In the United States, political parties continue to debate the wisdom of rolling back regulatory mandates imposed on banks after the 2008 financial crash. While some financial services experts argue that the burden of compliance is too high, consumer advocates see a need for continued oversight. The appropriate next steps may be a matter of perspective.
One undeniable outcome of those 2008 regulations was an intensified focus by Western banks on compliance, often at the expense of innovation. Asian banks and fintechs, however, pressed ahead – developing new digital business models and client-centric services. Now those banks, especially in China and Singapore, are preparing to introduce these innovations in markets around the world, according to a recent Finextra Research article.
Cloud-based hyperconnectivity helps these banks easily share information and knowledge throughout a huge, growing ecosystem of retail and corporate customers, a partner network, and emerging ecosystems. Even companies outside of the financial services industry can participate, introducing technical innovations and new business models into the market. Using advanced technologies such as artificial intelligence, machine learning, the Internet of Things (IoT), and blockchain, these companies are delivering the excellent customer experiences that consumers have come to expect.
For traditional banks, this all seems like bad news. But it’s not too late to compete – and win.
By embracing the same type of intelligent banking that these challenger banks have chosen, traditional banks can quickly and effectively accelerate their digital transformation. And they can do so without the time or costs of being a first mover.
Essential components of intelligent banking
The foundation of intelligent banking is a real-time, open, and integrated cloud platform that helps banks connect seamlessly and effectively with both customers and partners. It should embed disruptive technologies such as machine learning, blockchain, and the IoT.
The platform must also be open so that banks can seamlessly connect and share data with partners, fintechs, and other new entrants. It should support a vast partner ecosystem so that banks can take advantage of the next generation of API-driven banking.
Intelligent banking should also include a focused set of business applications that run both in the cloud and on premise. These applications must allow banks to operate comprehensive, optimized, end-to-end business processes. They should support industry-standard frameworks such as the Banking Industry Architecture Network (BIAN).
Finally, banks need data management and real-time insight that can personalize and transform the customer experience. Intelligent data management strategies, an enterprise-class data model, and technologies such as predictive analytics can combine to improve insight.
One company that is a prime example of intelligent banking is PayPal. The company, which supports 7.8 billion payment transactions annually in more than 200 countries around the world, is deploying technology that enables the use of data-driven intelligence across the entire value chain.
By using the solutions to streamline its finance processes, PayPal is increasing data quality and granularity and reducing the time needed to acquire data. A rich analytics layer will substantially automate its finance function – decreasing the number of manual processes, increasing accuracy, and freeing employees to perform more valuable activities.
The automated new solutions “will reduce regulatory burden on finance staff, increase their ability to do analytics, and streamline our overall control processes,” says Tim Crum, senior director of finance transformation at PayPal. That’s digital innovation that can change the trajectory of business success.
As I prepare to attend Sibos next month with my banking industry colleagues, I’m looking forward to hearing how organizations like yours are transforming your business models, service offerings, and third-party relationships.
Intelligent banking is a key to our industry’s progress and the success of individual banks. That’s a fact that requires no debate. The only question is whether your bank is ready to take advantage of intelligent banking. If not, how will you deliver the exceptional customer experience that both consumer and corporate banking clients have come to expect?
For more on emerging technology in the banking industry, see Phase 1 Of The Retail Bank Client Customer Journey: Awareness.