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Fintech & AI: How to increase customer value?

While much of today’s fintech debate focuses on the potential applications of technology to financial services, the underlying reasons why the industry is seeking innovation so aggressively at this time are also important. To a large extent, it reflects the realities of the current environment: the need to reduce costs, achieve regulatory compliance, protect against new forms of risk and remain relevant in an uncertain and rapidly moving environment.

However, there is also another driver, perhaps the most important of all. It is the customer Every fintech discussion should start and end with the same question: how can we use technology to improve the customer experience? To answer this, we must understand which technologies will have the greatest impact and offer the greatest value to the customer today, tomorrow and in the future.

Impacting today: automation of robotic processes

Of all the current innovations, the automation of robotic processes (RPA), or robots for short, are the most ubiquitous financial services nowadays, and they are already improving the customer experience, both in our personal and professional lives. We see this clearly on the retail side of banking and wealth management, for example, where virtual advisers are becoming more common every day.

As expected, progress is also being made in the integration of robots in the back office. As technology matures, they can take on a broader range of complex and labor-intensive processes, such as collecting data from multiple applications, managing customer master data, and avoiding double data entry.

What companies find so exciting about technology is that it is capable of not only providing cost and productivity benefits, but it can also generate a more transformative commitment with the client and a personalized service.

At DTCC, for example, we are in the process of integrating bots into our infrastructure to support the way we incorporate a new customer into our global commerce repository service. Over time, we believe that bots will help us mitigate risk by reducing manual error rates, accelerating the process for customers by highlighting exceptions before and adding a level of consistency that simplifies the incorporation life cycle.

For all the benefits, however, there are also risk implications of a digital workforce. That is why it is so important that automation initiatives are carefully managed and coordinated throughout the company, and appropriate controls and governance are established before RPA programs are implemented.

Transforming tomorrow: applied machine learning.

Applied machine learning represents the next frontier in the digital transformation of how financial transactions are processed with the potential to increase customer value by increasing efficiency and reducing risk. While the industry is still in the early stages of implementing machine learning to solve business challenges, advances should come quickly in the next two to five years. The data is driving this trend, and many companies are evaluating how it can be used to support business growth and improve the customer experience.

At this relatively early stage in the maturation of machine learning, it is critical for the industry to implement the right foundational strategy to maximize the value of the technology. There are three key areas of focus:

First, we must create and use the most robust datasets possible. Standardization and standardization of data before analysis is important to ensure accurate modeling results.

Second, we must recruit, develop and retain data scientists and technologists who can work with the algorithms and validate their results.

Third, we must address the concerns related to the security and confidentiality of the data. These can be thorny problems, but the industry will have to work through them to make the most of applied machine learning.

Shaping the long term: distributed accounting technology

Interestingly, the technology that received the largest exposure to date, distributed accounting books, is probably the most complex in terms of delivering value to the customer. However, it is also the one with the greatest potential to transform the way the industry conducts transactions and provides support to customers.

At DTCC, we lead one of the largest DLT initiatives to date: the platform of our Trade Information Warehouse (TIW). When moving from a traditional database to a distributed ledger and also take advantage of cloud computing to improve its scalability. , optimize performance, improve flexibility and reduce costs. This work teaches us a lot about the potential of technology and its limitations, and this learning will help us guide us and others about how DLT can be used in other areas of financial services.

Similarly, as the industry continues to experiment with DLT, we must all be careful about how and where we apply it, recognizing that in some cases existing technology may still be the best solution. This is a critical point because our collective goal should not be simply to move current processes to a distributed ledger. Doing so is a wasted company of massive proportions. Instead, we need to see technology as a springboard to fundamentally rethink how to transform the post-trade ecosystem.

It is impossible to predict how DLT will change the structure of the market in the coming years, but I can imagine a future in which capital markets are more intimately integrated through distributed accounting systems; All data is captured and stored in the cloud; The critical assets are digitized and reside natively in these networks; and the networks perfectly synchronize the data in the capital markets.

This vision of data synchronization would deliver value to the customer through massive cost savings, risk reduction and by meeting the long-term objective of the industry to achieve direct processing from execution to settlement. In some way, achieving this could be the easiest part because the transition of technology, processes and current market practices can be the most complicated and difficult task before us.

As we look to the future, there is no doubt that technology will fundamentally improve many parts of the financial industry. To achieve this, financial firms must put aside their competitive spirits and work together to build the technological foundation of the future. The danger of working in isolation is that we will create a new labyrinth of disconnected solutions, which will limit the enormous benefits that Fintech can offer. There are many ways to support collaboration, such as supporting and participating in open source organizations such as HyperLedger Foundation and Enterprise Ethereum Alliance, to share our experience and ideas. If we think and operate in this way, I have no doubt that we will improve the customer experience and generate greater value for the customer.


Also published on Medium.

Published inFintech

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