Those in financial services have to think very differently about the world in the ‘fourth industrial revolution’.
That was the message from David Vander, General Manager of Microsoft Services, Asia Pacific, when speaking at the recent Indue Leadership Forum: The Art of Thinking Differently in Sydney about the move from the physical to cyberspace.
He outlined six trends that those in financial services need to have a point of view on.
Today, we have branches and call centres. In the future, there will be many more ways for your customers to interact with you – for example, through technology that picks up their touch, gestures, speech or identifies them through facial or iris scans or thumbprints.
The technology may one day also pick up tangible emotions and allow your exchange with the customer to change based on how he or she is feeling. You may even communicate with your customer via virtual reality, augmented reality and holograms.
However, Vander saw voice as the most interesting development in this area at present. Think of intelligent personal assistants like Siri (from Apple), Cortana (Microsoft), Alexa/Echo (Amazon), Google Voice and Facebook M. “Voice activation is a massive battleground right now,” he said, explaining how using voice linked to other technologies could lead to a host of different scenarios in how you interact with the customer.
Analytics offered financial service organisations the single biggest area for competitive advantage if they could do it better than it was already being done, said Vander.
It would help them to dig into their data in real time, pick up trends and make good decisions about how to react. “But you must look at analytics as a platform no matter what size of business you are and not as a single business intelligence dashboard. And you must consider public data,” said Vander.
Good use of analytics would enable companies to benefit from “next best offers”, event-based management, churn propensity, digital marketing and identifying new product opportunities, he added.
“This is a distributed database,” said Vander. “There is no one single version of it. There are multiple copies of it. All the data is encrypted. Data is recorded in a ledger and shared… But Blockchain is, in my opinion, largely a technology looking for a problem. Its business model is unclear at the moment. Nonetheless, it’s still important to be aware of it as there are some runaway activities with it – for example, Bitcoin.”
From a financial services perspective, he said Blockchain did offer real benefits – it was quite cheap, could reduce fraud and increase transparency, and it could be quite fast. But Blockchain also raised two issues: Who was its ultimate authority? It doesn’t currently have one. Also, who would you sue if things went wrong?
Application programming interface (APIs)/Bots
APIs allow an app to interface with another in a secure manner. Although APIs have been around for many years, new banking APIs, such Figo, TreasuryView, IBAN Check, Zillow and Dwolla, were emerging.
“In banking and financial services, we’ve seen many companies open up their back-end systems and publish APIs, thus allowing other companies to build value on top on that,” said Vander. This, he said, could be very good for banks because they could get a lot of transaction volume. It could also be very bad for banks because of the potential to disintermediate the customer.
Vander predicted that Bots, a conversational access to an application, combined with voice activation and intelligent personal assistants, would be very big in the future. This would be next wave of productivity and offered many opportunities to those in financial services, he said.
This is the practice of using a network of remote servers hosted on the Internet to store, manage, and process your data. It quick to set up, you only pay for what you use, there are no maintenance fees, it’s constantly improving and it’s more secure than whatever your team could build, said Vander.
“If you are small, you should only be thinking cloud,” he added, noting that financial services were moving faster than any other sector towards the cloud.
Internet of Things (IoT)
This is the network of physical devices, gadgets, cars, buildings and facilities, embedded with electronics, software, sensors and network connectivity that enables them to collect and exchange data. It’s an area that is going gangbusters in terms of scenarios and ideas in financial services, said Vander.