It goes without saying that last year has been a huge challenge, if not a nightmare, for all of us. Now, when we are already on the other side, how do you feel about a note of optimism? At some point, the lockdown has become a blessing in disguise for some of our clients. As it made digital miracles happen.
Digital transformation (DT) used to be like Bigfoot a couple of years ago: everyone heard about it, but no one has actually met it. Who knows when it would have become real if the pandemic hadn’t left us any choice except for going digital and automating. 2020 became a year of total automation: in financial services, healthcare, retail, and other industries. It sounded so promising: just build a proper tool stack and everyone will be happy!
Then suddenly it turned out this wasn’t enough. DT also implies changes that you simply can’t implement overnight: strategic, operational, and cultural. It requires careful scaling and continuous adjustment. In 2021, it’s time to take it to the next level. As new trends for the financial services industry are evolving exactly when you’re reading this article. Trust us, they go far beyond linear automation.
Key 2021 trends for financial services
The more you dive into the very concept of DT, the more you see it as a complex structure that constantly evolves. Today, this evolution will be determined by the following trends:
Customer-centricity and personalization
Customer behavior has changed dramatically over the past year. People got used to digitalizing their lives, became more tech-savvy. To meet customers’ expectations for financial services in 2021, businesses need to adapt, offer expanded functionality and value. It’s a noble mission for today’s CIOs to lead these innovations and join digital champions’ ranks.
According to Deloitte Digital Banking Maturity Report, digital champions provide personal finance management opportunities with engagement-driving features. They help clients set financial goals, manage transaction categories, and stay notified of their budgets. Such services improve customer experience that directly correlates with business profitability and growth.
Sustainable digital workflows
The pandemic has become a true test of flexibility for businesses. Before, face-to-face communication and manual supply chains used to be a part of the game. In 2021, all processes are being transformed into online-first and require building new workflows for remote teams.
Although the circumstances of this transformation are hardly favorable, digitalization drives great opportunities for organizational efficiency and streamlined digital workflows. It enables smart automation in financial services which is performed through integrated platforms. Today’s banking can perform application management, invoice processing, and collaboration with employees in one place. This means extended potential for process coordination and templatization.
Advanced risk management
As 2020 has shown, one can never try too hard preparing for the worst, 2021 is about to be the year of mitigating further risks. The thing is that automation of financial services comes with certain vulnerabilities. Remote identification and verification give no rest to cybercriminals. Financial organizations need to outplay them and protect users’ data by continuous technological upscaling.
The ever-changing business landscape presents the second kind of challenge. To build a reliable risk management strategy, organizations need accurate estimations and predictions. A data-driven approach involving AI and ML is going to be an industry-shaping trend this year. “With a year of unpredictability behind us, enterprises will have to expect the unexpected when it comes to making technology stacks infallible and proactive,” says Ali Siddiqui, Chief Product Officer, BMC.
Environment, Social and Governance responsibility
The pandemic made the whole world realize how fragile stability is and how much the environment and society affect businesses. Organizations started seeing themselves more as parts of a greater system that share natural and human resources. Such an approach made them rethink their attitude towards ESG and find it valuable for business performance. For example, proactive C-level managers find reducing waste cost-efficient as this will decrease environmental risks in the longer term. The same applies to adding Diversity, Equity and Inclusion (DE&I) to corporate values as this helps promote employer brand and attract conscious professionals.
Automation best practices for finance
To catch up with the trends, businesses look to AI and ML technologies. At least 86 percent of C-level executives plan to invest in the automation of financial services from 2021 to 2025. They rely on technology to reduce operational costs and increase employee capacity.
A North Star metric for effective AI implementation is customer and stakeholder satisfaction. To achieve it, executives approach the following practices.
Implement AI technologies for building digital ecosystems
The spread of all-in-one apps in non-banking has influenced the way people discover and consume services. People have become used to complex digital experiences. In 2021, banks and investment companies need to adjust and merge into digital ecosystems where customers interact with the economic environment. This means a whole new level of AI automation in financial services. It should cover all the stages of service delivery:
- Personality identification through biometrics
- Customer request handling with intelligent bots
- Document processing based on ML technology
- Pattern-based fraud prevention and security automation
Giving users unified access to these operations while keeping security under control is the main focus for digital champions this year.
Leverage robotic process automation in financial services
It’s not even a question that routine tasks should be automated. Intelligent robots have already merged into financial processes to provide workload scalability. This year, stakes are even higher: machines become engaged in decision-making based on accurate data analysis. AI serves business objectives along with remote teams, and human employees become more effective in this alliance. Freed from monotonous tasks, they reveal the creative potential that helps solve high-level problems and mitigate business risks.
Apply ML for cybersecurity and risk management
On the other hand, machines have their competitive advantages. They quickly process both structured and unstructured data and provide faster action plans. The volumes of data they deal with ensure the accuracy of forecasts and predictions, therefore, minimize the risk of mistakes. This helps build a long-term strategy applicable to various scenarios while increasing business stability.
Also, ML offers precise authentication and verification frameworks, which, nevertheless, have controversial value. Cassandra Cooper, Senior Research Analyst, Security, Risk & Compliance at Info-Tech Research Group, highlights that “Whenever there are discussions about the relationship that exists between AI and data privacy, the two words that immediately come to mind are ‘it’s complicated’.” Businesses need to find a way to stick to GDPR on their way to automation in financial services.
In 2021, organizations will be moving towards new frameworks for smart automation in financial services. Analog business models will become a thing of the past, replaced by digital ecosystems and sustainable digital workflows. Financial services are no longer perceived as transaction-based only. Today’s executives are facing a mission of switching a company’s mindset towards customer-centricity and sustainability.