In Latin America, most of the traditional banks accelerated their processes to digitalization during the pandemic. Therefore, Microsoft presented today the trends and scenarios that enable financial innovation, help banks adopt new technologies, and layout a roadmap for the digital transformation of the industry for the years to come.
Fernando Andres, director of Business and Large Companies at Microsoft Argentina remarked that “the financial industry has the opportunity to take advantage of the acceleration in cloud adoption to modernize architectures”. This transformation has become a bare necessity in these shifting times.
Retraining working force
A key player in the transformation is the use of artificial intelligence to improve competitiveness, according to the Microsoft executive.
Technological intensity is a paradigm and a new look at a business that Microsoft took from a work prepared by Boston University. Andres maintains that, in the future, any company will be a technology company because some of its components will be 100% digital. Therefore, organizations must not only incorporate third-party technology but create their own with their solutions and retraining of the workforce.
The modern Financial Industry
Digital transformation changed the landscape for the financial industry. Now, almost all the products and services offered are technology-based. This means that many processes are beginning to automate and incorporate technologies such as AI, which are more agile and secure. The scenarios and trends that come to this industry find in technology a bridge for development, both for organizations, their business models, as well as their workers and customers.
The five scenarios for the new bank are:
Offer differential experiences to customers
Today presents multiple challenges: on the one hand, the customer experience is constantly changing; on the other, the new generations lack a sense of belonging to financial brands.
According to Gartner, bank customers are increasingly demanding authentic human interactions at all touchpoints. Faced with increasingly informed and sophisticated clients, who have high expectations of their banking experience, financial organizations are looking for new ways to offer differential experiences. Among them, some offers combine creativity and advanced technology to strengthen the relationship with clients and improve loyalty in a more mixed and plural market. For example, there are many smart bot services enabled at a scale that help answer customer inquiries. This allowed millions of people to stop attending a branch, avoiding the crowding of people and direct contacts.
Modernize banking systems and services
When larger players enter the market, the product offering intensifies. Therefore, the agility to offer new products and services that connect with the needs of users will be key in this new stage. Incorporating digital collaboration and automation to perform certain tasks will be an area of great opportunity for banks. According to McKinsey, it is estimated that this could generate $ 44 billion in operating profit in the global banking industry, with increases of 10% in organizational and employee productivity.
By modernizing the bank’s internal systems, it is possible to advance on new strategies such as omnichannel, which allows creating digital channels with basic functions faster so that, through this channel, a credit can be approved, a credit card can be provided, etc. Hand in hand with the cloud, it is possible to set up these payment processes, quickly display products and services, which were not previously sold digitally, in just days.
Risk management and reaction to the context
Faced with new contexts, recurring ups and downs, and market dynamics, cloud and artificial intelligence technologies provide useful services to understand how capital is used and provide reports on capital and risks when necessary. These technologies allow:
- Scale processes so analysts can create scenarios with endless possibilities to manage risk with greater precision.
- Conduct audits to identify unnecessary workloads that allow resources to be reallocated and used on key tasks. Another opportunity lies in nonessential services that can be postponed when employees are not actively working to save on costs and allocate workloads.
- Develop new risk applications to reach more customers. Improve non-financial risk posture and ensure GDPR compliance.
- Protect sensitive data against loss and external threats to meet cybersecurity requirements.
- Laying the foundations for agile and secure operations with a modern identity, protecting and respecting the privacy of users and customers.
During the first months of the pandemic, Microsoft detected 60,000 messages with malicious files or links related to COVID-19 each day. This puts any institution at risk. That is why banks need to adopt new technologies to deal with these ever-changing and evolving threats.
Banking entities work against cybercrimes that, as time goes by, acquire more technology, increase their number and sophistication. In response, banks must optimize their platforms and provide them with greater security to avoid fraudulent transactions or the theft of account data.
Some of the tools in this scenario allow you to: analyze user behavior and response patterns after login to determine if they are genuine and stop malicious activity; Take advantage of machine learning and security technology to identify new patterns and anomalies of suspicious or criminal transactions.
Hybrid work scenarios: between collaborative and face-to-face remote work
As a result of the sanitary measures to face the COVID-19 crisis, many people began to work from home and, with this, remote sales and services increased. This scenario marks a clear trend in the short and medium term: everything becomes more remote than before. Almost three in four directors of finance companies plan to move at least 5% of their staff to permanent remote positions. And nearly 25% of CFOs plan to move at least 20% of office workers to work remotely permanently.
In Latin America, most companies maintain that teleworking will be imposed as a new work scenario without neglecting face-to-face contacts and office meetings. For this reason, it is moving towards a hybrid model that combines physical and digital environments. The future of work is here: the tools and strategies of other times are not going to work in modern workspaces.
In short, in a hyperconnected world, more and more banks are making broader cloud platform choices (not just infrastructure anymore) and are extending their investment to collaborative work, productivity, data, and artificial intelligence solutions.