Digital Transformation Opportunities in the BFS Domain
In the age of data, BFS players have a significant advantage over other industries, thanks to the huge volume of customer data in their hands. How they plan to leverage this “new oil”, so to speak, will determine how far ahead of their peers they will be in the coming era of intelligent banking.
The BFS industry is at an inflexion point. Multiple technology paradigms powered by innovations in cloud, analytics & database management are expected to open the gates to unprecedented opportunities.
For example, Robo–advisors are being employed at investments firms like Vanguard, Schwab, TD Ameritrade and others.
We take a look at some of the top emerging digital themes taking root across the BFS domain.
Computer Vision & NLP are Helping BFS Enterprises See The Future
Computer vision is perhaps, most commonly associated with projects like Tesla’s self-driving car & the Amazon Grad-and-Go stores. But behind closed doors, banks and other financial institutions have been busy exploring CV to augment their fraud prevention strategies and to improve their customer experience.
Facial recognition technology is finding widespread use in verifying customer identities across the banking value chain. CaxiaBank uses the technology to verify customers that visit their ATM branches.
In some European banks, CV is being leveraged to replace the manual scanning of documents using OCR. Given the number of documents required to process a loan, this step is saving financial institutions a lot of money and freeing up their manpower. Amazon’s Rekognition, Google’s Vision API and Azure Computer vision can read unstructured data and classify them according to risk exposure.
Service providers who have experience in integrating and maintaining such systems are already preparing custom proposals and pitches to top BFS players.
On the NLP side, Bank of America has launched AI-powered chatbots that are capable of capturing different voice intonations and accents with accurate natural language recognition. Erica, the chatbot, combines anomaly detection, predictive modelling and NLP-powered text mining to provide the bank’s app users with a personalized experience optimized to help them achieve their financial goals in the long term.
DevOps Continues to Remain a Top Priority
While opportunities for digital service providers in the DevOps domain has been abundant so far, the demand is poised to take off by as much as 40% by 2022. As enterprises across the wide gamut of BFS realize the importance of a robust DevOps team, they are actively looking for third-party vendors who can meet their demands.
Vendors can win huge outsourcing contracts provided they have proven expertise in:
- Developing strategic roadmaps to build and maintain CI/CD pipelines
- Automating builds, deployments, quality checks, security scans and post-deployment validations
- Jira automation service (and others) for deployment
- Developing automated monitoring dashboards
And other DevOps implementations.
ABN Amro, a leading Dutch bank completed their shift to an agile organization only in 2017 following a successful CI pilot prior to that. ABN Amro was relying on the waterfall model before this and found the system of manual handovers, code mergings at later stages and non-frequent deployments a big barrier to scalability.
The demand for an agile DevOps team is picking up in smaller banks as well who traditionally only employed IT talents to take care of their websites.
According to a study by a DevOps service provider, while 80% of the firms in the US financial services sector are already implementing DevOps practices, 14% are trying to do so in the coming 12-18 months period. Seen at the global level, this demand for DevOps translates to over $2 billion in revenue for digital service providers.
Customer Centricity Powered by AI
Softbank’s humanoid helper Pepper, and HDFC Bank’s IRA 2.0, both built with customer centricity in mind, is proof positive of just how important customer service is important in the BFS sector. These humanoid bots greet customers, guides them on standard banking activities and are also capable of answering an exhaustive list of pre-trained questions.
On a more useful note, Varo Money has gone a step further and enhanced their mobile app with AI technology to help customers boost their savings and keep a track on their borrowing habits. Over time, the intelligent app learns the user’s behaviour and provides personalized insights to help them better manage their money.
Capital markets, the domain of big–shot investors are leveraging artificial neural networks to collect, store and analyze all the previous transactions in the capital market for a pre-determined time period. This enables these algorithms to make predictions that help analysts with risk management.
It’s not just in the front office; AI is powering the middle and back-office tasks of leading financial institutes. Whether it’s in ensuring that compliance checks are performed routinely, or risk management parameters are updated at regular intervals, digital service providers are coming up with unique solutions to capture the trillion–dollar financial market share.
An example of this is AdviceRobo that offers rich data, including psychographics, automated financial risk assessment & customer touchpoint behavior analyses, through its proprietary algorithm that uses neural networks and reinforced learning.
The use of AI tools in settling and investigating huge volumes of historical transactional statistics at a fairly low cost has empowered watchdogs with unprecedented powers to ensure that the markets are healthy and free of fraud.
Digital Transformation of Banking and Financial Services
Undoubtedly, COVID-19 has accelerated the pace at which BFS enterprises are adopting digital solutions. The above-mentioned use cases are but a brief look into the vast ocean of opportunities in the sector.
Technology service providers, with their expertise in banking technologies such as RPA and analytics, are emerging as robust partners for development. Analytics, RPA and App development are high-value areas that technology providers and startups can target.
Using Draup for Sales’ proprietary Signals dashboard, service providers can keep track of key movements in the BFS sectors and track tactical & strategic signals in real–time. The Ecosystem feature enables solution providers to understand the technology and operational landscape across geographies and thus helps in crafting custom pitches to win high-value deals.