Jeanne Pinder_resized
Jeanne Pinder Jul 18, 2019

Getting real with digital innovation

To be certain, artificial intelligence remains a technology that will change the face of banking forever. But let’s face it: Some hoped-for innovations (such as real-time marketing hyper-targeted to a single person) are still in development, while sophisticated chatbots such as Bank of America’s Erica are far from commonplace.

Thus, financial institutions need to grapple with pressing matters that take precedence over the “shiny new toy” talk. The good news here is that yes, AI has made some inroads—even as banking leaders make a concerted effort to find real digital innovation right now and apply it.

Here, industry experts weigh in on five areas where they see they see digital innovation in action.

1. Straight Through Processing

“Digitizing processes such as loan originations has a huge impact on a bank. We have worked with one of the four major Australian banks that has reduced the time to fund a mortgage from 90 days to 4.9 days. We’re doing the same in areas such as small business lending. This drives huge costs out of the bank and eliminates non-value-add costs. We are getting to true ‘Straight Through Processing’—an industry goal that had been elusive.

“The days of banks owning and running large data centers are over.  All banks are looking at moving functions out of their data centers and into the cloud. It’s driven by the desire to reduce the physical cost of infrastructure as well as the costs of running, maintaining, and enhancing applications. … They understand the business they are in, and it’s not building software.”

Mark Atherton, group vice president at Oracle’s financial services business unit in the Americas

2. Enhanced branch cybersecurity

“In the age of smartphones and growing technology, behavior that seems normal and harmless can cause trouble for banks. If people take photos on their phone in or around a branch and then post online, it can alert criminals to the layout and design of a branch. For this reason, most banks do not allow cell phone use in their branches. Another situation that occurs is when an employee sends what they see as a harmless message to a friend regarding the pickup or dropoff of cash, such as, 'Steve from high school delivered our cash today. I haven’t seen him in ages!' This gives out the branch’s cash delivery and pickup date, leaving the branch vulnerable.”

Noreen Brancaccio, vice president BSA compliance and security officer, Tompkins Mahopac Bank

3. Robotic process automation (RPA)

“Some use cases have revolved around utilizing RPA for automating manual processes such as account opening and case management workflows, which rely heavily on manual inputs. We’ll start to see more adoption of RPA as bigger banks implement and share the technology with smaller community banks that don’t currently have the resources or appetite to create pilot programs. We expect to see increased adoption to help financial institutions combat money laundering and comply with related regulations.”

Jason Chorlins, banking practice co-leader, risk advisory services practice, Kaufman Rossin & Co.

“If a customer reports their debit card lost, the RPA process can automatically cancel the old card and issue a new card seamlessly and quickly, which is an important customer experience. Instead of toggling from screen to screen, customer service teams can use smooth-flowing automated process that focus on the customer interaction or allow customers to interact quickly on their banking app. They can initiate a request and have automation take it from there.”

Mary Ann Miller, head of fraud strategy, Varo Money

4. Real-time payments

“With the Amazon era of shopping in full effect there’s an increase in consumer expectation regarding the execution of real-time payments and transactions in a smart and predictive way. The majority of consumers view their bank as the primary method to control the movement of their money. Banks need to ensure they leverage technology that allows them to meet and exceed these consumer expectations in a way that’s familiar to them. This said, we see a tremendous amount of growth in fintech partnerships with payments and money movement companies developing new and innovative ways to execute transactions via desktop, mobile and voice interfaces such as Google Home and Amazon Alexa.”

Peter Longo, vice president of digital banking, Axiom Bank

5. Consumer-controlled online data stores

Solid, the brainchild of World Wide Web inventor Tim Berners-Lee, may represent the most significant innovation in digital banking at present.

Solid knocks down data silos in two ways: First, customers store data from each service line onto a personal online data store (POD) and share access, as needed, reducing institutional liability. Then, Solid’s “instant data integration” allows banks to easily create applications that span service line data, generating new value possibilities.

“Banks have long dreamed of having authorized access to unified data stores controlled by consumers. But security and privacy concerns have forced data into institutional silos that block banks from realizing the full value of this data."

“Imagine refinancing your home by simply providing five lenders access to your ‘finance POD.’ Rather than hunting for the best rate by uploading documents to multiple systems, the competing lenders now review everything needed in one place to generate their best quote. Once selected you rescind access to everyone else, and enjoy your new low rate.”

Jonathan Bingham, CEO, Janiero Digital, a business transformation and technology consultancy.

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Jeanne Pinder is the founder of ClearHealthCosts.com. She was an editor, reporter and human resources executive at The New York Times for close to 25 years, and has also worked at the Des Moines Register, Associated Press and Grinnell Herald-Register.

For more articles like this, check out our recent executive report: Banking's digital transformation.

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