To keep abreast of the opportunities surrounding these changes, many central banks are actively experimenting with the idea of issuing digital versions of national currency, in the form of central bank digital currencies (CBDCs). This promising new form of digital money is made possible by advanced technology, which Microsoft is helping to enable through our global technology partner network. It is part of our commitment to Microsoft Cloud for Financial Services, which helps banks and other businesses unlock business value and deepen customer relationships. 

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How CBDCs are unique among digital currencies 

The growing preference for digitized money and payments has generated waves of innovation across governments, banks, and the global financial system. Cryptocurrencies like Bitcoin have demonstrated the potential value of new forms of digital currency. But because cryptocurrencies are unregulated, they remain too volatile to be widely trusted and broadly accepted as legal tender. 

By contrast, CBDCs are digital assets issued backed by a nation’s monetary authority, or central bank. A CBDC is a digital form of fiat money (or government-decreed currency) which shares the essential properties of a nation’s cash: the same denominations, values, liquidity, and stability; the same financial liability to the central bank; and the same applicability for any type of payment—extending the functionality of the country’s currency. CBDCs remain interoperable with existing financial structures and are reliably overseen by the central bank. 

Initially intended for use in wholesale banking with the prospect of extending to the retail banking system, CBDCs offer compelling benefits as compared to cash and current digital financial tools. These benefits include: 

• Streamlined cross-border payments enabled by reduced reliance on intermediaries, with benefits in lower transaction costs and improved transparency in international transactions. 
• Integrated smart contracts (basically, self-executing contracts with terms of an agreement written into code), which can automate and enforce terms. These provide a high level of efficiency and precision and offer composability (the ability to create and combine modular services and products across complex systems). 
• Liquidity and settlement finality. CBDC assets can be readily converted into other forms of money or assets, which facilitates a seamless flow and instantaneous settlement without delay or risk of reversal. 
• More accessible government-to-person payments, such as tax refunds or stimulus funds, with direct deposits into digital wallets that don’t require bank accounts. 
• New formats for payments and transfers, which are enabled through efficient processes that are usually not feasible with traditional payment systems (for example, by means of crypto wallets.)
• Financial inclusion through easier access to financial services, particularly for unbanked populations in developing countries, such as through offline payments. 

For these and other reasons, CBDCs hold enormous market potential. The annual value of transactions involving CBDCs is projected to reach USD213 billion by 2030, a remarkable growth rate of over 260,000% in just seven years.²  

The Drex project: How Microsoft is working with the Brazilian Central Bank 

In their earliest iterations, CBDCs are being introduced into national and regional economies in limited circulation, offered alongside cash as an equivalent monetary option, with the possibility of becoming more broadly circulated as they become more popular and accepted. Currently, more than 130 countries are exploring or developing CBDC initiatives, with varying degrees of maturity. Progress in the United States is nascent, while China has the world’s largest pilot in the world, with 260 million digital wallets.³  

Brazil is one of the earliest nations to pilot CBDC as it moves to build a more modern digital economy. Microsoft and our partners are working with Banco Central do Brasil (BCB) and commercial banks to help develop a solution for its CBDC, known as Drex.⁴ It will be one of the most advanced CBDC initiatives in the world. 

Drex is designed to help advance and democratize the nation’s economy by broadening access to intelligent financial services with greater ease and lower costs. A key feature is tokenization—creating digital representations of financial assets—which opens the door to many new options for trading and transactions. Tokens are managed on a distributed ledger technology (DLT) to ensure a secure, shared, and decentralized environment for transactions. This can make financial services more programmable, standardized, and secure, while ensuring optimal privacy.  

Drex could also be integrated into Brazil’s fast payment system, called PIX, which allows for quick and efficient transactions, and even with the global payments network SWIFT. Longer term, it also aligns with the innovative Finternet framework and Unified Ledger concept proposed by the Bank for International Settlements (BIS) to transform the global financial system. 

Empowering economies with CBDC initiatives worldwide 

The Drex project is a long-term effort that entered the second phase of its development in June 2024, which will continue for another 14 months with extensive privacy testing and new use cases. Ensuring the privacy and security of CBDC transactions is critical, so Microsoft and our partners, BCB, commercial banks,⁵ and other interested parties are working together to meet emerging requirements and ensure appropriate safeguards. 

Elsewhere, Microsoft is engaged in early CBDC initiatives in nations around the world. For example, we’re members of the Ensemble Project proposed by the Hong Kong Monetary Authority (HKMA), which aims to develop a set of industry standards to support interoperability among wholesale CBDCs, tokenized money, and tokenized assets.⁶ 

Microsoft is uniquely positioned to empower a CBDC project like Drex in several critical ways: 

• Infrastructure support: The Microsoft Azure platform provides robust infrastructure, AI services, and enterprise security—combined with our deep expertise with blockchain and other technologies critical for the design and implementation of a secure, scalable, and interoperable CBDC platform. 
• Privacy and security: Azure provides a broad catalog of security services that can be used as perimeters protecting CBDCs, with innovations such as a Zero-Knowledge Proof (ZKP) solution (called ZKP Nova) to help ensure privacy for digital assets. Additionally, Microsoft Azure Managed Confidential Consortium Framework (CCF) provides features to assure customers that data is inaccessible to unauthorized third parties including cloud service providers.  
• AI innovation: Generative AI copilots, for example, can help create smart contracts, analyze document inputs, write code, and identify vulnerabilities and risks. 
• Global reach and availability: Azure has a global network of datacenters, which enables central banks to deploy CBDC solutions in proximity to their users—reducing latency and ensuring high availability.  
• Robust partner ecosystem: Innovation in CBDC solutions is spearheaded by Microsoft’s vibrant global network of partners and developers, who can provide central banks with access to expertise, best practices, and pre-built solutions, such as a CBDC sandbox. 

Explore the possibilities of CBDC with Microsoft 

Microsoft is excited to share our insights and expertise on CBDCs with nations and commercial banks across the global financial ecosystem. For more details on Microsoft’s work on the Drex project and our participation in FEBRABAN TECH 2024 in São Paulo, Brazil, see our press release.

Learn more about Microsoft Cloud for Financial Services.

¹When – and why – did people first start using money? The Conversation.

²Jupiter Research, CBDC Transactions to Exceed $213bn by 2030, as Pilots Accelerate Rapidly, August 2023.

³ The Central Bank Digital Currency Tracker, The Atlantic Council.

⁴See Drex – Digital Brazilian Real (bcb.gov.br) and Piloto Drex (bcb.gov.br).

⁵Microsoft, CONSÓRCIO CAIXA, ELO E MICROSOFT REALIZA A 1ª COMPRA DE TÍTULOS PÚBLICOS POR MEIO DO DREX EM LEILÃO DO TESOURO NACIONAL, October 2023.

⁶Hong Kong Monetary Authority – HKMA establishes the Project Ensemble Architecture Community.

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Helping banks improve productivity through better teamwork, insights, and communications is a key focus area for Microsoft, and something Azure OpenAI Service and our rapidly evolving copilot offerings are well positioned to enable. Additionally, Microsoft Cloud for Financial Services provides a strong industry-specific platform and data model built for greater industry relevancy. Many of our banking customers are energized by these products and are exploring use cases and other innovations.

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Paying down the digital debt for banking employees

Banking employees continue to get bombarded with data, applications, messaging, devices, and communications channels. We call this gap between the volume of data and the ability to process it the digital debt. Every minute spent paying this debt down is a minute not spent on more productive or creative work.

This is where banking leaders and employees are interested in generative AI—specifically, its promise of dramatically improving the employee experience by automating mundane tasks, summarizing and comparing data sets, recommending key actions, and providing real-time insights.

The goal of copilot is to empower everyone to achieve more and to assist humans in being more productive and creative in their roles. And the proof is already being realized: In a recent Work Trend Special Report, 70% of Microsoft Copilot users reported being more productive, 29% were faster with searching, writing, and summarizing, and 68% said it improved the quality of their work.

These benefits are now readily available to banks, thanks to Azure OpenAI Service, Copilot for Microsoft 365, Copilot for Dynamics 365, and other Microsoft Copilot capabilities that make it easy to build new generative AI solutions for high-value use cases.

Improving the employee experience from the front line to the back office

Generative AI promises to advance productivity in banking and financial service firms by integrating powerful insights into daily tasks, summarizing documents and meetings, digesting and distilling content from myriad sources, and creating new, high-quality reports, presentations, images, and much more. The implications span every level of the business, and the innovation will ultimately impact every employee.

Let’s take a look at how workers in three different levels of a bank can be more productive though traditional productivity applications combined with generative AI.

The relationship manager: Delivering customer satisfaction to drive revenue

The relationship manager is often the face of the bank to the customer. This role drives revenue and wallet share for the bank by building trusted relationships and providing superior insights and relevant products to the customer. Relationship managers can use Copilot for Microsoft 365 to automate administrative tasks, instantly draft emails to customers, and even suggest customized replies to customer inquiries or requests for proposals. Copilots can also help prioritize daily follow-up actions, streamline preparations for customer meetings, or recap action items post-meeting. Relationship managers can also use Microsoft Copilot for Sales to improve sales productivity by pulling in key account details from customer relationship management (CRM) systems or instantly generating product comparisons, and instantly drafting new proposals.

The wealth manager: Making superior financial recommendations

Wealth managers and investment bankers need market insights that lead to better financial decisions for clients. This requires optimal access to data—from knowing the client to keeping abreast of market changes—and strong customer engagement.

Wealth managers can use copilots in Outlook and PowerPoint to communicate more effectively. Microsoft Fabric and Copilot for Power BI can instantly pull together multiple data sources, do complex financial analysis, identify key trends and patterns, and then optimize client portfolios. Copilot in Outlook can triage, identify, and summarize the most important messages, then instantly create client replies based on existing email threads and key points. Copilot in PowerPoint can be used to rapidly create new slides from existing sources, add speaker notes based on existing slides, or instantly create a visual rendering of a concept or idea.

The compliance officer: Protecting the bank by minimizing risk

The compliance officer needs to ensure security, privacy, and control of customer and financial data. Communication and collaboration are key, as the role touches critical functions across the bank, and reporting to management is a major responsibility.

Compliance officers are becoming more productive with copilots in Microsoft 365 and Microsoft Teams that speed a wide range of writing and reporting tasks, augmented with tools such as data loss prevention and rights management. Compliance officers can use Copilot in Microsoft Teams to avoid meeting conflicts for diverse cross-group virtual teams, and recap key action items for people who can’t attend meetings. Compliance officers can use copilots to summarize comments from coworkers, list outstanding actions, and even include missing citations. They can use copilots to instantly create an executive summary at the top of a new document or generate an internal FAQ based on the Word document. And, when needed, they can use Microsoft Purview eDiscovery to make the content more discoverable across communications (email and video) and documents.

Empowering the banking industry to achieve more

Many banks regard the advent of generative AI with a mix of excitement and trepidation, which is only to be expected with such seminal new technology. We and our highly capable partners help banks begin their generative AI journeys by identifying discernable use cases that can be developed, then working iteratively to discover what works best. Typically, this includes the contributions of Microsoft partners from across our global ecosystem, who are experts in Microsoft technology and generative AI, and who can help identify strong use cases and determine the best path forward for implementing solutions that meet their needs.

Together with our partners, Microsoft is dedicated to helping banks take full advantage of generative AI by partnering for the long term. Trust, security, and compliance are the cornerstones of our value proposition to banking customers and we are committed to the advancement of responsible AI, driven by ethical principles.

To learn more about how banks and financial services firms can unlock business value, deepen customer relationships, and manage risk with AI and the Microsoft Cloud, read the “Empowering Your Banking Employees to Thrive” e-book, visit the Microsoft Cloud for Financial Services website, or get in touch with your Microsoft sales representative or Microsoft partner.

The post Empower the banking employee experience with generative AI appeared first on Microsoft Industry Blogs.

Microsoft Cloud for Financial Services is unlocking new value for customers and helping partners deepen customer relationships. At Sibos 2023, we were proud to highlight the work of independent software vendors (ISVs), including Finastra, Intellect Global Transaction Banking (iGTB), LSEG, Symphony AI, Temenos, Trade Ledger, Traydstream, VeriPark, and Zafin, as well as global systems integrators (GSIs) like Accenture–Avanade and PwC. Each of these partners has done amazing work to create, implement, and enhance solutions tailored to the requirements and needs of financial services organizations.  

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Partners on the cutting edge of generative AI

This year, groundbreaking generative AI projects from our partners are proving the value of investing in new solutions.  

To explore new opportunities for payments, iGTB has showcased how they extract transactional insights from payment flows, opening up new horizons for the industry. In the complex domain of trade finance, Traydstream is addressing complexities head-on through the digitization and automation of trade processing, seamlessly integrating Microsoft technologies with their AI-powered platform. Finastra is modernizing its trade platform through a full microservices architecture using Microsoft Azure, that will give banks increased agility, flexibility, and scalability, enabling them to continue to provide service excellence to customers throughout their modernization journey.

In the realms of financial risk and crime, Symphony AI, ASC Technologies, and Temenos are forging innovative solutions to enhance security. Temenos, specifically, is combatting money laundering while facilitating secure international payments. Symphony AI is using generative AI to power-up investigative processes and teams. And Trade Ledger is using generative AI to create new channels for commercial banks and support working capital management decision making across small and medium-sized businesses. 

Amid the array of innovations showcased at this year’s event, we also presented demonstrations of an integrated copilot experience tailored for asset management. This new user journey spans analytics, workplace services, and data intelligence, offering a comprehensive and dynamic experience.

Our partner ecosystem continues to grow

The partner ecosystem for Microsoft Cloud for Financial Services continues to grow and evolve with continued innovation with Microsoft technologies. As applications of AI capabilities rapidly expand, our financial services partners are finding new ways to build customer trust with responsible AI, meet customer demands, offer transparency, and deliver groundbreaking solutions that drive industry best practices forward.  

“Customers are eager to transform their trade finance and supply chain offerings, and to access the latest innovations, working with partners across the ecosystem. Partnering with Microsoft builds on our joint strategic vision to help accelerate the digital transformation of financial services, and support customers on their journeys.”

—Isabel Fernandez, Executive Vice President for Lending at Finastra.

Through powerful partnerships, organizations can bring innovations to their customers, faster than ever.  

And at iGTB, Chief Executive Officer Manish Maakan says that, together with Microsoft, they are “piloting a roadmap that unlocks the potential [of] artificial intelligence in financial services and seeks to showcase the transformative capabilities of Microsoft Azure OpenAI Service in the commercial banking space.”  

According to Craig Ramsey, Head of Real-Time Payments at ACI Worldwide, “By hosting ACI’s Real-Time Payments Cloud in Microsoft Azure, financial institutions will now have access to an award-winning, end-to-end solution to enable their processing of 24/7 payments.” This provides simplicity of operations and promotes interoperability. 

Make the most of Microsoft Cloud for Financial Services

Discover the optimal technology solution for your organization through our array of ISV, system integrator (SI), and advisory partners.

Our financial services partner ecosystem remains dedicated to empowering our customers, enabling them to provide exceptional customer experiences, streamline their operations, and explore new avenues for growth. Our commitment includes ongoing investments in flexibility and extensibility within Microsoft Cloud for Financial Services, fostering the expansion of our partner network.

To continue providing the capabilities our partners need, Microsoft announced a set of new solution partner designations under the Microsoft AI Cloud Partner Program (MAICPP) at Microsoft Inspire 2023. These designations certify that our partner solutions are optimally built on Microsoft Industry Clouds to deliver their solutions.

We eagerly anticipate announcing more ISV partner solutions in the coming months as part of this program. We look forward to welcoming our industry partners.

New possibilities are always emerging

As financial institutions embrace cloud technology, they unlock numerous benefits. This includes harnessing standardized data models for innovative business paradigms, customer-centric experiences, and future growth. They also explore AI integration with confidence in Microsoft Cloud’s secure solutions.

In this AI-driven era, we’re deeply committed to advancing together with our partner community. We’ll build on innovations, work closely with financial services partners to identify use cases, and explore generative AI and large language models (LLMs). Microsoft Cloud for Financial Services partners can create novel solutions and elevate existing ones, leveraging the Microsoft Cloud platform. This collaborative effort is about more than just business; it’s about empowering our end customers to achieve a smarter, more interconnected future in financial services—delivering distinctive and exceptional value.

For more inspiring partner news and engagement opportunities, look for Microsoft and our partners at Money 20/20 and InsureTech Connect (ITC), where you can go deeper into AI innovations built on Azure OpenAI Service and our copilot offerings. 

Learn more

• Visit Microsoft Cloud for Financial Services.
• Review Microsoft Cloud for Financial Services partner assets.

The post Shaping the future of financial services: Microsoft partners at Sibos 2023 appeared first on Microsoft Industry Blogs.

With Microsoft Cloud for Financial Services, our customers are managing financial services data at scale and building solutions that improve customer experiences and operational efficiencies. With the advent of generative AI capabilities in Azure OpenAI Service, businesses can now unlock new value from their data not only to drive better customer outcomes but also to improve their protection against various kinds of financial crime—including fraud, electronic crime, and money laundering.

The financial costs and scale of these crimes are staggering. Worldwide, the estimated total of laundered money in a year is at least two percent of global gross domestic product, or USD800 billion.¹ For financial services organizations, the cost of financial crime compliance reached USD213.9 billion in 2021²—USD56.7 billion in Canada and the United States alone in 2022,³ a 13.6 percent increase from 2021.

Until recently, financial services organizations have felt hamstrung in their ability to combat the worst forms of criminal activity. They play a cat-and-mouse game with bad actors who use a wide variety of financial instruments in sophisticated ways, exploiting the distributed nature of the financial system to perpetrate their crimes. Criminals might, for example, engage in small transactions across many different institutions, or across different accounts in the same financial institution, to mask their activities.

Protecting privacy while advancing security

The global focus on digital privacy in an increasingly interconnected world is a cornerstone of trust, human rights, and individual empowerment. Privacy is mandated by legislation around the world, such as the Digital Charter Implementation Act 2022 in Canada and in the European Union’s General Data Protection Regulation. And of course, banks and other financial services firms also know that customers will vote with their feet if their data is leaked or mishandled.

At its core, privacy is about protecting personal information. And this poses some challenges in fighting financial crime, because it impairs organizations from knitting together a complete picture of what an individual bad actor or a group of bad actors may be doing. The keys are all there in transaction records, account information, customer relationship databases, and so on. But they remain off limits when they are associated with personally identifiable information.

Fortunately, businesses can now attack the problem using novel technologies such as confidential computing and AI that allow multiple parties to safely gain insights from financial data without violating privacy requirements.

Confidential computing and de-identification: New layers of protection

A host of modern, cloud-based capabilities and methods enables this shift. For one, data can be better protected in the cloud with solutions like Azure confidential computing. This unique service encrypts data while it’s being processed, meaning that data is no longer only protected at rest and in transit, but also in use. While in memory, it simply cannot be accessed by cloud operators, malicious administrators, or even privileged software such as a hypervisor.

The root of trust in Azure confidential computing resides in independent hardware. Not even Microsoft operators can access the encryption keys. This is what enables government customers to independently, cryptographically verify the identity and “known good state” of the cloud operating environment they are relying on.

Concurrently, regulators are beginning to recognize the impact of new techniques for de-identification, which obfuscates or removes personally identifiable information from data sets. Data masking, data perturbation, and differential privacy are some of the powerful tools and methods of de-identification that are proving their effectiveness by making data available to AI to deliver important insights without putting privacy at risk.

While securing the benefits of strong privacy protections, financial services organizations are now able to work across enterprise data sets—to reason over data from not just one location, but across different locations and potentially even different institutions. This dramatically changes how a firm handles data. Swift is just one recent example of a financial services firm that has benefited from these innovations in building an anomaly detection model for transactional data without copying or moving data from secure locations. And, significantly, it means that AI and related tools and technologies will now be able to explore, analyze, and spot trends and insights that not only help their businesses, but can have positive societal impact as well.

How AI helps financial services organizations

With AI, financial services firms have new capabilities for risk assessment and scoring, which can help prioritize investigations and resources. They can also benefit from pattern recognition, which can detect anomalies and suspicious activities across large sets of financial transactions, customer data, and other sources. This has significant implications for fraud management, which financial services organizations rely on to mitigate their risks. If a firm can show new levels of due diligence, underwriting costs can potentially be reduced.

Additionally, generative AI can be used to analyze a wide array of unstructured data from a variety of internal repositories to spot indicators of potentially suspicious activities. Natural language processing will assist in the delivery of regulatory documents, legal texts, and compliance reports. And financial institutions may realize broad organizational benefits through integration into productivity applications. At Microsoft, we’re all about democratizing AI and making these tools approachable and available not simply to the data analysts and mathematicians, but to people across the business. This is reflected in the broad innovations announced recently at Microsoft Build 2023, in which we have integrated AI into Azure, Microsoft 365, our development tools, and much more. These AI-powered products help surface more useful information for better decision-making and greater efficiencies across the organization.

The art of the possible

In our work with customers, we see a wave of interest in exploring the potential of these powerful new tools to fight fraud, money laundering, and other forms of financial crime. In Canada, privacy enhancing capabilities have long been bolstered by affirmation from the Information and Privacy Commissioner of Ontario that de-identification is a legitimate and valuable way to protect information, and enterprises have been provided with guidance on how to proceed. It’s powerful confirmation that organizations can leverage new approaches to address privacy considerations as they explore new opportunities. Once we light up the art of the possible, the dialogue quickly shifts and we can work collaboratively to solve these tough challenges.

Fight financial crime with the Microsoft Cloud

Collaboration is the key to industry-wide progress in the fight against all kinds of financial crime and fraud. Working well together is a core Microsoft value, and that means much more than ensuring that our products and tool sets are integrated. It means that we recognize that these challenges are bigger than us or any one company, organization, or entity. So, we promote and support the roles that every player in the ecosystem performs, from industry partners to government officials, regulators, law enforcement agencies, and of course customers.

For financial services organizations who want to explore these new possibilities, an exploratory engagement or proof-of-concept is a good way to examine how the technology and process puzzle pieces fit together. We’re constantly amazed at the inventive and impactful ways that customers are employing these tools to do better for their organizations and the world at large.

Read further in a recent post about how the Microsoft Cloud helps banks manage risk and discover real-world customer examples and other resources that show how Microsoft and our global partners can help banks deepen risk insights, facilitate regulatory compliance, and combat financial crime.

¹24 Alarming Money Laundering Statistics [New Data 2022 & Infographic], BusinessDIT.

²Global spend on financial crime compliance at financial institutions reaches $213.9 billion, Finextra.

³True Cost of Finacial Crime Compliance Study for the United States an Canada, LexisNexis Risk Solutions.

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For the people and teams responsible for managing risk and ensuring compliance, however, this paradigm shift comes with some new anxiety, as stringent security and compliance requirements must be met. While on-premises risk assessments and audit strategies may have been straightforward in a pre-cloud world, when data moves to a third-party cloud provider operating a shared environment at hyperscale, the lines shift. Security and access controls are automated, DevSecOps becomes more commonplace, knowledge gaps arise, and the regulatory context is changed drastically. Adding to the pressure, if compliance assessments and audits are disrupted, innovation can grind to a halt.

Fortunately, there are some excellent resources to guide you productively on this journey. Microsoft makes a significant investment to help customers get the assistance they need to optimize cloud risk assessments at scale. In this post, I’d like to share some of the learning we’ve gained through our deep engagements with customers, point you to a few Microsoft online gold mines, and invite you to check out our Compliance Program for Microsoft Cloud, which I think you’ll love.

Three road-tested strategies for governing cloud risks

Through our compliance community, we get an amazing stream of insights, feedback, and stories about what does and does not work. Here are three strategies that we see at the heart of every organization that successfully governs cloud risks:

1. Establish a cloud risk governance body. Risk organizations are complex, and siloed approaches are likely to hit walls when different risk stakeholders across all three lines of defense each make their own assessment of a cloud service provider. We often see problems with a poor understanding of cloud technologies and risk controls. Inefficiencies tend to spring up as questions are raised repeatedly by different stakeholders (“Where is my data stored?” or “Who can access it?”). Many problems can be solved or prevented through a unified cloud risk assessment approach. We advise setting up a cloud risk governance board or body that engages all key functions in a single, integrated process that leads to faster deployments and addresses resource constraints and skills gaps.
2. Adhere to common standards and apply risk-based approaches. Not every use case is the same, yet too often we see customers apply an extremely large set of mandatory controls to any and every cloud use case, irrespective of its significance. Moreover, cloud providers apply different risk control measures compared to what might be expected on-premises, and that can lead to endless control discussions. A good way to prevent these challenges is to align internal control frameworks to industry standards, such as SOC 2 and Cloud Security Alliance’s Cloud Controls Matrix (CCM). This approach gives you structure and guidance for implementing appropriate controls that can be applied in risk-based ways to individual use cases, each time aligned to your organization’s risk, security, and compliance requirements.
3. Take maximal advantage of third-party assurance. Another pitfall is that some financial institutions will try to evaluate or audit every cloud control independently. This is a waste of time because there are already certifications and audit reports available where multiple reputable third parties have attested to the soundness and safety of these same controls and related risk areas. These should not be ignored. Microsoft is a leader in compliance and offers a very extensive compliance offering for Azure, Dynamics 365, and Microsoft 365 with more than 100 certifications and attestations.

Our framework for assessment in the cloud

Once these foundations are established, you can execute cloud risk assessments across these six basic dimensions:

You can now achieve a cloud-optimized risk assessment process that drives maximum efficiency as you cycle through different use cases. Critically, this process will remain resilient as the enterprise gradually deploys more business functions onto Microsoft Cloud, each of which will require a contextual assessment of risks.

How to take advantage of Microsoft Cloud risk and audit resources

Microsoft understands the critical need for financial services risk, compliance, and audit teams to be well supported with tools and resources that empower them to fully understand and assess cloud-related risks.

To explain how we operate our cloud and help customers through their risk assessments and audits, we have created a one-stop shop describing Microsoft compliance that points to our compliance offerings. This includes a service assurance section that describes in great detail how we operate our Microsoft Cloud services, which is a great starting point for risk and audit functions to start their assessments. The service assurance section is organized by 14 risk domains and describes in detail how Microsoft works to secure our customer data. It includes on-demand learning paths available for customers to learn at their own pace.

A second excellent resource is our Service Trust Portal, where you can download external audit reports, useful whitepapers, and artifacts such as third-party vulnerability reports, business continuity, and disaster recovery plan validation reports. You’ll also find detailed regional financial services regulatory compliance checklists which can be used to meet regulatory requirements in each country.

Next, Microsoft Purview Compliance Manager is a unique tool that allows you to get to the next level and manage risk and compliance not just from the Microsoft side but also for your multi-cloud deployments, ensuring that your configurations meet all regulatory requirements as well as cybersecurity and privacy best practices. You’ll find more than 320 compliance assessments aligned to various industries and regions across the globe. You can double-click into each control and review detailed information—including Microsoft control implementations—and how each control was tested by external auditors and the results.

Don’t forget that cloud involves a shared responsibility, and after successfully having assessed Microsoft as your provider you also must ensure your deployments are compliant by default and optimally secure. The good news is that this is all integrated into service assurance as a starting point following the same risk-based structure.

Need the best? Check out the Compliance Program for Microsoft Cloud

The Compliance Program for Microsoft Cloud is a premium “white glove” service specifically created to support risk and compliance professionals through their assessments. This program originated 10 years ago when the first financial services organizations started to embrace the cloud, and it facilitates three-way engagements among customers, regulators, and Microsoft experts. The program continues to evolve, and it gives customers direct access to legal, cybersecurity, privacy, risk, and regulatory compliance experts both from within Microsoft and the industry as a whole.

Customers will receive the best answers to very specific questions and concerns and can submit entire questionnaires to accelerate risk assessment and audit activities. The program has tremendous educational value through webinars and global and regional compliance summits; offers opportunities to engage in a community with other customers and industry experts; and delivers proactive updates related to regulatory and compliance developments around the world.

Join the program today

The insights and tips in this article have largely been built on the experience of this community over the past years. If this resonates for you and your organization, I invite you to join the Compliance Program for Microsoft Cloud and connect with your peers today.

Learn more about Microsoft Cloud for Financial Services.

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The post 3 strategies for governing Microsoft Cloud risk in financial services appeared first on Microsoft Industry Blogs.

In the financial services industry, there has been greatly heightened interest in AI and the transformative opportunities of this new wave of breakthroughs. With the industry’s focus on managing risk and generating returns, generative AI has the potential to drive marked improvements in employee productivity, operational efficiency, and customer experience. In my current conversations with customers and partners, I’m asked how Microsoft can help businesses and organizations get started on the journey. This is especially true in banking, where technology is playing an increasingly decisive role in addressing a broad range of financial, regulatory, and competitive challenges. Generative AI has added a whole new dimension to what we mean by intelligent banking and the possibilities it creates to unlock greater innovation and business value at an accelerated pace.

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What generative AI means for banking

As generative AI capabilities become available to everyone, banks and other institutions will want to build intelligent solutions to provide revolutionary new capabilities—first with their employees and, over time, for their customers. Microsoft will help enable this with Microsoft 365 Copilot, which we announced last month. Integrated across Microsoft 365, this copilot will provide generative AI capabilities to the entire Microsoft productivity suite.

For banks that want to rapidly apply intelligence to improve operations and drive efficiencies, they can apply for access to Azure OpenAI Service to accelerate the deployment of their use cases. Azure OpenAI Service brings together advanced models from OpenAI, including ChatGPT and GPT-4, with the enterprise capabilities of Azure. Critically for banks, it is deployed on their Azure tenants so that all data—including training data and content—stays within the bounds of their organizations. By being fully integrated into Azure, banks also get all the advantages of enterprise-grade security and role-based access included. You also get the benefit of building on the Microsoft Cloud platform where we are infusing AI into all our products, making it easier to integrate these new capabilities into your applications. And it’s only getting better, as we recently announced the availability of GPT-4 in a preview release. GPT-4 is OpenAI’s most advanced LLM, enabling you to drive insights with greater accuracy than previous LLMs developed by OpenAI.

Azure OpenAI Service lets you deploy large, pre-trained, foundational models developed by OpenAI. This means you can potentially transform important tasks such as:

• Writing assistance and content generation.
• Reasoning over structured and unstructured data.
• Summarization of reports and text.

Use cases in banking

As we engage with our customers, we are seeing powerful new use cases emerge. For any scenario, we believe human agency and supervision are critical to ensure that generative AI is empowering and enabling human creativity. In our own products, we enable this through our copilots. The copilot is there to support you and work under your direction, with the human in charge. For example, GitHub Copilot provides code suggestions for developers as they enter code right inside the developer environment. In other situations, a chat-based experience will be a better fit when you are looking to embed knowledge search capabilities or a search bar to accept a prompt to generate some new content. Key banking use cases where generative AI can have the greatest impact include:

• Empowering contact center agents. Generative AI enables you to summarize conversations and get insights across various conversations. Customer sentiment can be measured from the start to the end of the conversation. In addition to summarization, generative AI can provide coaching to contact center staff in real-time, and partially automate the customer journey with human supervision of the next step. It can also feed new intelligence into the contact center knowledge base to enable agents to respond faster to future questions. For all these capabilities, we can aggregate insights for tracking key performance indicators (KPIs) for customer satisfaction, engagement, and impact to the Net Promoter Score (NPS), all of which can be used to continuously improve the experience for customers.
• Empowering advisors. Financial products have extensive documentation that can be difficult to search, making it a challenge to get to an answer quickly. In some scenarios, advisors are certified in their product knowledge. Many banks are exploring the opportunity for generative AI to help advisors retrieve the answers they need from financial product documentation. Generative AI makes it easier to do this through powerful summarization and contextualization capabilities. It can even summarize the key attributes of products in a comparison table. In addition to advisory roles, these enhanced knowledge search capabilities can be built once and used by multiple roles across the bank such as branch staff and contact center agents.
• Content generation. Banks are exploring how generative AI can accelerate the development of content such as pitch books. Pitch books are used by investment banks to generate a proposal for a capital raise or merger and acquisition for an institutional investor. Pitch books are developed collaboratively with content from multiple sources such as an overview of the client, the deal strategy, and marketing materials. For every content generation scenario, human oversight is critical to ensure the quality and accuracy of generated content.
• Code generation. GitHub Copilot was released last year, and developers can now take advantage of generative AI to provide code suggestions for dozens of programming languages, access application programming interfaces (APIs) faster, and accelerate software development. In March 2023, we announced the upcoming GitHub Copilot X, which is trained on GPT-4 and brings AI capabilities to the entire development lifecycle.

Responsible AI by design

As next-generation AI innovation gains momentum, we are optimistic about what it can do for people, industry, and society. Microsoft’s advancements in AI are grounded in our company mission to help every person and organization on the planet to achieve more. We’re committed to making the promise of AI real—and doing it responsibly. Our approach to AI is based on three principles: meaningful innovation, empowering people and organizations, and responsibility.

Accordingly, we’re dedicated to the responsible development of AI systems for the industry, ensuring they will function as intended and be used in ways that earn trust. We were one of the first major technology companies to call for thoughtful government regulation on facial recognition technology and are committed to creating responsible AI by design through our Responsible AI standard. For more information, see “What is Microsoft’s Approach to AI?“.

What’s next

Empowering our customers with intelligent banking capabilities is core to our mission, and we are excited to bring generative AI innovations to them through our Azure OpenAI Service and our copilot offerings. Additionally, we will work with our industry partners to enable them to take advantage of these same capabilities in their own solutions. I look forward to seeing what our customers and partners will create with generative AI in partnership with us. Together, we can apply the world’s most advanced AI models to meet business imperatives responsibly, securely, and with the confidence that can only be achieved with Microsoft Cloud.

Stay tuned for upcoming blog posts that will explore the possibilities of generative AI in the insurance and capital markets segments along with more guidance on responsible AI. We’re excited to help the financial services industry embrace this new era of AI and accelerate transformation.

Finally, learn more about the era of generative AI across the financial services industry by reading other posts in this series:

• The era of generative AI: Driving transformation in insurance

The post The era of generative AI: Driving transformation in banking appeared first on Microsoft Industry Blogs.

Clearly, finance is about data. Data is the connective tissue that brings context, value, and understanding of risks through its continuous, real-time flow. In financial services, as with other experiential industries, data is the pivot on which transformation is happening across all market segments, be they enterprise or consumer.

Becoming data-driven, however, is not just about technology or its cool tools. Rather, it entails a fundamental change in approach, particularly in traditional banks that have well-defined product silos with well-scripted domain experiences. In these institutions, being data-driven requires having a broader view of the bank’s role and potential, and the value it can bring to clients and the ecosystems that connect them. We might refer to this as intelligent banking.

Retail banking is a case in point. It seemed illogical that it would ever become a hotbed for data-centric change, given the well-entrenched consumer habits, data privacy concerns, and other mass-market challenges involved. Who knew that the ubiquitous adoption of smartphones by billions of people in a short period of time would facilitate such a wholesale transformation, with data as the prime driver of value?

For retail banks, the change came in the nick of time. The economics of their businesses were already under stress from a triple whammy of perpetually low-interest rates, consumer unwillingness to pay fees for routine services, and the high cost of brick-and-mortar operations. There was even doubt as to whether they could profitably serve multitudes of individual clients without a mass scale beyond that of most bank franchises. It was a perfect storm where the value of data insights saved the day.

Corporate banks observed this from a distance, seemingly immune from the forces of consumer adoption of mobile and the acceleration of e-commerce driven by COVID-19 shutdowns. Now, their staid world is fast approaching a similar inflection point.

Data: The key to commercial banking transformation

Cloud-native financial technology (fintech) has transformed retail banks by delivering appealing, low-friction customer experiences. They have also been savvy enough to anchor their business models around the value of data, for which the stock market has rewarded them with high valuations. Corporate banking, by contrast, involves a much richer palette of cross-industry data. Entire economies literally flow through business banking client accounts day in and day out.

Data is the heart and bloodstream of all working capital and contains an unparalleled richness of contextual information across all business-to-business ecosystems—such as those in manufacturing, logistical supply chains, and retail sales. These data flows are rich with insights and trend information that can be used, for example, to forecast cash flows that enable corporate treasurers to control enterprise risk and optimize operations. No longer will working capital be estimated through guesswork derived from spreadsheet manipulation. Rather, the role of a corporate treasurer will become more strategic in understanding the value of vast forests of data rather than the timber of individual trees.

Wholesale banking was the first to structure data flows around common standards beginning in the 1970s with the adoption of SWIFT messages. While that meant more efficiency in payment processing, it did not portend a fundamental shift in the use of messaging data to drive client value beyond rudimentary reconciliation services.

The new ISO 20022 standards, which are currently being adopted, hold the promise of redefining value-added services that banks can deliver through enriched, machine-readable extensible markup language (XML) formats. These new standards must be recognized as something more than expensive compliance projects. Rather, they hold the key to reimagining fundamental banking propositions. That much is self-evident. The question is where and how best to do it.

Where data and intelligence will drive new banking scenarios

As we have seen in recent financial crises, real-time flows move literally at the speed of light where counterparty risk analysis and decision-making need to be instantaneous. Similarly, dealing with fraud, crime detection, account takeovers, and money laundering all require a multifaceted view of data that only AI and machine learning can achieve. Anomaly detection in trade-based money laundering (TBML) is a typical example of a compliance challenge where banks are expected to decipher context and intent from subtle signals and telemetry. This degree of data analysis simply cannot be accomplished through manual operations. The volume is too heavy and the connections are too complex.

AI is also an essential tool for the modern and efficient operation of a bank. “Next best offer” is a typical use case of how surfacing the right data at the right time in client discussions can help achieve the best results for both the client and the bank. This is particularly true in modern banks where staff churn or the breadth of product portfolios is just too extensive for everyone to master the challenge of making the best suggestions all of the time.

Here, tools in the graph of a modern workplace—like Microsoft 365 and Dynamics 365 with Copilot-based suggestions—can be as empowering as they are powerful. In a regulated industry like banking, these tools are designed with security, privacy, compliance, and ethical considerations at their core while large language models (LLMs) make them easily relatable to real-world interactions. This is not the “data processing” of yore as we would have once imagined it.

The coming redefinition of banking

Banks, with their richness of real-time data flows, will evolve at the center of client relationships. No longer will a bank be a place to go simply for routine financial processes like making a payment. Rather, in the new world, banks become operating partners in achieving the outcomes their clients desire. AI-infused products, along with the agility that only cloud-based services can provide, will transform bank business models by adding data as a third economic dimension to the traditional two of accepting deposits and making loans in a spread business.

Learn more

In upcoming blog posts, we will continue to highlight the developments and opportunities we see in the evolution of banking. See our website for insights on how to reimagine banking and get in touch with your Microsoft representative or trusted partner to learn what our cloud can do for your business.

Explore intelligent banking

Microsoft and its partner ecosystem help banks reduce cost and risk, modernize core systems, and more.

Reimagine banking today

The post From data to insights: New revenue opportunities for commercial banking appeared first on Microsoft Industry Blogs.

For wealth management firms in particular, the mandate to embrace a “digital-first” strategy has never been more urgent. The competitive landscape is rapidly changing, as a new generation of clients demands new, highly personalized experiences. In the race to become the hub for all things financial, fintechs and non-traditional players have already changed the face of the industry with personalized client engagement models and new partnerships across the ecosystem.

In response, wealth managers need to quickly pivot to focusing on the client experience rather than on products. The challenge is significant for institutions with monolithic legacy infrastructures and more traditional customer bases. They need to innovate rapidly to meet clients in new ways through scalable, differentiated omni-channel solutions. That puts new demands on technology teams who need to do more with less, often with their budgets cut.

This is where the cloud comes in—and where the choice of cloud provider is essential. “Cloud has become a critical technology for institutions across all lines of business in the financial services industry,” says Jerry Silva, vice president for IDC Financial Insights. “But institutions need more than just the infrastructure to ensure the transformation to a scalable business. Institutions need to work with providers that can supplement infrastructure with industry-specific data frameworks and rich partner ecosystems to fulfill the promise of a digital future.”

Microsoft Cloud for Financial Services

Discover how Microsoft is driving innovation in financial services.

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Microsoft Cloud for Financial Services empowers wealth management firms and other financial services providers to implement the right digital strategies for their businesses. By bringing together the best of the Microsoft Cloud and solutions from our global partner ecosystem, Microsoft Cloud for Financial Services enables the delivery of personalized financial solutions at scale to all customer segments while also elevating the client experience. We do this through a combination of foundational privacy, security, and regulatory compliance, plus an industry-specific data model for applications designed to meet the specific needs of financial institutions globally.

Today’s announcement represents progress across several important fronts.

New features for wealth management

With today’s announcement, and building on our October 2022 release, we’re accelerating the value of our cloud for geographies and languages previously announced. Two new features for wealth management, now generally available, expand our investment across industry verticals:

• A new wealth management data model. We’re delivering an extension to the banking data model for wealth management that captures new attributes including financial goals and investment instruments specific to wealth management. This will power the development of new applications specific to wealth management scenarios and enable our partner ecosystem to plug in with their own vertical solutions.
• Unified client profile (UCP) for wealth management. This will foster deeper client relationships by delivering meaningful advice—for example, providing relationship managers with a deeper understanding of a client’s financial status, investment portfolios, financial goals, important life moments, and other personal attributes. This is a variation on the UCP feature for retail banking.

Customer experience updates in preview

To meet customers’ expectations and provide exceptional customer experiences, financial service providers must continuously enhance their offerings by creating stronger connections among people, processes, and systems. This requires a commitment to ongoing improvement in delivering the seamless and efficient services that customers expect, especially at the crucial points of intersection where customers or clients engage with the financial institution for the first time.

To further support our customers in this important endeavor, we are happy to announce the following preview updates for customers in the United States, the United Kingdom, and Australia:

• Onboarding application toolkit updates. We’re adding automated workflows, including a document intelligence feature that extracts key data from customer-submitted documents such as official identification required for onboarding scenarios. This also includes a new application queue feature and improvements to the application task manager that enables the cancellation of tasks.
• Intelligent appointments integration with Microsoft Teams Virtual Appointments. This enables the creation of a unique, branded, end-to-end experience for virtual meeting scenarios in Microsoft Teams (Teams Premium subscription required for some capabilities).

Additional enhancements

Finally, we’re announcing the following additional enhancements to our cloud:

• Landing zones. For both Microsoft Azure and Microsoft Power Platform, these are pre-configured, industry-specific architectures that speed time to value and reduce risk in Microsoft Cloud for Financial Services deployments (no subscription to Microsoft Cloud for Financial Services required).
• Australia, welcome to our previews. We’re delighted to welcome Australia to the list of countries participating in our previews. Our Aussie customers and partners join the United States and United Kingdom to accelerate cloud onboarding and facilitate additional customer feedback on product development.

And a wealth of partner solutions

Overall, today’s news represents an important continuation of our cloud journey for financial services. It also reflects the growing momentum and importance of our partner ecosystem, which is critical to delivering integrated solutions and support for customers. There are now 75 solutions available for our customers to use in extending the value of Microsoft Cloud for Financial Services, all from leading systems integrators (SIs) and independent software vendors (ISVs) from around the world. Some of our partners in this ecosystem include Accenture, ArganoArbela, ASC, Avanade, Avtex, Backbase, Bambu, BaseCap, BioCatch, Capgemini, EY, Finastra, KPMG, Mambu, Mortgage365, Publicis Sapient, PwC, Seismic, Thought Machine, VeriPark, Wealth Dynamix, and Zafin, who develop joint solutions built on our platform that deliver differentiated customer experiences, empower employees, and manage enterprise risk.

Together with our partners, we will continue to invest in improvements to Microsoft Cloud for Financial Services so that financial institutions will better be able to manage their data at scale and use it to improve the customer experience, coordinate engagements across stakeholders, drive greater operational efficiencies, and develop new products and business models.

Learn more

There’s more to come, so watch this space. You can always get the latest on Microsoft Cloud for Financial Services at our website. To find the latest on current release plans, visit Microsoft Cloud for Financial Services | Microsoft Learn. And to learn what our cloud can do for your business, get in touch with your Microsoft representative or trusted partner.     

The post New Microsoft Cloud for Financial Services features accelerate transformation for wealth management appeared first on Microsoft Industry Blogs.

Today’s customers want personalized banking with the ubiquitous access that comes from a seamless, omnichannel experience. They expect to be able to communicate and interact with their bank anytime they want, anywhere they want. To stay competitive, banking organizations need to meet this expectation.

“A lot of the millennials and Gen Z…expect banking organizations to have the same level of convenience and personalized service they’re getting from Amazon and other online providers.”

– Chad Hamblin, Director Banking Related Solutions for Industry, Worldwide Financial Services Group, Microsoft

Different from hard-goods companies, many financial services organizations offer similar products and services as their competitors—which makes it challenging for organizations to cut through the sea of sameness to attract new customers. In a “switching economy” where consumers are more apt to shop around for the best deal or experience, it’s difficult to retain existing customers. Personalizing the banking experience is one key way these organizations can differentiate themselves, that’s why we’re seeing a lot of them invest heavily in customer channels.

What does a personalized customer experience look like?

Providing a personalized customer experience means delivering the right message at the right time in the right channel. Banks need to go beyond next-best offers and targeted marketing to create relevant end-to-end experiences for each individual customer.

To create this individualized banking experience, organizations must leverage their data in new ways to get a comprehensive view of each customer and pinpoint their individual needs. Banks should focus on four key areas, or pillars, of a seamless customer experience:

1. Customer engagement
2. Customer insights
3. Predictive analytics
4. Augmented intelligence

“[Your customers] aren’t in the market for a mortgage, [they’re] in the market for a home. So, the question becomes, how can a bank become an integral part of its customers’ journeys?”

– Chris Dickin, Executive Vice President, Ecosystems and Product Marketplace, Zafin

The four pillars of a seamless customer experience in banking

1. Customer engagement

The customer engagement pillar is where banking organizations get a 360-degree view of the customer and track their interactions, usually with a traditional customer relationship management (CRM) system or customer system of record. CRM systems help organizations establish a baseline and serve as an important foundation for customer data.

2. Customer insights

The second pillar, customer insights, provides a deeper understanding of these customers. This might involve adding other data elements like lifetime value and social presence. The goal is to add more context to the data you’ve already compiled so you can better tailor each customer’s interaction with your business.

3. Predictive analytics

The predictive analytics pillar is all about using advanced analytics and machine learning to identify trends and patterns, then using that information to identify latent needs and preferences and take proactive action.

4. Augmented intelligence

The final pillar is augmented intelligence which is critical to the creation of a truly seamless customer experience. Ideally, AI is used in conjunction with human-led channels as a way to augment and complement them.

To learn more about all four pillars of the personalized customer experience, watch the on-demand webinar, Digital Transformation in Banking: Relevant, Personalized Customer Experiences. 

The key to a truly personalized banking experience is combining all four of these pillars in one easy-to-use process. Banking professionals need solutions that not only capture but interpret data so they can tailor offerings to each individual customer’s needs and wants.

Microsoft Cloud for Financial Services

To help bank employees create more personalized, differentiated customer experiences, Microsoft has created Microsoft Cloud for Financial Services. With capabilities to deliver differentiated experiences, empower employees, combat financial crime, and increase compliance, this cloud solution is specifically designed to help financial services organizations reach their current and future goals.

We’ve also partnered with Zafin, a leading cloud platform for product and pricing lifecycle management​. With Zafin, banking organizations can extend and enhance the core capabilities of Microsoft Cloud for Financial Services. This product lifecycle management solution facilitates workflow, collaboration, and communication across different domains of the organization. Relationship managers and banking specialists can empower a smooth journey toward a mortgage application using Microsoft and Zafin solutions. If the potential customer lands on the bank’s website and wants to learn about what loans are available, it will display available products based on how relevant they are for that particular customer.

“So rather than presenting a customer with a whole range of hundreds of products, you can…[show] only those products that the customer is eligible for.”

– George Winch, Senior Director, Ecosystems, Zafin

This kind of data-driven feature ensures customers don’t get overwhelmed with the bank’s entire catalog of products and services (many of which are of no value to that customer). It helps banks improve their customer experience immediately.

Create a customized banking experience today

This is only one potential application of these solutions. To see a demonstration of how the combination of Microsoft and Zafin solutions help customers have a more personalized experience throughout their financial journey, watch the on-demand webinar, Digital Transformation in Banking: Relevant, Personalized Customer Experiences. 

Learn more about Microsoft Cloud for Financial Services and how it can help your organization unlock new value with deeper customer connections.

The post 4 ways to deliver a personalized banking experience appeared first on Microsoft Industry Blogs.

In this blog, we sit down with Zilvinas Bareisis, head of retail banking at Celent, a leading research and advisory firm focused on technology for financial institutions globally, to discuss top trends and priorities for retail banking, differentiation of customer experiences, risk management, and preparing for the future.

What are the top priorities for retail banks in 2021?

Celent: 2020 has been a year like no other in recent memory. The COVID-19 pandemic forced everyone, not just those in financial services, to react at speed.

While the dust is yet to settle, we believe retail banks should be considering their priorities across three horizons:

1. When it comes to digital customer engagement, efficient operations, or robust fraud management, banks should identify and close key gaps in capabilities immediately.
2. Banks need to make sure they have a clear strategy, such as cloud adoption, or how they will participate in the increasingly open ecosystem.
3. Banks should keep an eye on issues that are not yet urgent but are starting to receive a lot of industry attention, such as central bank digital currencies.

What are the opportunities in digital customer engagement?

Celent: The pandemic has rapidly accelerated the adoption of digital across all aspects of customer engagement, from selling to onboarding to servicing.

Early on, with branches shut and banks struggling to cope with call center volumes, it became obvious how essential digital self-service is, such as being able to request a payment holiday.

Nearly all the banks we surveyed in 2020 told us that enhancing digital self-service capabilities was their top IT strategy priority. This was followed closely, 77 percent, by the desire to improve digital product origination and onboarding. The goal is to design a frictionless, yet secure customer onboarding experience across all products.

An orchestration engine that intelligently determines the optimum next steps based on context (e.g., customer and product risk) can help automate the process for simple products while embedding collaboration, communication, and document exchange tools to enhance the experience for more complex ones.

The leading banks are also deploying machine learning models to identify the next best offer or conversation with the customer and equipping their employees with tools to help selling.

Which areas should banks prioritize to ensure efficient operations and fraud management?

Celent: The banks’ risk models are calibrated to detect out-of-pattern spending behavior, and 2020 has certainly been out of historic norms, forcing banks to review and update those models.

Also, as more purchases are moving online, both fraud and disputes have been on the rise. And it’s not just cards: Authorised Push Payment (APP) fraud in the UK has become the fastest-growing type of fraud.

Our clients tell us they are increasing investments in automating many processes, and especially loan application and processing. Now is also the time to review and upgrade the collections capabilities.

What should banks prepare to address over a longer-term horizon?

Celent: The financial services ecosystem is becoming increasingly open and interconnected, and banks around the world are exploring how they can participate in open banking or support embedded finance.

Banks must also decide their strategies towards new products getting a lot of attention in the market, such as Buy Now Pay Later or Request to Pay solutions.

While branches and offices will not disappear, remote working will be more prevalent post-pandemic, and most organizations, including banks, will have to answer questions reaching far beyond technology to determine the right approach for the “future of work”.

And of course, banks’ attitudes towards public cloud have evolved significantly, with many now recognizing that cloud is an increasingly viable and important component of the banks’ technology infrastructure.

Transform your organization

Digital transformation is rapidly changing the way financial services institutions conduct business. To learn more about technology innovations in financial services and how to apply them to your organization, read our e-book, Empowering Intelligent Financial Services. To access additional resources and learn how banks are transforming digitally using technologies from Microsoft and our solutions from our partners, visit our banking, capital markets, and insurance pages.

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