Delivering Digital Value

Written by Wayne Bartlett

 

As the word evolution implies, banks and financial institutions are constantly looking to innovate and modernise to survive. The one-upmanship of competition and adverse market conditions are pushing both incumbents and challengers to capitalise on emerging technology. That means finding value from new avenues like artificial intelligence and machine learning.

According to McKinsey, the use of AI in standard business processes increased by almost 25 per cent, and this is projected to have grown throughout 2020. Yet, many Australian institutions have yet to scratch the surface when it comes to the power of AI.

So how can the financial industry deliver more digital value with AI?

 

Fighting fraud and cyber risk

As customers and staff begin to ubiquitously use digital devices to access financial services, the risk of cyber threats also increases in parallel.

Despite the increased focus during the pandemic, this trend should come as no surprise. Even before COVID-19, Microsoft research found a quarter of banks consider cyber risk is the top threat in the financial services industry.

But traditional solutions for tracking and preventing cyber crime – scanning transaction and payment data for fraudulent patterns, say – are often proven ineffective today, as the process can overlook a growing quantity of fraudulent entries.

Machine learning provides a more effective solution. It automates and improves organisational ability to identify fraudulent patterns accurately and in real-time. And it can be leveraged by any organisation to fit their needs, with a little help from the cloud.

For example, Swiss company NetGuardians recently made an anti-fraud solution available on Microsoft Azure that helps banks and companies spot and stop fraud before money is stolen. Built around ready-to-run AI risk models. It is designed to catch invoice scams, CEO fraud, employee collusion, fraudulent online banking transactions, hacking, and other issues — making a complex task all the more simple.

 

Understanding customer needs

As well as protecting your customers, it’s critical to understand them too.

Today’s consumers expect financial institutions to know about their circumstances and preferences, and personalise service to them individually – no matter what physical or digital channel they’re using. That’s a high bar to clear, but one that will be increasingly important in an open banking environment.

AI enables what we call a digital feedback loop for FSIs, assessing and analysing data from disparate sources to create insights you wouldn’t otherwise get.

The Bank of Queensland (BOQ) is a great example of using AI to personalise service and improve customer experience. The bank has replaced a manual customer feedback system with an automated solution that primes it to respond rapidly to customer concerns, and to make more informed product and service development decisions.

Around 1,000 BOQ staff use the platform to load customer feedback directly into a data lake. Then, it uses AI to gather and analyse feedback, prioritising important insights to make it easier to improve – and differentiate their business.

 

Automating labour intensive processes

And that’s not all. AI is also driving a new wave of business process re-engineering. Instead of hiring offshore teams to conduct labour intensive processes, companies can now achieve similar cost reductions by employing AI systems that automate these tasks.

Take Simple KYC for example. The Australian risk management firm uses machine learning to read and extract key information from complex sources like trust deeds or contracts. Then it runs electronic verification screenings validate them. This approach can reduce the time to onboard clients by more than 50 per cent, and cut operating costs by 20 to 30 per cent.

 

AI for a more innovative future

We operate in a digitised, 24/7, global environment where differentiation can come down to the smallest distinctions. Tech-savvy experience-driven competitors, more empowered criminals, and rising complexity and inefficiency are enormous threats to your firm’s ability to survive – and thrive. The adoption of AI is one of the foundational tools financial organisations have to future-proof their businesses, today and in the years to come.

 

 

Learn more about Microsoft’s approach to AI in financial services from our whitepaper, here. Or to chat through more insights and trends and other industry events, contact me.