The UK financial services (FS) industry is facing a number of challenges right now and could be said to be in a state of flux. The seemingly never-ending uncertainty over Brexit has been compounded by continued disruption in the market. New competitors and Big Tech brands are reinventing services and using the latest technology to steal market share away from traditional FS providers.
Rising customer expectations are also putting pressure on banks and other FS firms to create simpler, more intuitive, and customised products and experiences. Those that fail to respond to these evolving needs risk losing customers, especially now that it’s easier than ever for consumers to switch providers.
But alongside these challenges for UK FS, there are a great many exciting opportunities too. Digital banking paves the way for greater service continuity, making it easier for banks to capture and analyse data (with consumers’ permission), reduce repetition of information collection, and deliver more of what customers want. By innovating with richer and more convenient online and mobile banking experiences, and by using technology to deliver smarter and more streamlined backend operations, traditional FS providers can roll out and execute services more cost-efficiently too.
One such technology is artificial intelligence (AI). AI has existed as a concept for many decades now, but it is only during the last few years that the technology is beginning to be leveraged by FS firms in meaningful ways. Now that AI has become more integral to banking, helping with everything from a richer customer experience to the automation of backend tasks, so the benefits are really starting to be noticed.
The rise and rise of AI
Nuxeo recently conducted a survey with 501 UK FS workers that focused on the challenges, concerns, and opportunities facing their industry. The results from this study indicate that AI has an important role to play in the industry’s future.
Although almost two-thirds of respondents claim their organisations are committed to innovation, and more than half (58 per cent) believe that firms which use AI in creative ways make for more attractive employers. 58 per cent say their employers lack the latest AI talent and expertise.
This suggests that, despite appreciating the potential of advanced technologies like AI - and in some cases already using them in pockets of the organisation - FS providers are not in a position to fully-leverage all of the benefits AI can deliver. For now, some of the most widely-used AI applications tend to centre predominantly around aiding content search and automating routine back-office processes. Using AI for this purpose adds vast value to any organisation, addressing specific operational pain points and helping to improve productivity by freeing up time spent on back-office tasks to spend more productively elsewhere in the business.
68 per cent of respondents say their organisation is already using AI for content search or is in discussion to do so, and 67 per cent say the same for automating backend processes, suggesting that FS firms are alive to the value that can be achieved.
Transforming customer service delivery is also a key focus for AI ambitions, with more than one-third (34 per cent) of respondents saying their organisation is already trying out AI in this context. Chatbots, often used to improve the customer experience, are being used by one-quarter. Meanwhile 41 per cent are already using AI-based capabilities for some form of data analysis, suggesting that FS providers are attuned to the need to target their activities more strategically.
13 per cent of respondents believe their organisation’s inability to adopt AI quickly enough is one of the main challenges facing UK FS in 2020, so it’s something that will need to be addressed sooner rather than later.
An overload of information
One of the major threats to productivity is the inability for FS firms to connect and organise all of the data they have at their disposal, so that they can use it as the basis for improved and new customer services. Compared to newer industry challengers, established banks and FS providers have far richer data going back decades or longer. If institutions could tap into this considerable resource, it could be used to distil invaluable intelligence and insights into consumer trends, product performance, and relative account profitability.
Although organisations have all of the underlying information stored within their legacy systems, it is typically very difficult for teams to access, combine and cross-analyse this data. This is because, too often, systems are unconnected, use incompatible data formats and feature considerable data duplication between applications.
In our research, FS providers confirm that, on average, they store information and content across nine different systems. And these systems tend to operate in silos: almost three-quarters of respondents say their organisation’s systems are not fully connected with each other. System users who need to access information as a regular part of their jobs can be spending up to an hour a day (52 minutes) searching for what they need because it is not readily discoverable.
Given that this equates to four hours 20 minutes each week per employee spent looking for information, the total time wasted across an organisation over a year is quite significant. The most common reasons for this are that information is stored across multiple systems across the organisation (cited by 42 per cent); information is inconsistently, incorrectly or inadequately named (cited by 34 per cent); and it is not possible to search across different systems (by 25 per cent).
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UK FS in 2020
While the UK FS industry clearly has many challenges that are not going to go away in 2020, its business strategies and use of technologies such as AI do appear to be pointing in the right direction. A gradual migration path from the ‘old’ world to the ‘new’ is already under way for many: a managed modernisation journey, which can help address many of the issues that are so concerning to those that work in FS. Such modernisation helps address the most acute pain points and delivers quick wins, without incurring new risk or detracting from other critical work that needs to be done in 2020.
Focusing on the customer; keeping staff engaged and equipped with modern skills and tools; delivering innovative products and services; and embracing the technologies that make all of this possible – AI-powered content management included - will need to be central to FS firms’ plans for 2020.
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Chris McLaughlin chief product and marketing officer, Nuxeo