The financial services industry is changing rapidly as digital transformation enables new possibilities and changes in the way we access our banks, engage with insurance companies, and interact with capital market firms. Financial platforms and services are increasingly able to integrate with every facet of an individual's life. This increased access also means more data and a greater need for trust between companies and customers that this data will be safe. Financial service providers must continue to increase their security and privacy abilities to meet these requirements.

To learn more about how financial services institutions are innovating identity and access, download our white paper.

Digital disruptions drive new technology

New financial technology firms are disrupting the model of traditional financial service providers by taking advantage of new technologies and increasing amounts of accessible data to deliver an enhanced customer experience. These digital disruptions to traditional models have led to the creation of new technologiessuch as decentralized identitywhich have the potential to alter the industry's paradigm further. With more and more of our work and even our personal lives happening in the digital space, this innovation shows no signs of slowing down.

With increasing competition from these new, digitally-agile, financial technology firmscapable of setting up customers in seconds through quick, digital onboarding experiencesbanks and other financial service providers have been scrambling to keep pace. The variety of options for consumers and the accompanying ease of signing up has significantly lowered the cost of switching, forcing the industry to ramp up the integration of digital services.

Cloud ecosystems and digital identity

This contest between traditional providers and new financial technology firms has resulted in expanding cloud ecosystems for financial services. The services that form these ecosystems are customer-centric and can offer unified value propositions that extend far beyond past financial service offerings to reduce customer costs, increase convenience, and provide new tools and services. These services are also leading to the creation of large, richly-varied pools of data that companies can use to target new offerings and services effectively.

To better compete, traditional financial institutions need to enable their own digital ecosystems by integrating third-party services, improving customer onboarding, and delivering differentiated customer experiences. To do that in the cloud, they need safe and secure digital identity.

Addressing the challenge of modern identity

Microsoft understands that managing modern identity is a challenge for many organizations, regardless of industry. We recognize the heightened stakes for financial services firms especially. Microsoft is working with our customers to prepare them for the future by addressing their security needs with scalable products and services for identity and authentication.

Learn more

For additional details on our perspective of this important topic, download our white paper, "Crossing the digital threshold: identity and access innovation in financial services." To access additional resources and learn more about how Microsoft supports the financial services industry, visit our banking, capital markets, and insurance pages.

The post Innovating identity and access management in financial services appeared first on Microsoft Industry Blogs.

Financial institutions are awash in quality data that informs them about many of the essential priorities and concerns of their customers. This data comes from interactions with customers via multiple internal channels as well as from third party channels such as social media or other online interactions. But the challenge remains: how to make sense of the data and turn it into actionable insights? Security measures and know-your-customer (KYC) requirements may have made banks very adept at discerning customers' identities, but very few institutions understand their customers and their specific needs. This disconnect has far-reaching implications.

Outsider perceptions

The most notable problem, from customers' perspective, is the dissonance that occurs when they are forced to jump through additional hoops when interacting with their financial institution. For example, when applying for a loan or a line of credit, most banks will ask for proof of income, even though 82 percent of workers in the U.S. have their paychecks directly deposited. This disconnect calls into question not only what a financial institution is doing with the data they collect but also whether different parts of the institution even understand what the other parts are doing.

Would you accept financial product advice from an institution that obviously doesn't understand your situation or even try? Failure to understand and employ data properly for personalized service undermines the trust that banks are hoping to rebuild and that has been the cornerstone of their relationships with their customers for decades.

Creating cohesiveness in the cloud

But what if a financial institution employs a different data model, one where the data does not reside in separate systems, but rather a secure data lake? The benefits of such a model are numerous, but there are two that are clear: cybersecurity and advanced analytics. From a security perspective, there are fewer attack surfaces, and from an analytical perspective, consolidated data is the underpinning for machine learning and AI, thereby allowing for true learning about customers and their individual needs.

Imagine harnessing the near infinite computing power of the cloud to drive real-time AI decisioning that could identify customers immediately and use a financial institution's wealth of data to offer customized products and services. No longer are customers an amalgamation of account numbers and credit scores, but individuals with unique circumstances to whom a bank can present tailored offerings.

Digitally restoring loyalty

In the early part of the 20th century, a bank manager might have known all his clients personallyfor example, in terms of the yields on their crops or the profitability of their storesand could recommend financial products that would help customers succeed in their endeavors. But unfortunately, this quaint ideal was not scalable with the growing complexity of goals, relationships, and financial products. Cloud computing, and the analytics and AI that it enables, has changed the game for how financial institutions are able to interact with their customers: now they can do so individually, yet at scale.

Clients are looking for an intuitive and orchestrated experiencea partner who understands their needs and offers them proactive assistance. Financial institutions are uniquely positioned to be orchestrators of highly differentiated, personalized services and value in the form of intelligence derived from vast stores of customer data. The key to delivering on this promise is mastering the data.

• Find out more about the Microsoft perspective on the future of engagement and loyalty in banking and capital markets.
• Explore our guide for modernizing your business with a hybrid-cloud solution.

Enabling innovation is Microsoft's core mission: we understand that transformation can be challenging, but we also believe that it holds incredible promise. Our approach is to leverage technology in novel waysenabling business agility with the tools that will define the future of customer interaction.

As your trusted technology partner, we offer both industry know-how and enterprise-grade solutions. And we can help you wherever you are on your digital transformation roadmap.

The post Restoring individuality in banking by mastering the data appeared first on Microsoft Industry Blogs.