There are some who expect that legacy IT systems created from scratch by banks and insurance companies will soon be a thing of the past. With so much new technology being utilised in the financial services space, there are of course questions about what is next for established banks and well-known insurance companies. To do this they need to utilise the tools and technology available to them and understand, through analysing the vast datasets which banks and insurers hold, what it is that their customers want to see.
The way in which consumers live their lives is changing, thanks to apps and easy access to the internet wherever they go. Yet, the current IT systems do not reflect the needs of the customer, which is leading to fresh competitors gaining an edge. This is one factor leading to customer dissatisfaction towards established banks and companies in other industries who use archaic systems.
What has left legacy systems marooned?
With the banking and insurance industries operating a system which processes waves of data operating through many branches, there is no doubt that speed is not its great strength. As mentioned, consumers are changing, and one major trend is self-managing their lives online. For example, if you want your shopping delivered, need a taxi, want to transfer money, apply for a mortgage, speak to friends, etc. apps are the desired tool. Ultimately, people rely on quick and simple interfaces which give them the least hassle possible. This is why young competitors have put pressure on legacy organisations to evolve, and clearly, a lot has changed for established banks and insurance companies.
Now, most have set sail on the pursuit of more customer friendly tech, as almost all have their own app and a social media presence to deal with customer queries and a dedication to creating new tech. For example, JPMorgan has allotted $11.4 billion on technology for the year ahead, signifying a serious prioritisation on tech within the company.
The future looks exciting for banking and insurance companies, especially for those that are putting an emphasis on ensuring their technologies fit seamlessly into the lives of consumers. We’re already seeing this in the form of smartphones and of digitalisation, which are making banks and insurance companies increasingly accessible to customers - even outside business hours.
The way in which many organisations have began to combat lethargic IT systems has been to use automation tools such as Robotic Process Authentication (RPA) and Artificial Intelligence (AI). This is ideal because many system requests are repetitive and require no or little individual response. Also, according a recent NetApp survey, decision-makers in both industries see this as the ideal starting point for integrating AI solutions in their companies.
Flying the flag for RPA
The analyst firm, Gartner, currently values global spending on RPA software at $680 million dollars. And by 2022, it’s expected to reach $2.4 billion. Banks and insurance companies are, in fact, the leading advocates and adopters of RPA technology. Our study, launched to uncover the impact of AI developments on the finance industry revealed the following:
- Almost half (46.7%) of organisations within the industry already work with AI – unsurprising given that AI is being implemented to carry out repetitive tasks with less errors.
- Increasingly intelligent solutions are gaining traction in more complex areas such as portfolio management (26.7%), customer service (46.7%), and fraud prevention (40%).
- Many organisations expect AI and RPA tools to solve many issues in the future. This is especially true as it relates to employee workload and the improvement of individual customer care.
Cloud as a starting point
In the modern financial world, there are certain norms which are taking shape, such as the adoption of the cloud. In the same survey, 86.7% of participants revealed that they rely on AI services that draw their computing power from the cloud. So, with this figure we can see that the infrastructure is in place to build around and strengthen IT systems. The cloud provides financial institutions with great flexibility, not to mention the necessary performance to process large quantities and varieties of data.
In the end, the key to a modern, reliable IT system is speed. And as it stands today, without the boost of the cloud, financial institutions would struggle to operate on the scale they do now. It also benefits IT security as it helps to identify and flag fraudulent transactions – which are a growing issue within the financial services industry. AI also supports chatbots, using Natural Language Processing, which works by translating any incoming message automatically, regardless of the language spoken by the customer. With this feature, all customers can be helped at any time of the day, improving customer relations in real time.
Prepare well, improve quickly
One area that the financial sector is learning to do very quickly is implementing practical uses of AI solutions. So much so that it is a growing aspiration for financial companies to make their own software and solutions to integrate into their IT systems - 56% of participants had been developing their own strategy for several years and had installed one or more solutions into daily operations. When the survey came out, over 56% of participants had already been developing their own strategy for several years and had even go as far as to install one or more solutions into daily operations. Looking forward, 30% of respondents declared that they had planned to introduce a whole department focused on AI into their business.
Understandably, there has been some apprehension from companies to adopt AI, mainly due to the fact that they have a limited knowledge and have been exposed to some misconceptions around the technology. The biggest concern, however, is privacy. As banks and insurance firms hold highly sensitive data, it is a legitimate issue to worry about, as they’re both regulated frequently by local and global regulators. The good news is that expert consultancy is available and can reassure businesses that they are going in the right direction with AI.
Adding AI to the fleet of technologies within the finance and insurance industries will significantly enhance the services they can provide to consumers. Luckily, there’s already demand as we’ve seen through the increasing implementation rates of AI within both industries. But in order to thrive and show success with AI, financial institutions must have access to the data locked in technical and organisational silos. Therefore, building a clear data strategy, maintaining an open mind and recognising the potential of AI is the key to avoiding choppy waters in the future.
Grant Caley, CTO NetApp UK & Ireland