The technology to significantly transform the native digital experiences of consumers of financial services

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Technology has played a crucial role in improving operational efficiency and transforming the products offered in the BFSI industry. With the rapid adoption of digital among the masses, industry players are now focusing on adding the “wow” factor to the digital experience. Mr. Jaideep Dhok, SVP & General Manager – Banking, Financial Services & Insurance at Persistent Systems, shares his thoughts on how the BFSI space is leveraging technologies like Metaverse to bring the first digital or digital-native experience to their consumers.

  1. What do you think the future of banking looks like, especially with the advent of things like Metaverse? Do you think this will radically transform the digital customer experience?

Metaverse is definitely a technology to watch in the financial services industry. While much attention is already being paid to digitizing the experiences and operations of financial service consumers, Metaverse can add value by further personalizing these interactions. For example, you (i.e. your avatar) walk into your bank branch (virtual avatar of it) and meet a familiar person across the counter in their digital avatar and converse as you would in real life for banking transactions. Even bank employees from various functions can interact with each other in Metaverse and the whole experience would be very different and digitally native. Customer service, especially for seniors who prefer face-to-face interaction but cannot visit a branch, can benefit from this experience. Traditionally, in-person interactions are totally different from the digital experience on web or mobile channels. The Metaverse brings a great fusion of the two.

It certainly sounds exciting, but there are a few challenges. The customer will need a VR headset to opt for Metaverse related services. Adoption is another challenge as it is uncomfortable to use a VR headset for longer. Additionally, security issues can be a barrier in terms of securely disclosing information through the avatar and where that information goes and resides. More importantly, it will take a very fresh perspective and start from scratch to think about customer experience in Metaverse and work backwards from there. Looking back, virtual avatars or robots at the front desk have low overall acceptance to date. In short, this technology is at a nascent stage, and we have to wait and watch how it progresses.

That said, there are ways to improve end-consumer digital experiences across all areas of financial services. While there is an element of “digital” in many common interactions, especially in the banking and insurance retail consumer space, we will see a lot more adoption of “digital first.” or even “digital only” in the future. Replicating the same in the corporate banking space is still a long way to go.

  1. What technologies are currently transforming the BFSI space and what trends do you predict for the future?

One of the main thrust areas we see is around the clouds. Banks have been among the latest to natively adopt the cloud. However, we are seeing a rapid recovery in the industry. There are data residency issues at the country level, but regulators in general are increasingly supportive of this, as long as the data resides in the respective countries. The cloud will allow financial services organizations to reduce costs and scale quickly. However, the key is smart cloud adoption and implementation and leveraging native capabilities. A simple lift and shift will only make the problem worse in the future.

Automation is another area that has now really penetrated the lengths and breadths of BFSI organizations, and we see this trend continuing. Automation tools (BPM, OCR, RPA, Rule Engine) are implemented end-to-end, from customer journeys to back-office and hybrid journeys.

Data has always been the epicenter of BFSI. With the advent of AI/ML, it now has a new dimension.

  1. How are data and analytics shaping the future of banking?

Traditionally, financial services analytics included the areas of customer segmentation, credit risk management, fraud detection, and more. outside of normal relationships. All of these areas now have the added power of artificial intelligence (AI) and machine learning (ML). The first to know. customer segmentation becomes an art. Most banks offered similar products in the physical world, this will mainly be the case in the coming years in the digital world. What can differentiate banks from each other is the precision with which they can segment their customers and, therefore, offer targeted products and services. Of course, to do this you need a very nimble core and a solid foundation of Application Programming Interface (API) approach that allows for a faster time-to-market strategy. Predicting the “next best move” is an emerging trend and we need to see its success rate improve dramatically. In the areas of fraud detection and credit risk (specifically probability of default estimation), we expect the “prediction” part to work to a large extent. Data has been touted as the game changer in this area. Even if, on a practical level, the story is not yet very encouraging. We hope that further improvements to AI and ML models will change that.

  1. What type of demand and changes are you seeing in the payments space? What types of technologies are transforming it?

Payment is one of the most dynamic areas of financial services at all levels. Digital payments have become a necessity for everyone due to the COVID-19 pandemic. India is a good example. With the help of excellent ready payment infrastructure, digital transactions have reached unprecedented levels in India very quickly. In the coming years, real-time payments will become the norm, while batch processing will take a significant back seat. Data, cloud and APIs will continue to dominate this transformation going forward.

Crypto is another hot area in this space. Technology is the main driver, but there has been some volatility from a business model perspective. We’ll love it or we’ll hate it, but we can’t ignore it because it continues to evolve.

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