April 28, 2017 | Written by: Usha Srikanth
Categorized: Banking | FinTech
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The banking industry is undergoing a paradigm shift in terms of adopting cognitive computing into all of its facets. It’s amazing to hear the conversations and see the pilots in which clients are exploring “art of the possible” with cognitive. With the rich data financial services clients hold this is a natural evolution for the industry.
The pressure of innovation — driven by the Fintechs — is another factor driving cognitive adoption and moving the industry towards a new way of working and a new way of servicing clients.
Cognitive computing is the simulation of human thought processes in a computerized model. This involves self-learning systems that use data mining, pattern recognition and natural language processing to mimic the way the human brain works. It leverages a combination of structured and unstructured data, both proprietary and public, including social media channels. The more the system learns, the more efficient it becomes.
Customer acquisition, growth and retention are areas where conventional analytics are being replaced by cognitive analytics to provide superior client experiences. Wealth advisors and relationship managers are using cognitive technologies to achieve new levels of expertise and responsiveness. With “virtual agents” over digital channels being empowered by the power of cognitive computing we’re starting to see meaningful transactions in complex areas such as mortgages and brokerage, where a bank previously would consider the need for human interaction as mandatory for a conversion. It’s also enlightening to see how call centers are getting transformed with the intelligence of cognitive agents, driving more traffic onto the digital medium.
Using a cognitive computing approach, banks can address risk and fraud management more effectively. The advanced, predictive analytics, integrating external and internal data, is helping credit decisioning and fraud detection models to evolve to the next level with a greater emphasis on proactive prevention.
IT and operations costs are areas in which many banks struggle — both in terms of predictability and productivity. Productivity gains are always in demand given the significant level of spending from these areas. For most banks, the standard levers have all been pulled – outsourcing / offshoring; efficiency savings through process improvements; deploying lean and six sigma processes.
Cognitive, is a new avenue for taking out costs with unique optimization options possible through cognitive tooling and automation. In fact, those in the financial services industry with cognitive capabilities are witnessing a step change in productivity improvement in areas around production support and back office processing.
The benefits of cognitive banking are myriad. With sustained focus it will continue to change the industry. It’s important for banks to lay the right data foundation, embrace the right level of technology and determine where maximum benefits can be realized. Banks that embrace cognitive computing holistically are the ones likely to harvest maximum benefits.
To learn more please visit The Cognitive Bank.