Data and Analytics in Banking 4.0: the key differentiators

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The “Banking Everywhere, Never at a Bank” mantra popularized by Brett King succinctly defines banking for the new era. From frictionless financial services that are fully integrated into digital processes to the establishment of entirely new business models, Banking 4.0 is radically transforming the banking industry, enabling the delivery of the same set of services in a customer-centric manner.

The 4.0 challenge

Traditional banks have been supporting large numbers of expensive branches, staff, and legacy systems for years, or even decades, in some cases. These systems, although robust, limit the use of the latest technological developments. Financial institutions need to change their operational structure to increase the accessibility of financial services. Research published by Ernst and Young cites the following reasons why clients are looking for fintech startups rather than traditional banks:

  • Easy account opening (43.3%)
  • More attractive prices / costs (15.4%)
  • Access to new products and services (12.4%)
  • Better online experience (11.2%)
  • Better quality of service (10.3%)

The survey also lists the preference for using traditional financial service providers because of trust as the main reason not to opt for fintech start-ups. How can traditional banks take advantage of this huge advantage and drive their banking 4.0 transformation?

Read also: A changing landscape – The rise of “TechFins”

Focus on technology

Modern banks can get ahead of their fintech rivals by quickly addressing aspects that drive differentiation, while increasing their own levels of service to their customers. Here are just a few:

  • Hyper personalized service – By moving from a paradigm based on products to paradigm on services, banks can easily provide them at the customer and transaction level.
  • Innovative partnerships – Identifying partnerships within the ecosystem can help meet the needs of the current generation and allows for an easy transition to millennial preferences and new market priorities.
  • Strategic risk management – While risk in banking jargon has always had a traditional approach, it can be managed with better information using data and analytics.
  • Create new synergies – Banks can shape their products and services in such a way as to create new synergies and significantly increase value for customers.

In order to explore these opportunities, the first step banks need to take is to modernize the infrastructure. The ability to serve customers at any time can be achieved easily through the adoption of the cloud and other highly secure process changes. Using artificial intelligence in aspects involving data and analytics in the banking industry can help create intuitive processes and solutions.

The essential role of data and analytics in banking 4.0

The amount of banking data, gathered over years of customer relationships, is massive. Add to the fact that people look to banks for the majority of important life decisions and one cannot overstate their importance.

In the age of banking 4.0, financial institutions can create a 360-degree customer view by digesting data from different sources, use it in conjunction with data collected from bank records, and deliver the right products at the right time to optimal cost. This level of hyper-personalization isn’t just about selling new products, it’s about improving service, lowering costs, and optimizing the customer experience. This is possible by using AI in areas such as customer service, RPA, and process exploration.

The data and analytics provide key insights into customer preferences – from e-commerce platform choices to the payment methods customers prefer, among others. This enables innovative partnerships, such as those where traditional banks partner with e-commerce sites to enable co-branded offers.

In the Banking 4.0 paradigm, traditional risk management is expected to undergo a shift due to data and analytics driving credit risk management to much higher levels of precision. In addition to greatly improved fraud detection mechanisms.

The creation of new synergies using bank data and analytics is clearly visible in the area of ​​payments. The ability to bring the customer and merchants together on the same platform has been the only big success of modern payment providers. Banks have the ability to improve the game if they can provide key information to the customer and supplier using their unique perspective in the transaction chain. While regulatory issues and data privacy can be a hindrance, the ability of banks to play a key role here is not far off.

Maveric Systems, as a specialist in banking technology transformation, has helped Tier 1 global banks, regional banking leaders and the fintech community with a wide range of data transformation services such as data migration, data for digital, data for compliance, data lakes, visual analysis, etc. We bring the best data technologies combined with the expertise of people and our inherent strengths in the banking industry to increase the values ​​of precise decisions. This is how we #AccelerateNext journey towards banking transformation.

Examine the way to go

Creating digitally-driven experiences is critically important for banks to welcome the new customer. Providing them with that omnichannel experience also has the effect of making banking a side business – something people don’t shy away from. When paying for groceries is easier than texting, people would prefer providers that give them such an experience.

Read also: How to approach financial investment during a pandemic

The role of data and analytics and building the right AI infrastructure within banks is crucial for them on this journey. Now is the time for traditional banks to embrace this approach and envision this journey from a holistic 4.0 banking perspective.

Technology partners with sufficient fintech pedigree can simplify many legacy processes, while adding functionality to slowly introduce Banking 4.0 functionality and become true partners for success.

The opinions expressed in this article are the personal opinion of Swaminathan Srinivasan – Senior Vice President of Data and Analytics Business Unit at Maveric Systems.

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