Why Banks Need To Build Intelligent Digital Products

How to build a neo bank in the middle east

To be competitive in a fast evolving banking ecosystem, financial institutions must reinvent internal procedures and external consumer experiences. This will necessitate an end-to-end digital banking revolution, fuelled by data, artificial intelligence, applied analytics, cloud computing, and a workforce equipped to offer humanized digital solutions.

As transactions migrated out of branches, labour was done remotely, and clients wanted highly tailored experiences, the pandemic underscored the need for digital banking transformation more than ever. Financial institutions used to be able to obtain a competitive edge by having a larger distribution network and offering better prices. Leading banks and credit unions are now differentiating themselves by using data, artificial intelligence (AI), applied analytics, and cloud computing to innovate and offer tailored encounters in real time.

This more intelligent application of technology helps financial institutions to learn from and respond to changes in the marketplace or in consumer behaviour in ways that benefit both the financial institution and the client. When combined with the promise of Fifth Generation (5G) cellular, the outcome is a better client experience that delivers a competitive edge far beyond physical location, changing the financial services sector.

Read more: 8 Commercial Banking Trends in 2022

Intelligent banking firms will require cloud-computing infrastructures that enable the merging of data assets and AI algorithms to give greater quality, increased efficiency, seamless service delivery, proactive suggestions, and enhanced risk mitigation. While most businesses will start with internal data, the true strength will come from combining external data and insights, such as those obtained through open banking APIs.

Using AI and applied analytics in conjunction with sophisticated technology will enable current employees to take on higher-level jobs within the business, in addition to enhancing efficiency and improving decision-making. Banks and credit unions will be able to establish digital competence across the business by humanizing digital banking transformation, driving staff transformation.

Digital Banking Transformation in the Middle East
Key Technologies Banks Will Need in the Future

Intelligent Digital Transformation is Built on Data

Most digital banking transformation projects revolve around the capacity to gather and analyse both internal and external data in real time to generate real-time insights. Big data analytics insights may be utilized to improve decision-making, boost efficiency, improve customer experiences, and manage risks. The true power comes when whole business models are modified and possibilities for both the company and the consumer can be offered proactively, rather than merely leveraging data and insights for reporting and process optimization.

The quantity of data generated by mobile devices, transactions, and interactions grows as the number of devices, transactions, and interactions grows. This may either help businesses make more powerful decisions or cause them to get overwhelmed. While many people assume that more data is better, it is important to remember that data is meaningless without a well-thought-out plan for how it will be used in the end. For most businesses, this implies that it's probably best to start with data that's already accessible and optimize its utilization for better procedures, decision-making, and personalisation.

A good data governance program, quality data, and an awareness of both the data owners and consumers are required to manage the gathering and use of data. Any digital banking transformation project is jeopardized if there is a lack of trust in the data being utilized throughout the firm. Investing time and effort up front in data governance, sophisticated analytics, and machine learning will pay off handsomely in terms of higher efficiency, better customer experiences, and more income.

Read more: 4 Hyper Automation Benefits in Banking

The Use of AI in the Transformation of Digital Banking

Until recently, financial institutions largely employed AI for risk reduction and fraud detection. Most banks and credit unions were still in the discovery stage of AI in terms of marketing or customer experience development. Analysts were attempting to establish how AI and machine learning may be utilized to spot patterns and make predictions in both classic and new applications.

We are approaching the implementation phase of advanced analytics for many firms, implementing the insights from analysis to improve operations and improve customer experiences. According to Salesforce, 52% of consumers and 65% of corporate purchasers will switch brands if a company fails to understand their needs and customize messaging accordingly. Customers also don't want to supply information that is already accessible within an organization or have to repeat themselves when information is transmitted across departments.

Using data to enhance results is still a struggle. According to Forrester, obtaining and integrating big data is the largest issue for 53% of respondents, while building a predictive analytics platform is a strain for 52%. Both problems may be traced back to a lack of data strategy. This data strategy should concentrate on scaling insights to produce outcomes in areas where there are the most gaps and where data is readily available to address these possibilities.

Cloud Technology's Importance in Banking Transformation

The majority of financial services businesses, according to IBM, have yet to move their core systems to the cloud. The perceived level of complexity, as well as worries about security, risk, governance, and control, are among the causes. In reality, while 91% of financial institutions are using cloud services now or expect to do so in the next nine months, just 9% of their mission-critical regulated banking workloads have migrated to a public cloud environment on average. In other words, while all banks and credit unions realize the need to migrate to the cloud, the majority have yet to do so.

The potential to enable the use of big data analytics is one of the key reasons for embracing cloud computing. With the growing volume of structured and unstructured data available to banks and credit unions, cloud technology allows them to reap the benefits of applied analytics more quickly than ever before. For example, a financial institution can use transaction patterns to focus suggestions that help consumers improve their financial outcomes.

Organizations may blend public and private cloud resources in a hybrid cloud environment, giving them the freedom to choose the best cloud configuration for a given application or workload. The flexibility to migrate between the two clouds for R&D, product or operational testing, data backup, or more cloud capacity is also available.

Read more: The Advantages and Disadvantages of Cloud Computing

Banking Digital Transformation and 5G

From checking accounts to transferring cash to making payments, the bulk of everyday banking operations are now completed on a mobile device. Each of these encounters must be handled as efficiently as feasible. And each encounter yields information for future interactions.

By processing bigger amounts of data with little latency, 5G technology will not only make all interactions quicker, but it will also enable faster detection of engagement possibilities and more seamless implementation of solutions. This puts pressure on traditional banking institutions to keep up with fintech and huge tech corporations who are already using cloud computing and preparing for the 5G revolution.

Despite financial institutions' efforts to enhance the digital banking experience throughout the epidemic, many mobile banking apps still fail to deliver effective digital experiences owing to poor response times, friction, and the inability to use biometric authentication. Financial companies will be able to take use of 5G's increased speed and data capacity to provide improved customer experiences.

Finally, 5G lays the groundwork for improving real-time fraud protection. Processing data, verifying the nature of transactions, confirming transaction amounts and funds availability, consulting multiple data instances in real time, coupled with customer geolocation and merchant ID, will reduce fraud detection errors and false positives, protecting consumers and the bank's bottom line.

Sitech is a certified partner of Backbase, the leading engagement banking platform provider; and through our partnership we helped banks and financial institutions in the Middle East transform their digital banking experiences and infrastructure. We can help you validate, design, develop, and deliver your bank's new digital products and services faster than your competitors.

Need help? Work with Sitech today!