of open banking and rise in API usage is set to drastically change the industry with the flexibility offered by APIs allowing financial institutions and FinTech’s to put innovation at the heart of their service, resulting in improved customer service and enhanced convenience.
The importance of organisational structure transformation
In order to achieve true digital transformation, financial services institutions need to change their organisation functions from the inside out. To reap the greatest rewards, they must promote a “digital first” strategy internally. Only then will they see a positive change and truly release the benefits of digital transformation and the solutions available today.
The market is constantly evolving , and adapting, and whilst the survival of traditional institutions is not under immediate threat, key players are going to have to modernise their processes and ways of working to keep up with developing requirements and customer needs.
Financial institutions are now starting to recognise the importance of digitalisation, which many other businesses realised was a priority years ago. This is demonstrated by the emerging trends mentioned, which indicate a rapid altering of the operating environment, from increased customer expectations and improved processes, back-end technology and newer operating models to organisational priorities shifting with the times. Digital transformation can no longer be ignored, and financial services organisations will have to embrace it if they want to remain competitive
This is a Sponsored Feature.
Standard Chartered Bank partners with Microsoft to become a cloud-first bank
Standard Chartered Bank and Microsoft Corp. on Tuesday announced a three-year strategic partnership to accelerate the bank’s digital transformation through a cloud-first strategy. This partnership marks a significant milestone for Standard Chartered in making its vision for virtual banking, next-generation payments, open banking and banking-as-a-service a reality. Leveraging Azure as a preferred cloud platform, the companies will also co-innovate in open banking and real-time payments to help the bank unlock new banking experiences for clients.
Embarking on a cloud-first strategy
As part of its digital transformation, Standard Chartered will adopt a multicloud approach, where significant applications, including its core banking and trading systems and new digital ventures such as virtual banking and banking as-a-service, will be cloud-based by 2025, subject to regulatory approvals. The bank will also adopt a cloud-first principle for all new software developments and major enhancements.
As technology reshapes the banking industry, Standard Chartered recognizes that a cloud-first strategy is critical to the bank’s ambition to make banking simpler, faster and more convenient. By being digital-first, the bank will be able to meet the demand for seamless banking virtually anytime, anywhere, and make banking more accessible to people across its network.
Michael Gorriz, Group Chief Information Officer of Standard Chartered, said, “Cloud is a cornerstone of Standard Chartered’s strategy to meet the present and future banking needs of our clients. Cloud providers have invested massively in the reliability and automation of infrastructure and platforms. Using cloud services improves our ability to be agile and innovative, while increasing our operational efficiency and resilience. As disruption in the financial industry continues, we can focus on client benefits by deploying our solutions quicker and allowing for faster integration of new business models and partners. To realize our digital ambitions, Standard Chartered has chosen Microsoft as a strategic partner and this partnership marks a major milestone for the bank in adopting a cloud-first approach.”
Bhupendra Warathe, Chief Technology Officer, Cloud Transformation at Standard Chartered, added that “The pandemic has shone a spotlight on the need for businesses and banks to be resilient from a risk mitigation, cost and security perspective. With the increasing trend of an always-on digital economy, commercial and consumer clients are looking for applications and services that empower them to do online banking from anywhere, flexibly and efficiently. The speed and scale of continuous innovation offered by Azure allows us to innovate with the latest AI services to meet evolving client needs. We can pilot new apps in one market and scale them rapidly across others. This is especially important for a bank with a footprint as broad and diverse as ours.”
Standard Chartered will adopt Microsoft Azure as a preferred cloud platform to meet the bank’s need for resilient data centers and cloud services and addressing customers’ security, privacy and compliance requirements across the bank’s global footprint.
The first set of capabilities to move to Microsoft Azure will be Standard Chartered’s trade finance systems, allowing for seamless cross-border trade for the bank’s corporate and institutional clients.
The partnership will also advance the bank’s digital workplace transformation with Microsoft 365 and Microsoft Teams providing modern productivity and collaboration tools to Standard Chartered’s 84,000 employees across its 60 markets.
Co-innovating the future of banking
Standard Chartered will also use Microsoft Azure artificial intelligence (AI) and data analytics capabilities to enhance and automate banking processes as well as deliver hyper personalization of its client products and experiences. Co-innovation in open banking application programming interface (API) and Internet-of-Things-based, real-time payments will also help the bank unlock new banking experiences for clients.
Bill Borden, Corporate Vice President of Worldwide Financial Services at Microsoft said, “Cloud computing is an enabler for financial institutions to modernize their infrastructure and systems, to gain the agility they need to respond to competitive pressures, regulatory environments and customer demand. We are committed to helping Standard Chartered Bank in its ongoing digital transformation journey as it strives to address evolving customer needs and build the next generation of banking experiences.”
Addressing the social needs of communities in the emerging markets
Standard Chartered strives to understand the evolving needs of its communities and be an enabler for change. As a part of the strategic partnership, the bank and Microsoft will explore sustainable finance and business initiatives to expand sustainability across the industry.
What does the future hold for accessing earnings? Introducing the world’s first Earnings on Demand payment and debit card
By James Herbert, CEO & founder, Hastee
Let’s begin by looking at how our brains are wired. Think about the hunter-gatherer mindset: when we expend effort, we expect an immediate reward.
It’s therefore no surprise that over time, different areas in society have adapted to our nature as humans. Almost everything we want, we can get on-demand. Whether it’s instantly streaming movies on Netflix, online shopping from Amazon, or fast-food delivery from the likes of Just Eat. And, because of such technological innovations our expectations have accelerated when it comes to the pace of delivery. This isn’t individual to us as consumers in our day-to-day lives, it’s also reflected in the workplace. We ultimately want work to work for us.
Part of this of course comes down to accessing wages. Workers should be able to access a portion of their earned wages whenever they need it, in advance of the monthly pay cycle – whether to help during challenging times or in day-to-day life. We solved this solutionBut, to take this up a level, ready for the future, we introduced the world’s first Earnings on Demand contactless debit card, powered by Visa – giving users access to their accrued earnings in real-time, with the card’s balance dynamically increasing every day they work.
So what is the card, and how will it change how we access earnings in the future?
The basis is very much the concept of Earnings on Demand. At university I set up a company called Brightsparks to connect students with work opportunities so they could earn money. Yet I noticed a common trend. With students often having to wait for the monthly pay cycle to get their earnings, many were having to turn down work simply because they couldn’t afford the travel day-by-day. It became very apparent that not having £20 today could stop them earning £200 tomorrow.
It struck me that payday itself doesn’t have to be a rigid construct that people have to wait for. But this isn’t specific to students. Liquidity is a widespread issue faced by people in all industries and of all ages, and according to our most recent Workplace Wellbeing Study, 82 per cent of people turn to high-cost methods of financing to tide them over when needed.
The Hastee Card effectively makes wages directly accessible: it simply lets people spend a portion of what they’ve already earned.
Some people might wonder why they’d want to step away from the standard monthly pay cycle. But consider this: the monthly payroll (via a cheque) only came about in the 1960s as an Act of Parliament. Before this, most people were paid weekly in cash. The first major firm that shifted to monthly payments did it for cost-cutting. It worked for the employer more than the employee. In fact, that firm’s employees had rejected their employer’s change of payment type when it was first trialled a decade before (look up ‘Pye Radio’). So the way that workers and organisations interact around pay is not set in stone – it changes as technology and society shifts.
The way we perceive and use money keeps evolving. Apple Pay, Monzo, and PayPal have completely changed the way payments can happen, yet payroll still remains largely unchanged. It’s only a matter of time before disruption becomes more widespread.
Looking at it from the employer side, it has its benefits too. Before the climate changed, businesses were accommodating enhanced workplace benefits such as no-desk policies, flexible or remote working. In all cases by businesses offering more, they tend to see a more engaged, happier and less financially stressed workforce – leading to increased productivity.
Earnings on Demand is ultimately a perk that presents an ethical alternative to high-cost credit options such as payday loans, credit cards and overdrafts. And existing solutions offer zero impact on payroll processes, zero impact on the cashflow of the business and are designed for quick, simple integration.
The Hastee Card is an evolution of this all – preparing for the future. It builds upon and enhances the user experience by reducing friction and offering immediate spending power as well as a path to greater benefits such as cashback and rewards in the not-to-distant future.
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