Evolving innovation strategies & AI

Financial institutions have been talking about digital transformation for at least a decade, but have they made the progress they hoped for? What is the state of AI in banking? Articles by Forbes and The Financial Brand as well as a video interview from Finextra provide up-to-date insights into these topics.

?? The Financial Brand: AI Advantages in Banking Grow, Adding Pressure for Broad Adoption

A core aspect of digital transformation is leveraging machines and analytics to provide solutions that are more sophisticated than those that can be created by humans alone. According to The Financial Brand, intelligent solutions for banks and credit unions enable "robotic process automation, advanced analytics and AI deployment across the organization". Based on a survey of "more than 200 financial services executives who were already using AI technology", three characteristics "have seen the best results from the perspective of financial returns":

1. Fully embedding AI into the corporate strategy: "[L]eading organizations embed advanced analytics as part of the overall strategic plan."
2. AI usage in other initiatives: "[T]he leading AI organizations are tracking how advanced analytics can be utilized for revenue and customer experience opportunities."
3. External support: "[L]eaders are leveraging outside partnerships that provide access to talent and solutions. This improves speed to market at a time when available talent is in short supply."

?? Forbes: What Changes Will Open Finance Bring For Businesses And Consumers?

Forbes invited payment service provider ECOMMPAY to discuss Open Finance and Open Banking: "Open finance is currently a hot topic in the world of fintech. The legislation and technology resulting from it could significantly disrupt the financial marketplace, creating an atmosphere of innovation and unlocking new opportunities for consumers and businesses alike." When it comes to these opportunities, "[o]ne recent study of 758 financial professionals and banks revealed that 85% of respondents felt open finance was making the industry more collaborative and having a positive impact. […] As open finance develops and fintech providers as well as traditional banks continue to explore its potential, opportunities will arise to build innovative products that leverage AI to access data in real time, creating hyper-targeted recommendations to consumers and offering smarter, more streamlined payment solutions that better fit the needs of niche or small businesses. As the landscape continues to evolve, traditional banks and their customers will also benefit, linking more apps and services to customer accounts, reasserting their role as the cornerstone of consumer financial life and improving loyalty and engagement."

?? FinextraTV: Evolving innovation strategies

Jennifer Peve, Head of Strategy at DTCC, joined FinextraTV for an interview about key trends emerging from discussions on digital transformation in the financial industry:

"Foundational to all the conversations is: What is the true driver of innovation? It actually isn't technology, it's client needs. And as we talk about some of what's happening in the industry today and some of the more emergent innovations and novel concepts out there, there's a huge focus on the fact that clients need resiliency, they need integrity and dependency in their solutions and their providers. [...] [A]s we develop Innovation (regardless of technology that underpins it), we are very focused on developing resilient market infrastructure, building on global standards having seamless connectivity that allows us to integrate and collaborate more effectively. [...] I think of all of those elements that deliver true client value, regardless of what your use case is. [...] [A]t the end of the day, we're all under a lot of cost pressures, we all have various priorities within our organizations, and we have to find the right use cases, the right innovations that drive value. That value sometimes can be small, it can be iterative, but it does need to be there. Otherwise, it makes it very difficult for clients to adopt new technologies more fulsomely."

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