Digital transformation of risk management in financial services
Microsoft and its partners have compelling solutions for financial institutions that support the digital transformation of risk management. If you’re interested in learning more about Microsoft’s perspective on how infusing cloud and AI technology into current banking processes enables institutions to better manage risk, download A financial institution’s guide to the public cloud.
Financial institutions need transformative new technology to address the ever-increasing complexity around managing risk and regulatory requirements. Important steps financial leaders must consider along the way are: preparing to implement changes without needing to complete a broad system rebuild, employing smarter risk management software and programs that are easily adaptable, and eliminating data silos that currently exist between various systems in financial environments. As institutions revamp their risk management approaches, the stars are aligning in terms of an opportunity to do more than just address regulatory requirements. Advanced technologies such as AI and machine learning are poised to help organizations harness the vast amounts of data at their fingertips to identify risks and opportunities with more precision, while responding more quickly to stakeholder demands.
Financial institutions are already looking to redefine their risk management platforms
Regulations such as Fundamental Review of the Trading Book, or FRTB, are at the root of some of the most wide-sweeping risk reforms in recent history. Even though the new FRTB rules go will into full effect at least 24 months from now, the magnitude and impact of the sweeping changes the regulation is bringing means financial institutions are on a tight timeline for determining how to revise systems and implement changes.
Especially for FRTB compliance, there’s no question that financial institutions that take a proactive approach to preparation will be more adequately prepared, and there seems no better time to take advantage of the possibilities offered by emerging technologies to do so. Thinking holistically about how to use advanced technologies such as AI and machine learning will lead to the development of an end-to-end risk management platform and help organizations take advantage of benefits that go beyond limitless, cost-effective scalability, accelerated time to development, and future-proof technologies. Financial institutions will also gain the ability to derive actionable insights from their data and, just as importantly, the power to innovate.
Advanced technology enables banks to develop an end-to-end approach
It’s been stated that big data is “the new oil” of the digital age. Financial institutions have to manage more data than ever, and foundational to capitalizing on its power in an end-to-end risk management platform is breaking down the data silos that exist across various businesses in their environment. Institutions that have enhanced risk platforms to cater to regulatory needs have made some progress; however, it is imperative to take into account the surge in unstructured data. The next phase of the journey is to build powerful analytics capabilities to reason over data, not only in hindsight, but through insights that empower businesses and leadership to predict unforeseen risks and exposures.
By leveraging cloud computing, banks gain the tools needed to ingest and store data from various sources, the compute capacity necessary to crunch data without sacrificing efficiency, and the analysis and visualization tools required to derive business-critical insights.
Infusing cloud-enabled processes with AI and machine learning presents additional opportunities for institutions to digitally transform their risk management approach. Through a combination of advanced technologies such as machine learning, cognitive services, and natural language processing, AI enables banks to add intelligence to applications and streamline processes. When applied in tandem with robotic process automation (RPA) technology, these advanced offerings have the potential not only to help banks minimize risk, but also to improve operational efficiency, develop innovative products and services, transform customer experiences, and personalize offerings in a safe, compliant manner.
Combining the infinite compute capacity, advanced data management, and analytics capabilities offered by the cloud with the intelligence, process automation, and streamlining capabilities provided by AI and RPA gives banks and capital market firms all the building blocks needed to drive business outcomes that are truly transformative.
Partner with Microsoft to develop an intelligent, comprehensive risk management platform
Microsoft offers the most comprehensive platform available today for developing a modern risk management platform. Read more about our approach to AI in our Banking on AI e-book.
