The Debate Is Over: Fintech Has Won

By Aaron Lazor

For the past several years there has been an internal debate within the global banking industry regarding the efficacy of migrating to fintech, the next generation of automated solutions that incorporate new technologies, such as artificial intelligence. The debate is now officially over. Fintech has won.

That’s the obvious conclusion to be drawn from data recently released by the deVere Group, one of the world’s preeminent financial advisory firms. Having polled bank customers in Europe, Asia, Africa, Latin America, and Oceania, deVere found that some 55 percent of them acknowledged that they already use fintech solutions to access and manage their accounts.

That being the case, there’s no going back. Fintech is here, it works and it’s being warmly received by bank customers. Bank executives will inevitably respond to this new reality by accelerating their roll out of additional fintech solutions in order to compete in an open market increasingly characterized by competition from digital currencies, so-called “challenger banks.”

Of course, accessing and managing accounts is only the beginning. The ease that provides consumers is significant to be sure, but it only scratches the surface of the changes that fintech will bring to banking. Fintech will drastically upgrade customer service throughout the banking infrastructure.

A Case Study: Dispute Resolution

Take, for example, the credit card dispute resolution process. If you purchase goods or services that are not provided by the merchant as ordered, you can apply for a chargeback with the bank that issued you the card. By all accounts, the dispute resolution process is regarded by most cardholders who have endured it as agonizing, bureaucratic and subjective. The reason is that unlike so many other bank procedures, the technology used in dispute processing hasn’t been upgraded in decades. Moreover, it is largely handled manually. The dispute’s outcome depends entirely on the bank employee who handles the case.

Finscend has documented repeated cases, for example, of two identical chargeback requests regarding the same type of purchase from the same merchant filed by the same cardholder at the same bank handled by two different dispute representatives. Yet one is approved and the other is rejected. The only explanation for such erratic decision making is that the decision making is not based on the documentary evidence alone but is also subject to the whim of a single individual.

Introducing Artificial Intelligence

That’s why we at Finscend decided to develop a fintech solution for dispute resolution that would revamp the entire process from A to Z. The result was our unique Bank Dispute Platform (BDP), powered by artificial intelligence (AI), which objectifies procedures by removing the human element from the equation. The AI engine utilizes hundreds of data points and variables to produce a score that indicates an appropriate action  ? for example, whether the dispute should be raised or denied. BDP integrates seamlessly with the bank’s existing ecosystem. Moreover, many AI engine variables can be configured to meet the specific requirements of the bank.

As a result, dispute resolution time can be cut in half. That alone will amaze cardholders and certainly improve customer satisfaction, a critical element in guaranteeing any bank’s standing in today’s market.

No less important, however, is that BDP will also slash bank operating expenses. Worldwide, the financial service industry currently spends an estimated $15 billion annually in order to resolve as much as $65 billion in credit card disputes. Much of the cost results from inefficiencies, fraud and abuse. These problems can be mitigated by the deep analytics generated by the AI engine. By animating obsolete technology and manual methodology, we estimate that BDP can reduce costs by at least $4 billion.

And that’s just what we can do. All told, there are more than 12,000 fintech start-ups worldwide. Banking as we’ve come to know it is about to undergo a major transformation.

Aaron Lazor is the CEO and co-founder of Finscend Ltd.