June 11, 2016 | Written by: Paul Davis
Categorized: Banking | IBM RegTech Innovations | Security
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Calling all rainmakers, catalysts and change agents. Now is the time to bank on a cognitive business! Let’s see what cognitive banking means.
In the face of stiff headwinds still being felt from the financial downturn, the rise of the FinTech disruption and internal cultural resistance, we are starting to see winning organizations wade through a sea of change to find pragmatic ways forward. Focus is on innovation: removing friction, streamlining processes, updating stale business models and leveraging insights to dramatically improve clients engagements. Clients are transforming digitally but also rethinking how humans and machines interact, out-thinking competitors, opening up a Cognitive Era with cognitive banking.
These cognitive systems have the ability to understand natural language in order to interact better with humans, capture the expertise of top performers, build upon knowledge from structured and unstructured sources and to provide consistent, expert assistance. Already 89 percent of banks familiar with cognitive computing believe it has the potential to change the banking industry by combining digital transformations, advanced analytic capabilities and data, in all forms.
In my work with banking clients, I have seen several strategic starting points for using cognitive computing. Each presents an opportunity to redefine the brand experience through new ways, extending artificial intelligence one step further by augmenting human intelligence, extending expertise to all corners of the bank. Now there are no simple answers and every bank has to factor in its own realities and client’s appetite for new services, but the road-map to cognitive banking can begin with:
Designing value and improving client engagements by creating a customer-focused enterprise with cognitive banking
Consider new ways to interact with clients via digital virtual agents where machine learning meets self-service. In cognitive banking these new cognitive systems can interact with customers, listen to questions and offers solutions. They learn with every human interaction and grow its collection of knowledge, quickly adapting to the way humans think. We are now able to deliver unprecedented personalized support to customers in a way that fundamentally changes their experience. It goes beyond market segmentation or micro-segmentation, by not only understanding a customer’s unique needs, wants and desires but also engaging them in a dialogue. This method helps them answer questions and become more knowledgeable in an emotive and empathetic way.
Or equally, by optimizing risk, compliance and security. Cognitive systems can improve enterprise-wide visibility into regulatory and internal compliance controls in banking and financial services. By understanding the latest regulations, and comparing bank activity against them, cognitive systems can help the bank’s risk officers detect when a bank cannot meet its obligations. They can also provide recommendations on how to correct course. On the security front these systems can understand, reason and learn about security topics and threats tapping into security knowledge that has previously been dark to an organization’s defenses. These systems enable security analysts to gain new insights and respond to threats with greater confidence at speed and scale performing statistical analysis on a corpus of data, looking for patterns, defining relationships between that data and forming hypothesis to help people make better decisions. It is intended to be a trusted advisor to security analysts, uncovering insights and patterns into security incidents, while suggesting possible solutions to stop a threat.
All while driving agility and operational efficiency. At the end of the day we are still operating below pre-downturn levels and even though banking may fundamentally be changing it is still an attractive industry overall. The challenge is to be diligent about reducing cost and leveraging technology where-ever possible knowing start ups are “cherry picking” our services and coming in at much lower price points. Of course we won’t compromise on data security and governance, but we have to shore up our enabling technologies to offer real-time payments, simpler interfaces and APIs as well as leverage new technologies like blockchain, open source projects like Spark and utilize a cloud based platform where-ever possible.
From my vantage point it isn’t so much about disruption, but rather about adopting new strategies, leveraging technology in new and innovative ways while adapting our organizations and changing culture to provide value to our clients in new, clever and pragmatic ways through greater efficiency, quality and speed. The bottom line is business leaders are facing a stark choice: Either reinvent their enterprises or watch as their businesses decompose around them. Hail to the rainmakers, catalysts and change agents!
BTW, I would love to hear your opinions, so feel free to comment. If you are attending the June 20-22 American Banker Digital Banking Summit in New Orleans, I will be there and will be presenting on some of these topics. If you can make it, stop by the IBM Lounge for some coffee and world famous New Orleans Beignets!
See how IBM redefines the customer experience with Cognitive Banking!
Director, IBM Cognitive Solutions - Financial Services at IBM