The Financial Industry Is Changing Fast. Here's How to Keep Pace

 

Digital disruption is accelerating the pace of change in the financial industry. Banks need to shift to bionic organizations powered by AI and automation. Open banking and Automated Robo-advisors are just a few of the trends to look out for. If you aren't keeping pace, you'll soon be left behind. The only way to survive is to adapt.

Banks must transform themselves into AI-powered bionic organizations

To stay competitive, banks must become bionic organizations powered by AI. This will require them to shift away from highly standardized products and start offering integrated propositions that address "jobs to be done." Embedded personalization decisions must become a part of the core customer journey. Banks must also include relevant non-banking products into their portfolios to serve the end-user's needs. For example, a fintech product like Tally will help customers grapple with the challenges of managing multiple credit cards.

To stay competitive in the future financial industry, banks must transform themselves into AI-powered bionic organisations. Bionic organizations use data analytics capabilities to create new business models and services that serve a range of customer needs. To become bionic, banks must adopt an agile approach to serve their customers and innovate their businesses. In order to achieve this, banks must establish a culture of continuous improvement and a risk management process for AI models.

Open banking

The advent of open banking promises faster and more reliable banking services. Companies like Yolt have already built a large customer base by using consumer data to create account aggregation apps. As the adoption of open banking increases, small businesses can expect to see their funding application process become easier and faster. Meanwhile, their needs and habits can be taken into account when tailoring a lending offer. Ultimately, open banking will benefit consumers.

The adoption of open banking is already underway among the largest banks in the world. The aim is to create a more competitive environment for ecosystem partners that can work together on customer engagements. Open banking requires the nine largest banks in the UK to share aggregated customer data online in a standardized and secure format. Authorized third parties can then use this data to develop new products. But open banking also raises questions about the role of existing banks.

Automated Robo-advisors

While many wealth managers are ignoring the retail and affluent segments, they are generating 27% of revenue. The reason is that these investors have lower overall AUM and less demand than HNIs. Most wealth managers don't have a dedicated helpdesk to cater to these investors, either. Robo-advisory models can serve these clients, increasing revenue per customer while controlling operational costs. While the scope of robo-advisory adoption is more limited than the HNI segment, these automated systems are transforming the financial industry at a rapid pace. Here's how to keep up with these exciting developments.

Robo-advisors are changing investment management quickly. Using a Robo-advisor is the best way to keep pace with automated features that streamline complex tasks. These programs help you achieve your desired allocation while simultaneously offsetting taxes on realized gains. The result is a stable income stream as you retire. But there's still a need for human interaction.

Artificial intelligence

Banks need to understand how to implement AI in their core systems to reap the benefits of the technology. While legacy systems have served them well, they lack the flexibility and capacity to support AI applications. Furthermore, they require significant resources to maintain. In addition, data reserves in many banks are dispersed across multiple silos, limiting their analytics efforts to stand-alone use cases. Banks must establish a continuous improvement process to keep up with the fast-moving AI field.

One example of how AI can be applied to customer service is in the form of chatbots and virtual assistants. These assistants are designed to answer common questions from customers, including checking their balance, making a payment, and researching account activity. These assistants can also help customers make better decisions by guiding them to the right customer service unit. And these innovations aren't limited to customer service. AI can also transform the Front Office by providing instant self-help solutions for customer service and generating tailored financial advice.