A Seemingly Gargantuan Ask for FSIs: Mixing Individualization, Compliance, and Lighting-Fast Speed in the Consumer Banking Equation

Cracks in the financial ecosystem can erode confidence and deter foreign institutional investment. Recent occurrences, particularly the collapse of three small to mid-sized US banks in March 2023, serve as a stark reminder of the banking sector’s vulnerability and underscore the criticality of risk management and regulatory oversight. This leaves no room for complacency, even in economies such as Singapore, which has long prided itself as a bastion of economic stability.

Today, Singapore ranks third on the Global Financial Centre Index 2023 - trailing only behind New York and London - and boasts the largest real estate investment trust (REIT) market in Asia Pacific, excluding Japan. While having a favorable regulatory landscape does help, Singapore’s overall competitiveness as a financial hub will mostly hinge on how well the financial services industry (FSI) addresses certain factors, including technology adoption and financial inclusion, to create economic value and opportunities.

We’ve said time and again that having a holistic digital transformation approach is critical in industries such as financial services, where change is constant. If the increasing demand for buy now pay later (BNPL) options and financial services embedded into popular platforms such as Grab is any indication, 
new customer dynamics necessitate FSIs to deliver services exactly when customers need them.

Innovation to illumine FSIs’ growth journey
FSIs must rise to the challenge of meeting the ever-increasing demands of consumers, who expect precise and secure transactions delivered at lightning speed. This task becomes even more daunting amid the sheer magnitude of data generated by different sources, ranging from transaction records to market activities. 

FSIs can explore various means to manage the overwhelming volume of data they encounter, and one of these is leveraging AI-powered automation. When implemented strategically, AI-powered automation can significantly enhance FSIs’ operational resilience.

When investors have confidence that their data and investments are secure, they are more likely to participate in the financial system, facilitating capital flows and economic growth. AI-powered automation can strengthen the integrity of financial systems, with robots automatically quarantining email threads and triggering remediation actions. Event-driven automation capabilities support FSIs with key threat detection and prevention functions, including potential threat triaging and vulnerability management.

AI algorithms excel in analyzing large datasets at incredible speeds and uncovering hidden correlations and patterns in workflows. Process mining capabilities can help identify gaps that cause lengthy customer service response times such as data entry errors, or missing documentation. Armed with insights on workflow bottlenecks, FSIs can better understand how they can optimize processes to delight customers. 

A plethora of customer preferences requires an individualized marketing approach
Separately, digital banking has transformed the customer experience, offering conveniences like conducting bill payments or fund transfers through smartphones, tablets, and laptops. But consumers’ expectations continue to rise as they seek more effective ways to manage their financial lives. They increasingly demand personalized interactions, high-quality service, and seamless experiences that are interconnected across various platforms.

In a highly relationship-driven business such as banking, negative experiences with a random chatbot, which may be incapable of identifying nuances of customer requests, can impact consumer trust. A recent study by Twilio revealed that 65% of consumers in Singapore are frustrated with digital interactions over the past year. AI-powered automation can help address this in a big way, streamlining customer journeys from the front office to the back office and eliminating bottlenecks caused by customer communication in contact centers. Software robots are capable of fetching data, posting information to relevant systems, and sending confirmations, all of which support chatbot interactions to ensure a seamless communication flow. Meanwhile, employees in FSIs can also benefit from utilizing the chatbot as a single window for instructing bots to pull information from dozens of applications without opening a single one. This helps drive swift response times and timely customer notifications. 

Beyond customer engagement, automation can prove to be valuable in processing requests, resolving credit card inquiries, and facilitating faster onboarding and account management. It can help analyze transactions and customer eligibility for fee reversals, reducing the burden on customer service representatives and ensuring faster resolutions. By automating the task of extracting and verifying data, financial services institutions can likewise benefit from reduced manual errors.

Cultivating Trust with Improved Compliance
Deep insights into customer data and behavior may give financial services institutions a leg up in driving hyper-personalized customer experiences that foster trust. However, maintaining consumer trust also entails compliance with ethical standards and local regulations, which keep on evolving. For instance, the Monetary Authority of Singapore (MAS) announced this year that the parliament has approved the Financial Services and Markets (Amended) Bill (FSM(A)B), a legal framework for financial services institutions to share information with customers in a bid to counter money laundering and financial crime risks. Sudden policy changes like these can pose challenges around resource capacity – and automation can give financial services institutions an added boost in this aspect to stay agile in a dynamic regulatory landscape. 

Given the increase in banking and insurance fraud, financial services need to pivot away from mere periodic controls and move towards always-on testing and fraud handling at all stages. Automating regulatory compliance processes across distributed systems can help improve risk profiles and optimize existing controls, ensuring better adherence to evolving policies.

Additionally, the advent of generative AI has shifted the spotlight on FSIs to assess how they can leverage this technology. Fortunately, financial institutions have already been using a combination of generative AI and automation to streamline the process of identifying suspicious transactions, leading to more efficient fraud detection and prevention.  The synergy of automation workflows and generative AI allows the automatic analysis of data such as transaction history and customer behavior in financial transactions. As anomalous transactions are automatically flagged, human analysts can already focus on verifying transactions and resolving fraudulent cases promptly. Bots can also automate the process of setting indicators in underlying applications to activate alerts in the future.

Ultimately, adapting the script to the new tempo dictated by the new digital economy is the only way for the financial services industry to move forward. From effective data compliance management to strengthened customer engagement, AI-powered automation can serve as a powerful ally that helps the industry foster success. But alongside new tools, the industry needs to prioritize democratizing information, access, and learning to realize continuous growth, operational agility, and sustainable digital transformation.

By Lee Hawksley, President for APJ, UiPath