Big Data

Journey To Digital: Banking In 2025

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There exists a fundamental difference between a bank offering digital services and a bank becoming truly digital. 

The digital bank represents Finance 5.0 – the generation of banking that will arise in the next 5 years. Traditional banks will either need to partner with FinTech’s or take on the transformation process themselves. Key to this evolution will be the need to further develop digital capabilities as well as welcoming a fundamental mindset shift [1].

AI and Big Data’s role in the customer journey:

This shift primarily revolves around a change in starting point – banks must devise strategies that start with the customer, rather than the bank. By adopting a customer-focused approach, banks will realise the need to re-think the customer journey. Seamless interaction is at the core of this process: services and touchpoints should be available in an integrated, unified manner.

Leveraging AI and Big Data is crucial to personalising such services at scale. AI allows for the likes of Robo-advisors and Chatbots, whilst data collection and processing is needed for this very personalisation to take place and is required for the continual optimisation of service delivery and the customer experience. Natural language processing (NLP), one of the key technologies involved in human-machine communication and interaction, has advanced to a level at which Chatbots and Robo-advisors can perform what is known as sentiment analysis, enabling them to understand the meaning, emotion and intent behind language [2]. This in turn facilitates their ability to respond to and advise humans appropriately. NLP not only provides top service at scale, but service that feels authentic and natural – service that feels human-human.

In retail banking, the emergence of the so-called smart-branch makes this shift clear. These branches strive for “the seamless integration of…technology”, “the adoption of…teller- and desk-free branch formats”, and “the use of digital technology and advanced analytics”, such as personalisation tools [3]. In doing so, the customer and their journey becomes the focal point.

The importance of both physical and digital touchpoints:

However, as advanced as conversational interfaces and emerging technologies have become, the likes of Robo-advisors currently act to facilitate and streamline customer engagement rather than replace humans altogether. They are, therefore, a fantastic example of machines augmenting employee roles within the workplace. Currently, these technologies are not and will possibly never be at the stage at which they can replace humans entirely.

For example, when customers seek remediation, they want to be recognised, heard and empathised with. A simulation of a machine that is gifted at problem resolution management cannot cater to these needs. Given that AI is currently not at a level at which it can serve the complex array of human emotional needs, human presence and involvement in the provision of service remains essential. What’s more, the performance of these technologies will always be limited to the methods that we, as humans, have available to capture and structure data into a machine-digestible form. As such, combining human and machine intelligence remains critical in extracting optimum capabilities from both.

It is, therefore, important to realise that physical touchpoints will not be rendered obsolete [4] – rather, the introduction of AI solutions will ensure that both physical and digital interaction is available in a cohesive way. Here, the process that is the democratization of financial services becomes clearer [5]. Digital touchpoints render services more accessible to a younger demographic whilst retention of in-person customer service and alike meets the need of both the traditional and vulnerable consumer. Digital inclusion must not result in the exclusion of those most in need of human contact. 

Whilst conducive regulation is required for banks to fully undergo this move, the cost savings involved in the shift to automation and integration will be huge. Banks that fail to realise the potential of emerging technologies today will be left behind and lose customers tomorrow.

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