How AI is driving Fintech collaboration

AI is changing the way customers interact with their banks, through chatbots and intelligent voice services

Ian Hawkins

AI isn’t new, but it’s taking the banking industry by storm

In the last year or two, banking has been changing the way customers interact with their banks, through chatbots and intelligent voice services, and it also boasts a number of benefits for institutions looking to deliver their customers better and more tailored products.

For a glimpse into the AI future, look no further than Sophia, an AI-powered robot, created by Hanson Robotics, who spoke at Finastra’s regional flagship conference last year. Is this what we can expect from our banks in the future?

I sat down with Martin Häring, Chief Marketing Officer at Finastra, to ask w
hat challenges are banks facing today, and whether they are they ready to capitalise on the potential of AI?

Martin: Over the years, banks have invested in best-of-breed software which hasn’t been as chatty as Sophia. By that I mean, we often see banks challenged by siloed software systems which don’t connect well with each other and can’t ‘speak’ across business divisions.

So, when you ask your consultant in a branch whether they have a 360⁰ view of your accounts – mortgage, savings, insurance, microloans and so on – the chances are that they won’t. The data often resides in separate locations across the bank. This is where artificial intelligence now plays a huge role, because once you have connected all the banking systems and data, AI is able to overcome this connectivity problem. When the bank can see, for example, that I have an investment portfolio, three insurance policies, two current accounts, and one savings account, the power of the AI algorithm can offer all kinds of consultative benefits.

We've discussed AI in fintech before: 
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It might recommend products to me based on my use of my current account. The smartest banks will build in even more publicly available data from social media profiles. Using this, they could then call me to say, 'I see your daughter is approaching her 18th birthday. Would you like a loan to buy her a car?' These tailored offers deliver a better customer experience and move the conversation from transactional to consultative.

PEX: Why is it important for banks to move beyond silos to take advantage of AI?

Martin: This technology has potential, but not if businesses continue to run as they have in the past. Information has been siloed (think of our branch consultant above). This not only impacts the customer experience but hampers internal, back-office processes too.

As well as helping banks to provide a better customer service with chatbots (Sophia might be a step too far at this stage for most banks), AI can help organisations to drive efficiencies in the back end and, as outlined above, better harness data.

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Breaking down the barriers to dialogue between systems is not just a technology issue – it’s a cultural issue too.

To counter this, and to help banks prepare for the future, our strategy is to open our systems and technology stack, encouraging innovation and the building on top of our software with the help of open APIs. And what is it they say about culture eating strategy for breakfast? If the culture is not supporting the strategy, the strategy will fail.

PEX: Do you have examples of how AI and pattern recognition might help banks?

Martin: Finastra has created a product called Detect. It uses machine learning to identify trading errors in capital markets and accelerate trade validation by understanding patterns and user behaviors. It tackles the issue of erroneous trades at the source, before they can go through the entire post-trade process. For instance, it can show patterns that should be investigated for money laundering or where a trader has made a ‘fat finger’ error submitting 100,000 trades rather than 10,000.

PEX: Tell me more about Finastra and the work you’re doing with your platform.

Martin: We combined D+H and Misys to form Finastra a year ago. We’ve spent the first year introducing a new cultural shift in the company, cementing our brand and moving towards a platform-centric vision. We’ve introduced a completely new way of thinking which changes how we approach the market, how we want to be seen in the market and how we drive innovation from a cultural perspective.

We’ve pushed much more responsibility into development areas. We thought about how to make outside thinkers a part of our innovation strategy. Rather than coming up with ideas for features, and throwing them over the wall to marketing, we looked outwards. Our customers told us what they want and now we are building solutions based on this.

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If we see that customer demand cannot be matched by a technology that we built, we collaborate with a Fintech. We’ve screened the market; there are some smart people out there, and we can plug this innovation into our big bank infrastructure. Suddenly that Fintech is selling to our 9,000 clients on the back end. This kind of outside-in thinking and outside-in innovation is something we’ve introduced into Finastra. It's not finished and will take a bit of time, but as with every change process in a company, it doesn't come overnight.

PEX: So how would this work in practice?

Martin: Think of the iOS platform and all the apps which sit on top of that. The long tail of tens of thousands of apps are all open to the market, though Apple still owns things like Mail and Calendar. We are following the same model with FusionCreator is a low-code development environment in which anyone can create applications. With FusionOperate, the apps are distributed into the cloud and can be sold through the FusionStore.

Users can now go to this store, look at the financial applications, buy them and run them on the Finastra back-end infrastructure. Our concept? To be the number one platform for open innovation in the world of financial services, which is very different from where we were five years ago.

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We have a major vision. We want to unlock the potential of people and businesses for end consumers. This means we want to provide you with applications that give more freedom, more intelligence and more innovation to shape your own future. We are also unlocking the potential of businesses by giving them more transparency, reducing risk and presenting an open platform for collaboration.

PEX: What do banks need to do going forward?

Martin: Banks have had to radically change the way they think about themselves and, as a company, we have been part of that story.

New customers expect banks to behave more like a power outlet. Do you know who’s providing the power? No, you just plug in.

We all just want the lights to come on when we press the switch, and we don’t care who makes the energy. We want it to work in the way we expect it to, when we expect it. And people are already beginning to look at their financial products in exactly the same way.

In order to stay relevant, banks must embrace open innovation and harness tools like AI to make the most of their data and create efficiencies; from supporting back-office processes to better knowing a customer’s behaviour to support tailored offerings and being able to deliver a slicker customer service.

Hungry for more PEX? Check out the video below!