By Chris Boas, Managing Director, Q2 Sydney Office
Financial institutions (FIs) have been talking for some time about the shape digital reform will take in the industry. While many FIs have made useful but limited digital advances (usually with their account holder interface), few had achieved what suddenly became essential in March of this year: a fully remote customer interface with substantially automated processes and operations structured around digital technologies and machine learning.
The finance community had envisaged this shift fully taking place not now, but later – maybe as late as 2040. But the changes brought by lockdowns across the globe in response to the COVID-19 pandemic delivered what the industry thought was tomorrow’s problem on today’s doorstep.
With future goals needing to happen now, how should the digital solutions being created in response to this immediate need look?
Scalable and customisable
Markets are volatile, and so are account holder finances. Solutions need to be scalable enough to meet demand and flexible enough to address evolving situations (like customers rolling off government support schemes or starting to repay business loans). Hiring humans to handle volume is certainly scalable, but it can be inefficient and tremendously expensive. FIs need solutions like intelligent chat systems to handle initial customer contact and more. They also need straight-through processing (STP) to evaluate loan applications quickly. The solutions should also be customisable, not only to the product base and operations, but to address the level of risk an institution is comfortable bearing. STP, wherein loan applicants are machine-assessed using significant amounts of data provides a great example of this. Better-capitalised FIs may wish to lend more leniently and can programme the straight-through technology to support this. With STP, FIs with tighter margins can make the system more risk-averse.
Intelligent
Today’s account holders generate a lot of digital information, and FIs can make use of that data. Digital systems should be optimised to capture and investigate larger pools of data - including alternative data - in order to lend, collect, and advise more accurately. Since account holders may be increasingly unable or unwilling to visit physical branches, FIs should make use of artificially intelligent digital technologies that learn how customers speak, can pull information (as well as ask for it), and can streamline customers towards solutions or offer meaningful assistance with accuracy. It goes without saying that implementing intelligent solutions requires FIs to break down the silos they’re used to working in so that, where appropriate, information can move freely between departments and systems.
Automated
The more FIs can automate, the less ‘human touch’ will be required. This has multiple benefits. First, it frees up employees to work where they are needed most – on more complex problems. Second, it means that face-to-face interaction is not a necessity if business is dealt with in an efficient digitally manner. And third, it reduces inaccuracies and delays. Human touch is prone to error and bias. Systems can be programmed to nearly eradicate that. Automation leaves a useful audit trail, is more transparent, and provides clearer, enhanced information for reporting. It’s important to note that if systems and processes are automated, employees can swap iterative and tedious tasks for relationship-building assignments, where their skills are irreplaceable. Automated, digital solutions are meant to augment, not replace, the workforce.
Seamless for account holders and minimally disruptive for FIs
Crucially, streamlining processes should lead to a seamless experience for account holders. They should get their money, or an answer, or advice faster. They should feel like the FI knows who they are, can call up their information instantly, and can provide them with personalised solutions. From the institution’s perspective, rolling out digital solutions should be minimally disruptive. That can be difficult when asking one of the world’s oldest industries to abandon methods that have worked so far. Tackling the disruption of digital inside the FI is more closely linked to changing management strategy than it is to implement the actual systems themselves. (A future blog will cover this topic in greater details.)
This vision of the future isn’t 20 years down the line. For those who are willing to make the leap, digital change is happening now.
