How future technologies are transforming banking
Raoul van Engelshoven, VP for banking and financial markets in Europe, IBM, looks at how two key technologies – cloud and cognitive – can aid banking transformation.
Diminishing income, operational efficiencies, regulation, fintechs. Sound familiar?
That’s because all banks are experiencing the same big challenges. Yet no one bank looks the same, so there is no one size fits all solution.
Moving IT to the cloud
Customers are changing the way they bank from checking their finances digitally, to applying for credit from non-banks.
Banks need a system which can provide customers with real-time updates and ensure they are offering personalised services that reach the customer wherever they are, at any time of the day.
To enable all of this requires a real-time business operating model that has the flexibility to scale and is by design data driven and centered around real-time analytics.
Building such an operating model needs an underlying infrastructure that scales with the service needs instantaneously, which is the reason why IT workloads are moved to the cloud, being either privately or publicly sourced or in a hybrid model.
Sourcing IT workloads through the cloud can range from consuming basic infrastructure services to full end-to-end processes, augmenting or replacing current processes in today’s business model.
Cloud is seen very different now than it was two years ago when it was all about reducing cost and increasing efficiency through simpler and faster processes.
Today it delivers real business outcomes and is the enabler of business model innovation and a source of revenue generation.
Embracing cognitive banking
There is still a lot of manual processing in banks today where staff needs to collect, analyse and conclude on decisions through cumbersome iterations.
Apart from the costs, it slows down the system enormously and impacts client service. Cognitive computing perfectly addresses these challenges.
Cognitive computing provides immense new insights to help banks understand big data, find the patterns, evaluate risks and drive higher probability decisions leveraging all type of data, structured and unstructured.
This is enabling banks to grow revenues through deeper personalisation of the customer experience and operational efficiency. We’ve seen that cognitive computing can help banks to achieve up to 40 percent reduction in operating costs and significantly improve the client experience.
So how does it work? Cognitive computing refers to a fundamental difference in how systems are built and interact with humans. Traditional programmable systems are fed data and their results are based on pre-programmed processing.
A cognitive system learns, understands, communicates and reasons like you and me. As such a cognitive system is being trained like any first time employee, but once trained, it continuously improves itself.
Artificial intelligence (AI) is no longer science fiction, it’s being used now to solve real world challenges and deliver complex real-time multi-variable decision making.
Banks that are leading the transformation
In today’s world, the business is just a swipe away, but equally can be swiped away as the new generation of customers are less loyal to one institution.
Coping with this new law of business drives a big increase in interest of these new technologies to transform the current banking landscape.
This will allow banks to become more relevant and find it easier to do business through enhanced real-time interaction with their clients. All while managing flexible business operating models.
In the future, the advantage will go to banks that become a cognitive business working in the cloud. It’s not a mere technology. It’s a way of doing business. It will augment what you do and enable you and your team to do what they do best.