But what if we’re making a false assumption about the trade-off between growth and efficiency? This very question was raised at a stimulating discussion I took part in at the Financial Times Global Banking Summit in London back in December. We were talking about ‘Sustaining a growth mindset: Innovating for consumer needs’, and I was joined by fellow guests Claire Calmejane, Chief Innovation Officer at Societe Generale; Rishi Khosla, CEO and Co-founder of OakNorth Bank; and Andy Ellis, who is CEO of Mettle and Head of Digital Assets at NatWest Group. The event was moderated by Liz Lumley, Deputy Director of The Banker.

How can banks continue digital transformation in a downturn?

Liz Lumley launched the session by providing helpful context. Rising interest rates and inflation are a challenge to both fintech startups and consumers as the cost-of-living crisis looms and funding is constrained. Businesses are more focused on the shorter term, while consumer purchasing decisions are in a state of flux. Nevertheless, the world’s leading lenders continue to invest in technology, data and hyper-personalisation of services. These are seen as necessary steps to retain customer loyalty and improve risk management during uncertain times.

But, we asked ourselves, is digital transformation really delivering revenue growth and profitability fast enough for shareholders? The vulnerability of many fintech businesses at the current time would suggest otherwise.

Data insights that deepen customer relationships

All the participants agreed that data was going to play a central role in the future of banking, not least by providing an accurate and complete view of the customer. In essence, rich data enables banks to make better lending decisions by anticipating changes in businesses’ financial situations. Modern analytics also provide insights that customers want to know about, which gives banks opportunities to deepen client relationships and nurture their loyalty.

Artificial intelligence, sentiment analysis and omnichannel customer engagement are also on the agenda right across the sector. The advent of these technologies has led many established banks to partner with fintechs to improve the developer experience and add to their stock of digital skills.

Integrating with fintechs for better all-round customer value

Delivering more tailored banking services and real-time customer experiences is, no doubt, an attractive proposition. However, despite the temptation to snap up smaller businesses that can deliver these, Andy Ellis of NatWest Group believes fintechs should only be considered for acquisition if they align with a bank’s strategic mission and deliver a specific capability for a defined sector. While there may be no single formula for a successful partnership, effective integration is fundamental. Fortunately, banks are getting better at preserving the agile culture of startups, where so much value lies.

Meanwhile, banking-as-a-service (BaaS) offers significantly more growth potential than traditional banking, in the view of both Andy Ellis and Claire Calmejane. Looking further ahead, Claire also saw potential in greater collaboration around open data. But progress in this area will require an international framework around data standards, secure data exchange and certification.

Advocating industry evolution, not revolution

At Microsoft, we partner with banks to help them deepen and extend their relationships with clients. A key aim is to bolster customer trust through increased responsiveness and security, while anchoring digital transformation initiatives in improved customer experience. In other words, we need ongoing work to build the foundations for innovation rather than a wholesale digital revolution.

Digital transformation is a long-term process, as are the relationships that bankers seek to foster with their clients. Microsoft’s partner network, industry specialisations and technical expertise – as demonstrated by the Microsoft Cloud for Financial Services – play a key role in enabling this to happen, as well as helping businesses become more sustainable.

Looking ahead: agile banking operations that accelerate growth

One critical insight this debate revealed was the need for banks to create an efficient digital operating environment that can add products and services quickly while helping to mitigate factors like climate risk. Digital transformation can also help make lending smarter as well as faster, while growing the quantity of lending as well. As Rishi Khosla neatly put it, “The trade-off between operational efficiency and growth isn’t actually a trade-off if you’ve got a good operational environment.”

Find out more

Lead new opportunities and advancements in financial services

Scale to revenue: How to leverage fintech solutions to drive growth

4 ways to deliver a personalized banking experience

Microsoft Cloud for Financial Services: Create new value with deeper customer connections

About the author

As Client Director for Microsoft, Janet is responsible for leading the strategic partnership between Microsoft and one of the UK’s leading banks. She focuses on supporting its transformation, anchored on business outcomes and drawing on Microsoft technology and partner solutions to deliver innovation and strategic change. Prior to this, Janet led Industry Strategy for Financial Services, helping customers address industry-wide challenges and innovate for the future of the industry.

Janet has a background in Corporate and Commercial Banking, having joined Microsoft in 2018 from Lloyds Banking Group and previously held roles at Barclays and NatWest. She has a personal interest in cultural transformation and has also played an active role in supporting the inclusion and diversity agenda during her career.

The post How to negotiate uncertainty in banking: aligning growth with efficiency appeared first on Microsoft Industry Blogs - United Kingdom.

The financial services industry is rapidly changing. In a world where the future means hybrid working, hyper-personalisation, and Banking as a Service, there is no doubt that data and AI at scale is going to be needed to succeed in the future of finance.

Technologies such as AI and automation can help organisations solve business problems and inform decision making. It can also increase productivity by taking over repetitive manual tasks. Data and analytics can help organisations better understand their customers, build resilience, discover new opportunities and remain competitive.

However, as more organisations adopt and capitalise on data and AI, those who are successful are the ones who take an unsiloed approach. They bring the whole organisation along on the journey and focusing on the result. This, in many cases, is as much about culture change as it is about technology.

I recently took part in an engaging panel discussion where myself and Peter Jackson, author of the Chief Data Officer’s Playbook and the Chief Data and Analytics Officer at Carruthers and Jackson, Norman Neimer, Chief Data Scientist at UBS, and Steve Higgins, Lead Impact Strategist for financial services at SparkBeyond. We discussed the challenges and opportunities financial services organisations need to consider when implementing AI into their business.

What are the challenges facing the financial services industry?

Despite the use of chatbots, machine learning programmes, and a lot of experimentation, adoption of AI is lower in financial services than in other industries. And as much as we all wish it were, every new technological implementation is not always smooth sailing.

“It would be hard within one organisation to see a successful uniform pattern of adoption and operationalisation of AI,” agrees Peter. He adds that there are four key challenges to AI adoption for financial services organisations, which the rest of our panel agree:

1. Low levels of data maturity: Are you ready to embrace AI? Measure your data maturity first.
2. Low levels of data literacy: To get good AI, you need good data knowledge.
3. Low levels of investment: The opportunities are huge, but it hasn’t been matched yet. Not only in the tech, but the processes, people and data.
4. Bad experiences and risk: Ensuring your data is secure and compliant helps reduce risk. To be quick to succeed you need to not be afraid to fail fast and move on.

The key to successfully implementing AI is based on data, company culture, and the business values. Don’t start with AI just for the sake of it. Look at your business values, and what you want to achieve. And instead of starting with the biggest use cases that will drive the biggest impact, start with the smaller value but more achievable cases. That will help you see results faster.

Deliver personalised customer experiences with data and AI

In a recent report by SparkBeyond and Microsoft, banks using AI found that 30-80 percent of conventional patterns are no longer relevant. Customer behaviours are constantly changing, and financial services need to achieve customer intimacy. People want to know that organisations understand who they are, know what they want and can meet their needs. Just look at how quickly we adapted to changes in the last 12 months. Banks need to understand these patterns quickly to best serve their customers. AI can inform decision making to help build personalised experiences for customers, from banking to investments. Additionally, the ability to understand customer experiences and make more dynamic decisions around customer vulnerability using data will help across society more broadly.

ABN AMRO, the third largest bank in the Netherlands, wanted to be able to efficiently access and use data to help support customers during key stages of their lives. By migrating to the cloud, ABN AMRO could scale faster, access better insights to empower both customers and employees.

“I foresee a future where we have a much smaller on-premises footprint. There’s so much data processing and analytics we can do, making predictions, doing all kinds of complex calculations, and developing entirely new, cutting-edge use cases, for example with Azure Machine Learning Services,” says Piethein Strengholt, Principal Data Architect.

Establish a data-driven business

To gain a full view of the customer, internal silos need to be reduced. Data modernisation is key to fixing silos. Additionally, it can help organisations uncover new insights that wouldn’t otherwise get accessed without a collective view of data. At the same time, organisations need to be sure this data is of good quality.

Nationwide uses Dynamics 365 to connect their data silos and provide a holistic view of the customer. “It’s much easier to check in with clients and keep them up to date with key product and service changes,” says Anthony Pooley, Customer Relationship Manager in the business savings team. “We’re spending less time on admin tasks which gives us the capacity to spend more time on value added activities which our clients appreciate. We now have a wealth of information at our fingertips.”

Underpinning a data-driven business is data governance. “There’s a need to have regulatory oversight to ensure the data is safe and protected,” says Steve. Ensure valuable business and customer data is adequately protected, including the proper regulatory compliance. At the same time – think about how that data will be used. The responsible and ethical use of data will build strong AI models, reducing bias and risk. At the same it, it will ensure the models deliver exactly to customer’s needs.

[msce_cta layout=”image_right” align=”right” linktype=”blue” imageurl=”http://approjects.co.za/?big=en-us/industry/blog/wp-content/uploads/sites/22/2021/04/CLO20b_Evan_office_003.jpg” linkurl=”http://approjects.co.za/?big=en-gb/industry/blog/cross-industry/2021/04/29/data-strategy-build-innovation/” linkscreenreadertext=”How to power up your data strategy to build innovation ” linktext=”Power up your data strategy” imageid=”48569″ ][/msce_cta]

Build a data-first culture in finance

“I would encourage data leaders to really think about how they can build culture and business impact within their organisation,” says Norman. “That’s going to require some rewiring and rethinking of processes.”

According to a CBI/PwC survey, 93 percent of financial service businesses expect a greater need for skills in technological proficiency and 71 percent believe that people management and leadership skills will be needed.

Therefore, when you start implementing AI projects, don’t just bring your C-level and boardroom suite along the journey. Bring your frontline workers too. “Building a model doesn’t get you all the way. What gets you all the way is bringing the users along, turning the model into an app or report that someone can use and drive impact with it,” says Norman.

Illimity bank offers employee discounts for loans, but it’s application and approvals process was slow an inefficient. Originally, a single employee handled all the requests, performed complex prescreening processes and sending summaries to HR for authorisation. By automating this workflow, they saved 15 hours a month of employee time. They also sped up the process for employees wanting to use the benefit. What’s more, they now can see the big picture when it comes to employee loans, using the data to power further insights.

To build data literacy and use new technology such as AI, the right skills are needed. Democratising AI and data for every employee helps uncover innovation. For example, employees can drive innovation by using low/no code apps to automate workflows. This will enable them to spend more time with customers or on other value tasks.

[msce_cta layout=”image_right” align=”right” linktype=”blue” imageurl=”http://approjects.co.za/?big=en-us/industry/blog/wp-content/uploads/sites/22/2021/05/SUR21_LaptopGo_Contextual_1629_RGB-1.jpg” linkurl=”http://approjects.co.za/?big=en-gb/home/digital-skills/” linkscreenreadertext=”Microsoft’s digital skills hub” linktext=”Microsoft’s digital skills hub” imageid=”49202″ ][/msce_cta]

Reduce risk and build resilience with data and AI

Traditionally, incumbent banks and other financial service organisations are risk averse. As a result, there is a slower take up of new technologies such as AI and cloud services. However, as challenger banks and digital-native fintechs appear, traditional organisations need to rise to the challenge.

In this challenge, lies opportunity. Regulators recognise the value in new technology, for example, with the implementation of Open Banking. The Bank of England recently issued a Supervisory Statement on Outsourcing and Third Party Risk Management, which focusses on facilitating adoption of the cloud and other new technologies.

AI can help gain insights into risk – spotting fraud quicker or flagging unusual banking activity. It can also be implemented to help protect data – taking over low-level monitoring, scanning thousands of signals daily to spot cyberthreats.

AI can also help reduce errors, with RPA taking over repetitive manual tasks. Low and no-code AI solutions can improve operations, while reducing errors. And starting with a small AI project, for example in the middle or back office, will increase data literacy, while showcasing its effectiveness at a smaller risk than starting with a big project.

[msce_cta layout=”image_right” align=”right” linktype=”blue” imageurl=”http://approjects.co.za/?big=en-us/industry/blog/wp-content/uploads/sites/22/2021/05/SUR20_Pro7_Contextual_09196_RGB-1.jpg” linkurl=”http://approjects.co.za/?big=en-gb/industry/blog/financial-services/2021/04/23/cloud-innovation-agility-and-resilience/” linkscreenreadertext=”How the cloud drives innovation, agility and resilience” linktext=”Drive innovation, agility and resilience” imageid=”49259″ ][/msce_cta]

Improve sustainability goals with data and AI

For organisations across every industry, Environmental Social and Governance (ESG) is becoming a reputational importance. “What I’ve seen as a trend is financial firms no longer look at their ESG as a reputational risk, but as a credit risk, i.e., if they don’t help reduce their carbon footprint, that’s going to impact their portfolio. AI can help you understand a complex problem,” says Steve. AI can help uncover insights around financial services value chain to reduce waste, save energy, and optimise processes.

Recently, NatWest and Microsoft announced a partnership to help NatWest’s business customers understand how they can start reducing their emissions, using data and AI to inform the decision making process.

Data and AI for innovation

Implementing AI isn’t just a technology process. It’s requires organisations to think culturally about how to address decision making within the organisation to be able to take opportunities quickly. Start small. Experiment fast, fail fast and learn fast. Keep the focus on the customer and the problems to solve but let the data guide decisions. As a result, challenges previously not already considered may be identified.

To successfully innovate and deliver competitive advantage, organisations need to establish a data-driven business, underpinned by skilled employees and focussing on customers as a key part of their value chain.

Find out more

How are leading finance institutions are capitalising on AI analytics

Future-proofing financial services with AI analytics

Boost the innovation of banking business models

About the author

Janet currently leads the Industry Strategy for Financial Services at Microsoft UK. She ensures that drivers of change and emerging technological trends across the sector are core to how Microsoft works with Financial Services organisations, supporting their digital transformation. Before joining Microsoft in 2018 Janet held roles within commercial banking; latterly at Lloyds Banking Group and prior to that, Barclays and RBS. She has a personal interest in cultural transformation and has also played an active role in supporting and driving the inclusion and diversity agenda during her career.

The post How to power an innovative culture with data and AI appeared first on Microsoft Industry Blogs - United Kingdom.

What happens when you combine this business agility and intelligent operations? Firstly, you can enable your operating model to derive additional value. Secondly, an agile, data-driven operating model can help you gain new capabilities and improve current ones. Thirdly, you will gain competitive advantage. In our previous blog Marina shared the changes happening in the industry and how intelligent operations could help. Here we focus on some of the use cases and tangible business outcomes of intelligent operations to help you drive competitive advantage.

“The biggest opportunity is in operations. We have vast operations departments because processes are not there, and data is incorrect. You have 1000s of people covering the cracks…Fixing this and getting it 100 percent right is the biggest opportunity. It will make our clients happy and enhance our service.”
– Head of Strategic Development, Top Tier European Bank* 

Mitigate risk and reduce data silos

End-user computing (EUC) are applications like spreadsheets, databases or reporting tools that are not often developed or maintained in a robust IT environment, but by separate teams. What this means is not only do you have operational data silos, but extra risks and increased costs. Add the lack of governance and integration with existing business applications plus data errors, security and more. All these are barriers preventing firms from being able to maximise data value.

By modernising operations with Power Platform, Power Apps and Power Automate, you can deliver operational savings and innovation. Turn EUCs into End User Solutions by providing a compliant and secure framework. It also reduces operational silos and data inconsistency and inefficiency. All those micro silos of data that are scattered across your organisation? They are now part of the larger data estate with full IT controls and management. Power Platform is built with security in mind. It has advanced encryption, rich access control, and deep integration with Azure Active Directory.

“We calculated that if anything went wrong with an Excel business critical process we had, the impact would be 100s of thousands – this made the investment in Power Platform immediate.”

Streamline workflows and processes

Power Platform combines data to create a single source of truth. From there, you can build low and no-code solutions to analyse data and automate processes. A Forrester Total Economic Impact™ Study Commissioned By Microsoft in March 2020 on Power Apps found that organisations were able to reduce app development and costs by 74 percent.

Microsoft’s Commerce Compliance Engineering (CCE) team uses Power Platform for their compliance evaluation process. By moving to Power Platform, this time-consuming costly service was completed with 53 percent less effort. They even had a 36 percent increase in scope. As a result, they saved around $500,000 compared with FY19.

With Power Platform, you can automate time-consuming manual processes with robotic process automation and digital process automation. This means employees can focus on high value tasks to improve the overall customer experience. The increased productivity can also help reduce costs. The Total Economic Impact™ of Power Automate, a commissioned study conducted by Forrester Consulting, April 2020, found that over $1.40 million of worker time savings were made over three years, with a 27.4 percent reduction in error.

Leveraging the speed of developing solutions via Power Apps, South African-based Standard Bank created a prototype mobile app within 24 hours. The app enables the bank’s 100 inspectors to record faults and capture images of ATMs. On a monthly basis, Standard Bank records 5,000 to 6,000 inspection reports — a process that was previously totally paper-based.

At Illimity, Italy’s first cloud-native bank, an IT Program Manager said: “The underwriting team has been able to reduce processing times from an hour per request to just 20 minutes. Now, it can respond to requests in a matter of days rather than a full week, saving a total of 15 hours a month.”

Increase collaboration and gain new insights

Gaining insights from data helps you build competitive advantage and become more agile. Power Platform connects to Power Apps, Power Automate and Power BI. Likewise, it links up with Microsoft 365, Dynamics 365 and Azure. This connects your workflows to hundreds of data sources thanks to a library of connectors and Microsoft Dataverse. This helps to automate workflows and processes. In addition, it also brings all your data together into a single source of truth. You gain deep new insights into your business while improving collaboration between people and teams.

At PayPal, they wanted to enhance employee collaboration and reduce data silos. By connecting their data, PayPal not only improved their data discovery, they also found that employees were collaborating more to uncover insights and new ways to innovate.

”Microsoft Teams, and its interoperability with Power BI and Power Apps, has homogenised and eased not just meetings, but overall communication here at PayPal, and we see those benefits only increasing as time goes on,” says José Buraschi, Director of Program Management at PayPal.

Drive a new innovative employee culture

Who knows best about the day-to-day running of any organisation? The employee. So, when you give them a solution that they can use to build automated workflows and processes you’re democratising the data process. Everyone has the opportunity to build efficiency within the organisation without coding knowledge.

“One of the most fundamental shifts that we’ve made as a financial services institution is to dedicate people to helping our business teams identify friction points in their working lives and then use technology to solve them. People are knocking on our door who we’ve never met, simply because of the speed to value that Power Apps provides,” says Ian Doyle, Head of Employee Experience Engineering.

You’re also creating competitive advantage by embracing digital ways of working. This means you’re more likely to acquire and retain talent who will be excited to innovate and drive your business forward.

By connecting your data and combining business agility with intelligent operations and empowered employees, you will create operational efficiencies that drive competitive advantage, help you create innovative customer experiences, and build long term business growth.

Find out how

[msce_cta layout=”image_center” align=”center” linktype=”blue” imageurl=”http://approjects.co.za/?big=en-us/industry/blog/wp-content/uploads/sites/22/2020/10/james-padolsey-tvPvROBv0F4-unsplash-2048×1179-2.jpg” linkurl=”https://mktoevents.com/Microsoft+Event/240074/157-GQE-382?wt.mc_id=AID3028878_QSG_EML_510667″ linkscreenreadertext=”Register for the webinar” linktext=”Register for the webinar: Intelligent Operations in Financial Services” imageid=”42845″ ][/msce_cta]

Learn more: Power Platform

Read the previous blog: Build intelligent operations by empowering employees and connecting data

Discover real world stories: Power Platform in organisations

Download the report: Creating a blueprint for UK competitiveness

About the author

Janet currently leads the Industry Strategy for Financial Services at Microsoft UK. She ensures that drivers of change and emerging technological trends across the sector are core to how Microsoft works with Financial Services organisations, supporting their digital transformation. Before joining Microsoft in 2018 Janet held roles within commercial banking; latterly at Lloyds Banking Group and prior to that, Barclays and RBS. She has a personal interest in cultural transformation and has also played an active role in supporting and driving the inclusion and diversity agenda during her career.

The post How to create competitive advantage with operational efficiencies appeared first on Microsoft Industry Blogs - United Kingdom.

The marketplace is rapidly changing and competition is fierce. And, since the financial crash of 2009, the UK is home to the world’s largest fintech sector. It’s a new way of banking, providing customers with increased choice as to how they access financial products and services.

AI is driving digital transformation across every industry – little wonder, then, that our recent report into the UK’s AI scene, ‘Accelerating competitive advantage with AI’, revealed that organisations using AI outperform competitors by more than 11%. From a sector perspective, 72% of financial services are using the technology; far higher than the UK average of 56%.

Key challenges

51% of financial services leaders want their organisations to pioneer AI use. It’s an ambition borne from the technology’s potential to touch every aspect of a financial services business – from improving cyber-security efficiency to prioritising workloads and deliver enhanced, intelligent, and personalised customer experiences.

But it’s a goal not without its challenges. As a highly regulated sector, and one concerned with the ever-present threat of cyber-security, deployment can be constrained. Fears over risk and compliance take hold. Moving from innovation to implementation can be slow.

As Abhijit Akerkhar of Lloyds Banking Group, explains, ‘The focus now for the financial sector is on scaling AI. How do we do that in the right, safe way while generating tangible value?’

This question is precisely explored in ‘Accelerating the competitive advantage with AI’. The report explores how organisations can become AI-enabled, and highlights three core requirements when undertaking this journey.

• Scaling AI – moving from experimentation to implementation
• Creating a culture of participation – empowering staff & supporting re-skilling
• Making AI work for everyone – considering standards and operating principles for deployment from an ethical and unbiased standpoint

Key opportunities

Most financial services organisations agree: that for successful scaling and effective deployment of AI, culture, awareness, and skills must be aligned. In particular, we find that…

• Adoption is highlighted as an area of focus. No-one wants to be left behind, yet 35% of leaders are concerned this isn’t accelerating fast enough.
• Finding and preparing usable data ranks highly as a challenge across the sector, especially in terms of introduction of AI at scale. Data, built up over time, is siloed across business divisions and legacy systems. Access to this data is imperative.
• 60% of staff in financial services are yet to complete training on AI; 93% are yet to even be consulted on its introduction into a business. The gap between ambition and awareness must be closed, helping employees embrace the technology’s potential to transform and augment their roles, rather than the fear that workers will be replaced by robots.

This serves as a timely reminder: deeper collaboration between business and technical divisions is needed. Or, as Chris Skinner, financial author and blogger, puts it: ‘Scaling AI is not a technology shift, it is a structure and a mindset shift. Banks cannot embrace AI and digital transformation if they are just doing it as a project.’

Find out more

Download the full AI report, ‘Accelerating competitive advantage with AI’

Develop your skills and AI understanding with the Microsoft AI business school

About the author

Janet currently leads the Industry Strategy for Financial Services at Microsoft UK. She ensures that drivers of change and emerging technological trends across the sector are core to how Microsoft works with Financial Services organisations, supporting their digital transformation.  Before joining Microsoft in 2018 Janet held roles within commercial banking;  latterly at Lloyds Banking Group and prior to that, Barclays and RBS. She has a personal interest in cultural transformation and has also played an active role in supporting and driving the inclusion and diversity agenda during her career.

The post Opportunities, challenges and fears of AI in financial services appeared first on Microsoft Industry Blogs - United Kingdom.