More than ever, digital transformations have been impacting every industry at an unprecedented rate. Many Financial Institutions have adopted some form of digital innovation while others are leveraging several solutions powered by emerging technologies (such as AI, ML, NLP and more), yet less than half of 43% corporate banking executives surveyed by BCG have a comprehensive digital strategy in place.
What happens when things spiral out of control? Major disruptions may occur in the absence of an explicit and adaptive digital strategy. FIs would need to reformulate the mode of operation, harness the potential of customer data, redesign the customer experience, create a digital actuated enterprise, and put together a holistic digital strategy, The Financial Brand reports.
Disruption to daily operation due to technology update, uncooperative attitude of IT with other departments, compliance issues, inefficient change management capabilities and transition impact on organizational culture are key roadblocks to digital transformation, the survey by Accenture reports.
Resolution steps include: objectively hiring appropriate personnel and periodic assessment of staff performance; proper assessment of new digital possibilities and ensuring adequate customization; synchronize legacy systems with the enterprise; and employ an adaptive enterprise wide agile culture. By aligning comprehensive digital strategy and strategic execution, FIs can realize the robust potential that digital innovation offers.
Chatbot becoming mainstream
AI powered Chatbot has undergone various enhancements since its introduction; having the potential to cut operational costs of companies $8 billion by 2022, and $1 trillion by 2030, the Juniper Research states. In US, major banks, such as Wells Fargo, Bank of America and Soft Bank have invested in bots. The use of chatbot with human assistance have saved banks an estimation of $450billion.
Insurance sector is experiencing increase in AI and Natural Language Processor powered solutions. For instance, the chatbot launched by All States Business Insurance, ABIE, pronounced “Abby” handled 25, 000 support tickets within a month. GEICO utilized a chatbot; known as Kate, to automate customer experience also via its mobile app. Royal bank of Scotland implemented its digital assistant, Cora. The chatbot is available 24/7 to engage with customers.
Similarly, Bradesco bank of Brazil’s digital assistant, BIA, currently gathers 72 million transactions. Many US Banks have embraced digital transformation as a means for deploying new product offerings, improve customer experience and loyalty, resulting in revenue generation stream.
Open Banking Watch
Open banking has the potential of £7.2bn in revenue by 2022, PWE reports. Momentous efforts are currently being experienced from various industry players. 82% of banks surveyed by Ovum at the end of 2018 already have a distinct third-party open API strategy in place compared to 56% reported in 2017. UK is the main driver of open banking with its Competition and Markets Authority (CMA).
Recently, HSBC’s launched its connected application which allow customers to access accounts from different banks together in one place, giving customers effective financial control and reliance. Also, it might be difficult to resolve issues such as who, keeps; manages and secure customers data. More awareness is paramount to expanding Open Banking acceptance and FIs would need to invest more in solutions that can protect transactions in real-time.
Industry players will have the leeway to carry out their innovation plan. However, the slow pace of its adoption around the world is largely due to less awareness and customer concerns about security and privacy, bobsguide reports. The deadline for PSD2 implementation in the UK is September 2019 and API uniformity is expected to start at the same time across Europe.
