By Nirav Choksi
Banks need to embrace digital innovation and AI at scale to stay relevant and competitive in this new world. Gartner predicts that the global expenditure on IT for banking and investment services is projected to reach $652.1 billion in 2023. Banks are opting to enhance their IT investments, particularly in technologies that bring about substantially higher business outcomes, such as AI and Machine Learning (ML). By deploying AI and ML capabilities, banks can streamline their corporate operations, meet legal requirements, detect fraud, and enhance customer-facing services.
Building Tomorrow’s Banks, Today
Over a decade ago, the mention of a bank brought to mind images of never-ending queues and excruciatingly long processing times.
A lot has changed in recent years. Having packed years of innovation into one, the pandemic-induced digital evolution is undeniable.
Meanwhile, customer experience has climbed up the ranks to become the most important digital transformation goal.
More than ever, banks are open to:
- Digitising their customer-facing applications and internal processes
- Collaborating with disruptive FinTechs
- Taking on the role of ecosystem orchestrators
- Participating in digital marketplaces
Banks today are going above and beyond the mold of traditional financial services to enrich their customers’ everyday experiences.
That said, despite rapid digital acceleration, only a mere 6% of banks qualify as “future-ready”. Primarily, because banks are yet to scale their core technology capabilities such as data analytics, cloud, and AI.
Staying ahead of the curve by digitising the core
Implementing an enterprise-wide initiative aimed at modernising core technology and data infrastructure is the need of the hour.
Before embarking on a fundamental transformation, banks need to take stock of their existing technology landscape. An alignment between the banks’ technology roadmap and strategic business goals is key.
By digitising their core systems, banks are creating a foundational layer that will enable them to:
- Build API-driven ecosystems
- Enhance operational efficiency
- Integrate cutting-edge technologies effortlessly
- Elevate customer experiences across multiple touchpoints
Moreover, for AI to deliver institution-wide value and for banks to remain at the forefront of digital transformation, the need to modernise core systems becomes an urgent priority.
Unleashing the next disruption with generative AI
Generative AI is playing a central role in creating value for banks and their customers. Banks today are streamlining their talent and technology to make the AI-first vision a reality.
Against this backdrop, banks can leverage AI-powered decision-making capabilities and robust data sets to deliver highly personalised products and services at scale. Round-the-clock transaction processing and real-time reconciliation have also come to the forefront as key competitive advantages for financial institutions. By creating advanced ML models and credit assessment scorecards, AI-first banks can reduce the risks posed by potential threat scenarios and introduce higher levels of automation.
The breakneck pace of digital transformation
In today’s financial services landscape, change is the only constant. This calls for banks to make a drastic transition from traditional mindsets towards a more collaborative, experimental approach.
Banks need to reorient their teams and processes to place the customer at the center of the financial services ecosystem. Furthermore, by putting digital and data at the core of all their operations, banks can take a more holistic approach to refine the customer experience.
The current industry convergence is paving the path to new revenue opportunities and innovative business models. Banks need to gear up to set out on a transformational journey employing a series of progressive programs that enable them to adapt continuously and cater to the ever-evolving needs of their customers.
The author is CEO, co-founder,CredAble
