Monday 25, June 2018 by Jessica Combes

Five tech trends dominating financial services


Wissam Khoury, Managing Director, MEA, Finastra writes for Banker Middle East

There is no doubt that technology underpins the transformation and growth of the financial services industry. In the past, financial services organisations tended to rely heavily on legacy systems and were relatively reluctant to embrace new technology.

Today, they recognise that fintech is no longer just disruptive but an imperative for success. A bank or financial institution that is not investing in fintech and building collaboration into its DNA is at risk of losing out to the competition in the long run. Many fintech trends regularly hit the headlines, from blockchain and cryptocurrencies to regtech. So which trends are looming large for 2018 and beyond in the Middle East and Africa?

The concept of digital transformation has been on the agenda for a while, but now market pressures—including the emergence of slick new challenger brands—are forcing banks to make the leap sooner rather than later. Process automation enabled by artificial intelligence (AI) plays a significant role here. The focus is on driving operational excellence across the whole value chain, and process automation will help deliver it. Although banks across the globe have automated a few back-end processes, including payments, true end-to-end automation is still to be achieved.

We will continue to see investments in driving the greater automation of front-end and back-end processes. There will be a great deal of process re-engineering required to automate and reduce the time and quality of service delivery.

Globally, bots are making waves in the financial services industry. For example, banks have started deploying chatbots to conduct the first level of interaction with customers via contact centres. Bots are also being used to automate and reduce processing time in the back-end.

So far, bots have been useful when operating in a predefined manner with set rules to follow. But with AI and machine learning taking centre stage this year, self-learning algorithms will drive even more ‘intelligent’ and streamlined services.

We all agree that the financial services industry is sitting on a tremendous amount of valuable data about customers and their behaviour. The industry has made great strides in its ability to use this data to make intelligent decisions about which products should be provided and to whom, for example. However, usage has often been limited to the data owned by an organisation.

Now, within the open banking concept, financial institutions will have access to data held by other organisations as well. This data transparency is going to drive unprecedented changes to the way in which the industry harnesses and utilises data. Similarly, the second-tier organisations who buy loans and mortgages from banks are starting to depend more on data to make strategic decisions. This increased dependency on data will impact bottom lines in the industry by making it easier and quicker to connect customers with the products they want and need.

Over the past year, we’ve seen exponential growth in the number of cryptocurrencies at a global level, as well as wider adoption by investors. Blockchain or distributed ledger technology (DLT)—the architecture that makes cryptocurrencies possible—has captured the imagination of the financial sector. DLT is now more than just a concept: solid use cases have started to emerge and it will really thrive where inefficient processes still exist in the financial services industry, such as lending.

As new entrants hit the market with slick customer experience at the heart of their proposition—think Alipay—banks must up their game to compete and deliver on today’s customer expectations. Banks are already implementing technologies and solutions that help to create a single view of the customer, addressing business fragmentation and shattering departmental silos.

As customers navigate between walk-in branches, banking apps, website chats, social channels, and customer care centres, their every touchpoint will be recorded and consolidated to understand them better. This single view will help banks to deliver a consistent brand experience that improves customer loyalty and reduces churn. With so much change underway, it is safe to say that the industry is closing in on major disruption. However, it is not just technical superiority that will dominate 2018. The winning combination will be a mix of business pragmatism, innovation, transparency and collaboration.