Banking & Financial Services Reinvented - Cognizant
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Banking & Financial Services Reinvented Learn how AI can play an important role in staying relevant and how you can seize business opportunities by applying digital technologies. The banking & financial services industry has been heavily impacted by the digital developments of the last decade. Read what the future will bring for your industry to cope with digital transformation & innovation.
An External A View by New Challenges
Perspective by Cognizant’s and Questions
The future of banking & financial Futurist and Trend- Center for the
services offers a world of opportunities, watcher Tony Bosma Future of Work
but this transformation will require
substantial steps and boldness. The
industry needs to be open to new
10
insights instead of being mentally
closed by the existing ones. 4 8 Embracing Hyper-
Personalization in
Banking & Financial
Services
18
Each industry has its own challenges, and digital disruption is everywhere.
Organizations must be agile and build new momentum that respects the new
Harness the The Future of AI in
reality of their industry. Remaining relevant requires adaptation to changes not Transformative Banking & Financial
only today, but also tomorrow. Change is the only constant. Constant change
demands scenario-based thinking, exploring several paths and crafting a digital Power of AI Services
strategy based on preparing for the future. For businesses to stay relevant, they
need to explore the future and look at next generations.
No one can predict the future; organizations must actively explore various
possible futures to anticipate what disruptions are coming. We believe that Key
future winners in the digital economy will be those that can deliver on one key
insight: put technology in the background, and focus on people first. Putting Take-Aways
customers first does not diminish technology’s importance; rather, a deep
customer understanding should help guide the choice of which technologies to
incorporate in your business.
12 16 23
Cognizant can bring together digital strategy, deep industry knowledge, human
sciences, experience design and technology expertise to help companies
design, build and scale digital business solutions. Cognizant has both expertise
and experience with digital transformation. Together with clients, we can explore
tomorrow’s opportunities.
02 Banking & Financial Services Reinvented 03
An External Perspective
by Futurist & Trendwatcher
Tony Bosma
Banking &
Financial
Services
Tony Bosma (1973) is a futurist and trendwatcher.
He is the founder of futuring and consultancy
Reinvented
organization Extend Limits (www.extendlimits.nl). Of any industry, banking & financial services has
Extend Limits does not predict the future but helps
organizations anticipate it. Do not ask yourself why been the one most heavily impacted by the
things are happening. Ask yourself, “Why hasn’t
it happened yet?” This is the mindset companies
digital developments of the last decade. For these
need to adopt in this era of change. businesses, their role, image, organizational In 1994, Bill Gates famously equated banks with dinosaurs. But relevant change. What trends and developments will shape the
apparently, the dinosaurs are stronger than most of us thought future of financial services?
Tony Bosma is an authority in future thinking structures, customer relationships and competitive because decades later, financial institutions are still the biggest
and trendwatching and was nominated in The organizations on earth. At the start of the 21st century, the Disaggregation of the Financial Value Chain
environments have been shattered. New regulatory
Netherlands several times for trendwatcher of the emergence of start-ups suggested the era of disruption for Banks are looking to transform themselves into platforms of
year. He is an internationally renowned keynote frameworks have been introduced and put into place. financial institutions was in full force, but nearly 20 years later, services to remain relevant in the lives of their customers. For
speaker. He is known for his confronting, inspiring, this appears only partially true. Of the top 10 organizations this, their mindset and organizational structure needs to shift
visually attractive and surprising sessions about a
But still, the new normal has yet to completely settle listed in the 2018 Forbes Global 2000, banks remain dominant. toward a diverse ecosystem with fast-changing and hyper-
wide variety of topics. He also works for a variety in. Are financial institutions able to cope with all the In an era of promised technological disruption, banking seems personalized contact, products and services. These new value
of companies and governments, helping them to remain the steadiest industry on the planet. networks will appear to compete with financial services
anticipate the future and, more importantly, transformational forces surrounding them? Or will organizations’ own channels. As the financial services landscape
challenge and question today’s world and mindset. At the same time, ongoing technological progress and its becomes a highly sophisticated marketplace, steered by smart
these once seemingly indomitable institutions - these
perpetual adoption by consumers is forcing a reformation of the and adaptive technologies, financial institutions like banks
In collaboration with Cognizant, Tony Bosma did former societal beacons of trust and stability - be essential elements of financial services. In this new world, it’s not themselves will reshape to become more like high-tech
extensive research into near future trends across so much about long-term vision but about the ability to anticipate companies.
industries. Together with Cognizant, he made replaced by something else as they find it impossible
abstracts of the most dominant developments - to change their established financial procedures,
“Disruption
not far fetched futuristic worldviews - but realistic
developments which are seen right now. These are structures and, most of all, mindsets? No matter what will not be a one-time event, rather a
continuous pressure to innovate that will shape
not only plausible future developments but also
the challenges of technological developments.
happens, one thing is clear: The future of banking &
financial services will be transformed. A world of customer behaviors, business models, and the
opportunity stands at the ready, requiring substantial
change, a bold mentality and a willingness to be open
to new insights.
long-term structure of the financial services industry.
World Economic Forum “
04 Banking & Financial Services Reinvented 05
A Future Beyond
Financial Servicing
With changing financial services ecosystems, the services these Elements such as data accessibility, lifestyles and loyalty will be
organizations offer will change accordingly. As agile new entrants factored into real-time decision-making processes on the price
insert themselves between financial services institutions and customers pay for goods and services. For this to succeed, there
customers, and raise service expectations by providing services needs to be a high level of trust in the systems and technologies
that enhance the financial and even non-financial customer involved.
experience, there’s some fear that traditional institutions will lose
ownership of the customer relationship. The future winners in With technologies like blockchain, institutions are no longer
finance are likely to be those that control the customer the mediators of control, transactions and trust, as these
interaction, while those that don’t risk becoming utility players at mechanisms are embedded within the technology itself. The
the end of the ecosystem. role of intermediaries will be reinvented and even become
obsolete as trusted transactions can take place among anyone,
But traditional organizations can become key players at the including parties with no prior relationship.
center of a customer’s life because of their access to enormous
amounts of valuable customer data, from buying histories to It’s vital, however, to remember that the future of finance and With AI, banks will be able to more accurately forecast the future,
lending information to travel data and even medical information. trust hinges less on technology and more on the reality of the automate processes and minimize unnecessary human
Even with new regulations about data ownership, financial regulatory environment and the mechanisms used in future interaction. Technology will help banks intensify the human
institutions are well positioned to become highly personalized business models of finance. The more transparent and relationship with its customers. Ultimately, technology could
data brokers in customers’ lives, even beyond financial services, meaningful these business models become, the more societal help remove human bias from decisions and transactions and
“ The
and play a much bigger role in tomorrow’s society. In this context, trust will increase. The financial services industry will need to possibly enable financing to become completely democratized.
rebuilding trust is key to a bright future of finance. future winners in embrace the goals of the customer rather than focus on being a
finance are likely to be powerhouse of profit and growth.
“ R200,000
Regaining Trust Through Digital
As financial services integrate more and more seamlessly with
those that control the Smart and Prescriptive Financing
obots will eliminate
“
consumers’ lifestyles and devices, organizations will be able to Artificial intelligence (AI) will become mainstream in the financial
calculate personalized value analyses. customer interaction. services industry. Even beyond the use of AI to enhance customer jobs in the
experience, the technology will be applied to analyzing customer
banking industry within
“
behavior to minimize risk, detect fraud and recommend relevant
products and services. Continuously fed with data, AI-powered
bots will be available 24/7 and increase in intelligence to gain
the next 10 years.
consumer trust. Wells Fargo
06 Banking & Financial Services Reinvented 07
A view by Cognizant’s Center for the Future of Work
Meet the Customer
of the Future
“ Ultimately,
The Customer of the Future
It’s no secret that banks and financial services institutions have our finance
taken a few major hits in recent years, from the 2008 financial
crisis to the hacking of numerous banks and customer data
institutions could
over the last two years. Banks are working to regain customer become a seamless part
trust and remain relevant for the future. But “relevant” will look
quite different five or 10 years from now. of people’s lives, which
Today, banks are using a multi-channel approach to reach
are seldom noticed but
customers. From web banking to mobile phone payments, and always there. This could
The Future of Finance is Human
from self-service kiosks to videoconferencing, financial institutions
well become the norm in
“
are striving to keep up with the increasing pace of change. But And trust is what it’s all about. So before financial institutions
more changes are coming, and with the number of brick-and- the next five years. design the seamless financial services of tomorrow, they are Quick take
mortar bank buildings already dwindling, it’s becoming clear that
the most relevant banks of the future won’t be banks at all.
best served to spend their time and talent working on ironclad
security. Just as the giant vault in the brick-and-mortar bank
Post COVID-19 Impact
Fewer Bricks, More Weight gave a customer peace of mind in the 1920s, the data vault that
A Cashless, Bank-less Future As everyday activities become more on-demand, customers financial services can develop will give peace of mind to the Banks came into the coronavirus pandemic much
Today’s consumers are looking to simplify and streamline their will seek solutions that fully integrate everything into a single, customer of the 2020s. And then, true service and integrated stronger than they went into the global financial crisis, but
financial interactions, and banks that serve these desires will multi-purpose platform. They will expect a one-stop app that connection can begin. With a blend of artificial intelligence (AI) to the impact from the coming economic decline could still
gain their trust and respect. The influence of digital natives is manages money, credit, insurance, income and expenditures in a handle fraud mitigation, greater security through PKI encryption severely stress the majority of the banking industry.
enlightening people to the possibilities of mobile transactions, and simple, streamlined way. Multi-purpose apps such as WeChat are and immutable records and audit trails via blockchain, the data
services like WeChat and Amazon Go are capturing the attention already the norm in China, and incumbent banks in Europe are vault can be locked up tighter than a drum. However, there is a silver lining, this crisis could well prove
of millennials on the go. They love the high-tech, no-hassle taking note. These banks are looking to integrate multiple facets to be the push needed for banks to pull the plug on
convenience of having everything in one place, with seamless of the customer lifecycle, from rewards programs with retailers Customers will share their data as long as it benefits them wide scale digital rollouts. From chatbots to preemptive
connection to their finances. They love having as much of their to power of attorney change, all available from one application. directly in the form of personalized service and customized highly personalized financing, banks will now need to
lives stored in their phones as possible. And they’re not so crazy Given the tremendous amount that banks currently know about advice. And as banks integrate with other service providers like utilize an increasing number of digital technologies to
about that bulky wallet messing up the silhouette of their skinny their customers and their spending habits, they can become the insurance companies, retirement funds, healthcare providers, cope with demand, boost revenues and deal with a
jeans. It only makes sense for financial institutions to focus on central cog in an increasingly complex network of services and retail chains and more, they will take on an increasingly important remote workforce. The banking customer of 2025 will
technology, partnerships and services that make finance as simple, applications designed specifically to meet customers’ needs. role in customers’ lives. Ultimately, banks could very well own expect a fully personalized digital experience and the
convenient and streamlined as it can be. This is already playing out, the single platform that links numerous industries. Soon, AI- COVID pandemic could well be the catalyst to make
with incumbent banks partnering with fintechs to drive improved As customers move through life, they can be continuously enabled services will be able to predict customer behavior and that happen.
customer service. An example is Santander partnering with Ripple contacted with advice, options and realistic choices for the best anticipate their financial needs. For example, maybe John would
to develop a blockchain-enabled payment system. way to spend and make money, such as which data exchange to automatically get finance options on the car he test-drove,
list their personal data on that day or which supermarket has the and as soon as he bought it, the best insurance deal would be
How far will it go? Think of cashless societies, boundary-less best price on commonly consumed items. The application can preemptively pinged to his phone.
payments and preemptive finance when we most need it. work as both an enabler and a monitor.
08 Banking & Financial Services Reinvented 09
“
Banking &
Financial Services We’re moving further
into a financial world
Reinvented
New Challenges
and Questions where technology
While a digital-driven utopian financial
future is the promise, what is the reality?
Amid all the digital opportunities, are we
controls technology. “
addressing the real problems faced by the
financial services industry? Are our financial
Even amid today’s higher trade barriers and growing financial Ethical questions also arise in the regulatory realm. As control
services institutions focusing on real human
protectionism, the future of financial services will be based on over regulations and procedures becomes increasingly
needs? Are they dedicated to supporting global interconnectedness and a tight-knit digital network technology-driven, we’re moving further into a financial world
between countries, businesses and individuals. A decentralized where technology controls technology. With this approach, it’s
economic, social and environmental impact but still interconnected approach could increase susceptibility to vital for humans to understand the autonomous processes and
risk, making regulation and crisis management tools ever more steps taken by technology. The biggest ethical dilemma of the
and adopting a mindset of not just doing important as new technologies become the basis of our lives. near financial future is who will be in control: technology or
less bad but doing only good? humans. This is especially important in an increasingly complex
Digital-driven financial services in an interconnected smart world world in which humans are challenged to understand the
will raise the question about financial surveillance. We are decisions made by technology, especially technology that’s
handing over more rich data to our financial institutions than ever becoming more capable of self-learning and increasingly
before. Most of us are completely unaware of what this data is situationally aware and responsive.
Let us not forget that financing and money can be one of used for. In addition to privacy concerns, other issues loom: what
the most powerful forms of democracy and a force for good. about financial organizations influencing our decision making The future of technology in finance will be about answering
Will our financial services institutions in the future be even process? What about real-time risk scores? Is technology ethical questions, enabling transparency and explainability,
more disconnected from customers and society than ever reducing the autonomy of financial services customers? What is reducing complexity and adding humanity. The industry needs
- unreachable digital monopolies programming the world’s the leading purpose of the data being collected by financial to ensure the decisions made by technology are unbiased and
financial future? It’s the big question of this era: Ethics or services organizations? that the inner-workings of the supporting algorithms are
innovative financial technology, which comes first? transparent.
With increased robotic process automation, other concerns
People today are more aware about how they spend their money arise around the use of algorithms. There’s the ethical question The industry will need to emphasize the human and emotional
and how it is invested – with every euro/dollar they spend, people of who’s responsible for the decisions and actions of these side of finance and the ever-important human connection
vote for the world they want to see. Financial services institutions algorithms. Do financial services institutions and customers in financial decision-making. The goal is to create customer
need to embrace this mindset and earn a reputation for working understand how the choices and decisions of robotic advice are experiences facilitated by machines and intensified by humans.
to build a better world for future generations and support social derived? The interconnectedness of financial services toward
cohesion. Worldwide, the industry needs to reset its vision on frictionless experiences could effectively minimize the ethics in
economic growth and rethink its definitions of progress and the buying process.
value.
10 Banking & Financial Services Reinvented 11
Harness the
Transformative
Power of AI
Artificial Intelligence becomes the engine of our new world. It is the artificial pillar and backbone
of our lives and in our societies. An engine that enables us humans to rebuild the world we have
become so accustomed to. A world in which we all become data-generating entities just by
living our lives. Everything we do, the places we are and the connections we make transform into
data. All this data will be used and analyzed to gain insights and enhance our individual lives. It
“
Algorithms help define our governments’ policies. Future smart
will be magnified to predict hyper-personal forecasts and insights. It will allow us to transform
societies for the good and the better, but it will also put us humans to the test. Will we use the
88% of Europeans machines are transforming into an all-knowing interconnected
neural network, of which decisions made and influenced by
power of data and AI for personal gain or will we be able to share it with the whole world?
believe that AI should be machines are harder to understand.
Will we be able to use the transformative power of technology to truly enhance humanity?
‘carefully managed’ on Trust in a World of Fake and Bias
the basis of its potential AI is becoming so sophisticated in the upcoming years that we
are entering an era where we cannot trust our own eyes and ears
to result in harmful anymore. AI blurs the line between real and virtual humans and
societal outcomes.
“
dissolves into society as a ubiquitous force. Concerns rise about
Data and AI are already rapidly transforming all industries and Reimagine the Past how the enormous advances of AI affect what it means to
dominating our personal lives. They are altering the world and The development of AI goes way back to the first half of the 20th European Commission, 2020 inherently be human and live in a world where machines have
raising important questions for society, economy and governments. century. AI research, as a scientific discipline, was founded become such an important part of our lives and fake has become
While they offer bounds of opportunity, there is also a growing in 1956 at Dartmouth College. From that moment, experts so realistic; a world where fake is the new real. What does it mean
necessity to discuss the morality of the future of AI. We live and philosophers imagined a world of intelligent humanlike to live in a world where machines nudge us towards healthier and
in a liquid digital world where change has become the new normal. machines. It even became a popular subject for movies and safer lives? What about the exercise of free will and existence of
Adaptability must become the norm for companies, governments television shows; at the time, most of them were considered A Once Unimaginable Future privacy? The biggest risks of smart cities is that we dissolve
and individuals, and data and AI will provide the tools and information scary. Fast forward to the 21st century and we have entered an In the year 2020, algorithms help humanity fight the global humanity and unlearn to live in a world where risks and uncertainty
to adapt to these changing environments. AI is developing to be era where machines and humans are merging. AI has become pandemic by developing treatments and making physical are also a beautiful and essential part of human life. AI and the
our greatest friend and foe; a digital tool that will change what so sophisticated that it is becoming more difficult to see the contact unnecessary. Algorithms develop the first vaccines. AI ‘datafied’ society bring us unprecedented opportunity but also
it means to be human in the near future and drive business. difference between machines and humans. The technology decides between life and death by predicting time in intensive demand to think about the future society we are creating with
evolved from science fiction visions and robots to self-learning care units and survival rate. Algorithms used by fire departments every AI tool we bring into use. We need to put ethics at the
and evolving machines involved in every aspect of our lives. AI optimize medical emergency responses. Banking algorithms center of every technological development.
“
may even try to mimic the human brain and eventually excel it in predict the possibility of fraud and detect lies in our voices.
Machine learning is the far future, though this stage of resemblance to human-level
AI is still many major scientific breakthroughs away.
Algorithms analyzing our lifestyles effect our insurance
premiums. Autonomous systems redefine the transportation
AI and Its Compelling Myths
Looking at the enormous investments, promises and stories
the last invention
“
sector, and AI systems enable retail to become fully predictive, about AI, we must also be realistic about the truth behind these
for mankind. “Predictions: By 2026 AI will be capable of writing school essays
and by 2049 the next Stephen King; by 2027 self-driving trucks
personalized, and adapting. AI develops our future products
and helps us get over a recession. Our cities become smart
visions and headlines. There is no denying that AI is still in its
infancy and isn’t able to really understand the purpose it is used
Swedish philosopher will become possible and by 2031 AI will outperform humans in and houses anticipate our desires. Preventative algorithms for yet. So how intelligent is AI? Maybe it is more realistic to name
Nick Bostrom the retail sector. By 2137, all human jobs will be automated.” transform security from reactive to preventative by analyzing it “machine thinking” so there is no link with any kind of human
(Oxford University’s Future of Humanity Institute, AI survey: people likely to become future perpetrators. AI is involved in intelligence? In today’s world, we humans are much more like
When Will AI Exceed Human Performance?, under 352 AI every decision we make and customizes products and services. machines: using our unique intelligence for things machines can
experts) Even a product connected to electricity is has AI in it nowadays. do better. So in fact, the biggest risk is not that machines are
12 Banking & Financial Services Reinvented 13
Real-Life
Cases
Virtual Humans = Lifelike
Probably the most known virtual influencer is Lil Miquela. She
has more than 3 million followers and acts as an influencer for
several brands, all while being fully digital. Today’s human
models are concerned about their virtual counterparts. The
future of Computer Generated Supermodels like Shudu
(www.instagram.com/shudu.gram/) and Imma (www.
instagram.com/imma.gram/) will be the first examples of
“ Predictions: By 2026 AI will be capable of writing school virtual humans that will transform society.
essays and by 2049 the next Stephen King; by 2027 The Diigitals
Works with fully digital models who look like real humans.
self-driving trucks will become possible and by 2031 www.thediigitals.com/models
AI will outperform humans in the retail sector. By 2137,
“
CitizenMe
all human jobs will be automated. Take back control of your digital self. Reclaim your online
data and unlock the real value of that digital data. That is
Oxford University’s Future of Humanity Institute, AI survey: what CitizenMe is providing. It is CitizenMe’s purpose to
When Will AI Exceed Human Performance?, under 352 AI experts bring people and organizations together by sharing data
for mutual benefit instead of only the benefit of many
companies using online data.
www.citizenme.com
Levity
replacing us, but that we humans resemble machines too much. time desires, services and products. All this keeping the much- are on the horizon. From computers exceeding human Levity makes AI available for everyone. The start-up
There are many myths surrounding technology. Ones such as, needed balance between humans and planet as a starting point. intelligence and the loss of control of our lives, to a world where facilitates everyone to create AI for repetitive tasks. This
“AI will soon surpass human intelligence and replace all human AI will enable a more customized future but will also connect us data is abused by monopolistic organizations to nudge us into will enable organizations and individuals to automate
jobs”, “We will never be creative again” and even, “We will cheat with more uncongenial people to broaden our horizon. Yet, most consumption of their products, a world of mayhem, job loss, and what could not easily be automated before.
death”. The biggest myth remains that AI will solve all of experts, regardless of whether they are optimistic or not, even autonomous weapons. The future of AI is in our hands; what www.levity.ai
humanity’s problems. This is a very simplistic worldview expressed concerns about the long-term impact of these new matters is what humanity does with it. To be ahead of the negative
underestimating the complexity of our society and human life. tools on the essential elements of being human. All respondents scenarios, we need to anticipate possible outcomes. More than Drone Hopper
We have to be realistic that AI will be a powerful tool to enhance in this non-scientific canvassing were asked to elaborate on why ever, it is necessary to start the dialogue with society about the Drones are becoming the new normal. They are being
humanity, but the biggest challenge will remain in redefining our they felt AI would leave people better off or not. Many shared future of these technologies. Educating our children on how to developed to autonomously do a variety of tasks. Drone
current systems and changing human behavior. AI has created a deep worries, and many also suggested pathways toward deal with smart machines and make them machine aware. Hopper was founded in 2016 and is located in Spain. The
groundswell of excitement and promises, and investors are lining solutions. Governments need to build legislation to counteract the start-up makes several drones for tasks like firefighting
up in turn. However, many times it is forgotten that humans make downsides of technological innovation. wildfires, agricultural work and other emergency tasks.
the real future and are responsible of the success of AI. By 2030, most social situations will be facilitated by bots – www.drone-hopper.com/about-us/
intelligent-seeming programs that interact with us in human- AI will do good for humanity. It can increase agricultural
The Future is Augmenting Humans like ways. “The biggest threat to humans isn’t evil AI but humans productivity, resolve human bias, help education to personalize Tractable
The future isn’t just technology. It is technology augmenting using AI for evil.” to people learning styles, fight disease and poverty and make This start-up develops AI solutions for accidents and
humans. The combination of data with AI enhances our human life sustainable. AI combined with data could and should disaster recovery. The main purpose is to allow faster and
capacities. The dominant digital world makes our unique human AI Be Good bring back balance to our world. That’s the biggest challenge of more efficient settlement of claims when disaster strikes.
capabilities: reasoning, emotion, attention, understanding, The future of AI is mind blowing and, for many, unimaginable. The AI and data. Let us not forget we are responsible for that! For this, Tractable made an AI tool that is able to assess
communication and cooperation more important. AI will amplify SAGE project done by IARPA, a US government agency, is such damage using satellite, drone or smartphone imagery.
human productivity, effectiveness and adaptability. Smart an example. This project uses AI to predict the future of Appraisals can be made instantly and be integrated with
systems working with a continuous flow of data will work with geopolitical events. It can smell disease from a human’s breath repairers.
sophisticated decision-making analytics. They will interact with and even read our thoughts and turn them into words and images. www.tractable.ai
our surroundings and us by recognizing patterns, speech and
even emotions. In nanoseconds these systems will see patterns But there is still a lot of uncertainty within the developments of
and relations all over the world and transform these into real- AI. And when uncertainty dominates our vision, doom and gloom
14 Banking & Financial Services Reinvented 15
The Future of AI Real-Life
in Banking & Financial Cases
Services Trailblazers in the World of AI in Banking
In the field of AI start-ups in banking, a lot is happening. Here are
a few examples of AI start-ups that show the promising and
transformational power of human creativity together with smart
machines. All start-ups mentioned have no business relation
Banks have always adapted to new ways of interacting with accountable and explainable decision making at the center of with Cognizant and are solely inspirational.
customers using technologies to transform their business and future banking services. Financial inclusion will become one of
services. It has resulted that “brick-and-mortar” banking is now the biggest topics and challenges towards a future driven by AI HooYu
something we have to explain to kids. Nowadays banks have the and data. The banking industry must not fall for the trap of HooYu is an easy and customer-centric verification system. The
opportunity to become more relevant for society and become focusing solely on efficiency and profits in a world driven by AI system creates a frictionless digital journey for banking. It
an integral part in their customers’ lives by implementing machines and lacking any humanity. helps identify customers via database checks, identity validation
transformative change from reactive and siloed banking system and digital footprint analysis.
towards a hyper-connected, predictive, anticipative ecosystem AI and data will enhance interactions with customers. The future www.hooyu.com
organized around the desires of individuals. For this unique will be all about tailored and predictive services and offers based
chance, banks realize they have to quickly adapt to the latest on lifestyles and risks analyses. Banks will have access to much Bond.ai
developments in artificial intelligence (AI) and use of data to its richer customer profiles based on real-time data and artificial This start-up uses artificial intelligence to help users meet their
limits. Meanwhile, customers are becoming used to banking as a analyses. Even personal data will become a means of value. AI financial goals. The system does this by automatically optimizing
virtual predictive always-on service instead of a reactive mostly-off and data open the opportunity to intensify customer interaction their finances, saving, and investing. Everything is in close
physical building. and prevent banking from becoming a utility. But will banking interaction with the customers. Bond.ai even claims to improve
become really personal when it is only driven by machines? The the lives of customers holistically and uses its AI to do financial
“77% of banking leaders believe that Artificial Intelligence (AI) more impactful and personal a service becomes, the more good for its customers.
will be the most game-changing for the industry” (Economist customers demand attention and humanity. For the industry, the www.bond.ai
Intelligence Unit (EIU), Global study on the future of banking, biggest challenge is addressing this fragile balance between
June 2020). humans and machines; the application of data and AI to enhance Revolut
the lives of customers and humans to address the emotional Revolut is an impressive example of the trend of neo banking.
Technologies like AI already transformed banking towards smart demands that also accompany many financial decisions. This banking service operates solely via an application. Revolut
financial planning, AI-powered chatbots and dynamic services started in 2015 in the UK and already has more than 12 million
“80%
and products based on behavioral data. Virtual currencies, customers and is responsible for 100 million transactions per
biometric identification, fraud detection and even predictive
financial services are the new normal. AI and data are already
of banking leaders month. Revolut is active in 35 different countries.
www.revolut.com
the basis of financial services. For the future of banking, AI and believe that banking
data will ultimately fully operate all the services and processes
will become a part of
“
accompanying banking. Humans only apply when exceptions,
indicated by AI, arrive. platform of services.
Economist Intelligence Unit
“30% of banking jobs could be wiped out by AI in five years”
(Former Citigroup Chief Vikram Pandit, FinTech Evangelist). (EIU), Global Study on the
Reality shows that there are still many hurdles to overcome within Future of Banking, June 2020
the banking industry: compliance, legislation, quality of data and
consumer trust to share data are just a few to mention. Another Embracing the possibilities of AI and data is no longer a choice,
reality is that the COVID-19 pandemic accelerated the seismic but a necessary way to survive the new and ever-changing
“ The
shift towards a fully digital banking industry. A clear path towards landscape of banking and answer customer demands. The future
future success lies in building AI-driven data networks of financial
services. Liberating data frees the opportunity to fully organize
of AI in banking lies in trust and human empathy. The more we
interact with artificial intelligence, the more human these
Neo Bank (digital only) market globally
around customers’ lives and act on their needs and lifestyles; machines will finally become. Still, empathy will be a key role
is approximately $20 billion and could grow
“
transform in a way that will go beyond the siloed financial for financial advisors just as the demands from their future
data (open banking). It is a development that needs to put customers that cannot be met with AI will challenge them. to approximately $400 billion by 2026.
16 Banking & Financial Services Reinvented 17
Embracing Hyper-
Personalization
Banking & Financial Services
In the drive to embrace digitization across internal and customer- products for a multi-year timeframe involves a far greater depth
facing operations, leaders in the banking & financial services (internally) and breadth (externally) of data. There’s also the issue
(BFS) sector are finding that going digital is not enough. In of disjointed services. Banks may have had different product
light of growing competition from data-rich neobanks, fintechs streams running for years in product silos without proper data
and big tech companies, there is a need for data-driven digital collection. From the customer perspective, it’s not unusual to
transformation if they are to compete with and outpace find that they’re using different services or (legal) entities within
emerging challengers for customer mindshare. the same bank, yet their personal data does not flow or replicate
between the services. This creates unnecessary frustrations that
This demand is, albeit indirectly, coming from customers, who reflect poorly on the provider. As the services of banking remain
increasingly expect enhanced services and more contextually critical in the digital economy, it’s imperative that institutions are
relevant interactions with their financial service providers. With able to adapt to a new generation of customer and provide the
“
a data-led approach, banking & financial services organizations low-friction services they expect.
can begin to put the customer at the center of their organization
and build solutions around them - in effect, to hyper-personalize Bridging this gap is not simple, as banking & financial services
anks will typically have a lot of data that is transactional
B
customer relationships. companies need to make this longer-term transition while still and business related, which makes it possible to go into
Putting hyper-personalization into practice, and embedding
dealing with immediate pressures. The margins on traditional
banking services are getting tighter, bringing a need to drive new personalization. However if you look at behavioural data,
it uniformly across services, requires a top-down approach services. The data is the most valuable asset they have to define which they collect from how customers interact with their
“
as leadership needs to recognize its priority status and set their services, as it reveals a lot about their customers’ needs and
the strategy for it to be built into the organization’s digital preferences. At the moment it’s not being properly monetized, services, it’s really quite poor.
transformation. creating a need for more data-driven banking if they are to gain
Martin Dieussaert, Head of Banking & Financial Services Belgium, Cognizant
control of the marketplace.
Understanding Customers in Real-Time
While the blend of behavioral science and data science for Reshaping for the Future
deeper customer understanding has been adopted to great Building the foundation in real-time for data-driven transformation
effect in other areas, such as e-commerce and digital services, is no easy task. There are several critical challenges banking &
there are distinct characteristics of the financial sector that make financial services companies typically face in making hyper-
the hyper-personalization playbook difficult to port over. personalization integral to how they operate. The second challenge is compliance. Banking is still coming The third challenge relates to legacy IT environments and
to terms with the latest set of regulatory requirements and processes. For data-driven customer strategies, technology is
The main reason is the nature of the services banks offer to The first is data. Banks have a lot of transactional and business conscious of the risks - financial and reputational - of misusing only part of the equation. While IT infrastructure and payment
customers. In areas like retail or consumer goods, for example, data, but are typically lacking in behavioral data. This behavioral customer data. Understandably, hyper-personalization is a large rails may require multi-year modernization strategies, it’s often
hyper-personalization strategies such as customized sales data is vital to hyper-personalization and understanding context. step into potentially hazardous territory. Taking too conservative the people and process parts that financial organizations
messages are used to generate and capitalize on latent demand Financial decisions, along with risk appetites, vary greatly an approach, however, risks missing the opportunity altogether. struggle with most. Internal fragmentation is reflected in a poor
for products and services that bring immediate gratification to a depending on factors such as the individual’s stage of life, their Banks therefore need to find the balance between innovating customer experience as customers interface with different
customer. In banking & financial services, the services being income bracket and current financial commitments such as the customer experience and staying on the right side of services without a common intelligence layer in place.
offered, such as loans, mortgages or saving products, can have mortgages or investments. Interacting with customers based regulation. Where the balance sits must be defined from the top- Modernization of technology therefore needs to run in parallel
significant lifetime effects that don’t produce immediate on any single set of data points could miss the broader context down. with the realignment of processes and upskilling of people to
outcomes. While a consumer’s behavior may offer implicit clues and risk getting it wrong or biased, often to the customer’s make sure the customer experiences a united front.
on their preferences, identifying the most suitable financial dissatisfaction.
18 Banking & Financial Services Reinvented 19Five Key Areas
of Concern
Taking the Lead in Banking & Financial The application of data helps to give a better understanding of CLV systematic risks they’re overlooking. This can be addressed at a Getting Hyper-Personal
Services so that providers can align strategies more closely with customer technical level, such as safeguards within software, but also When it comes to money and financial decisions, there’s no
How then can banking & financial services leaders plan for and needs. CLV requires a top-down approach as it involves upfront requires human skills, such as critical thinking, to address issues substitute for trust. Trust is rarely attained overnight, but built over
advance in data-driven initiatives in their organization? There are costs, and possibly even sacrificing short-term sales opportunities, like bias in AI programs. time through a high quality of service and a dedicated focus on
five key areas of concern. for lifetime-value gains based on the CLV business case. This isn’t customer understanding. Established banking & financial services
an easy decision, especially for smaller financial organizations, so While the ethical side of data and hyper-personalization may be companies often find themselves in the enviable position of
1.
it needs to be directed from senior decision makers. a major issue for a bank, the answer isn’t to shut it down but to decades - even centuries - of reliable service and large pools of
3.
address the risks. This necessitates new skills and even new roles, relevant data, counter-weighted against pressures, a growing
Structure Around the Customer such as a Chief Hyper-Personalization Officer, within the number of mobile-native competitors and an onerous regulatory
In order to tailor the services and present consistent messages, Bring Together Data and Analytics organization to manage the organization’s risk level. landscape. Bridging the gap towards trust and understanding by
banks need to be able to micro-segment their different customer Under One Umbrella offering hyper-personalized products and services is vital to
5.
groups, including retail, private banking and wealth management. Capturing and analyzing massive volumes of real-time data is staying relevant to new and existing customers.
Without this context, personalization of services is meaningless. vital to delivering hyper-personalized services to customers.
The growth of chatbots and natural language processing However, a disconnect exists in many financial businesses Embrace Open Banking There are no shortcuts to getting to this level of data-driven
capabilities is helping in this regard, reorienting communications between the data function and engineering, such as cloud Banks are having to change the way they approach product customer understanding. The only way to do it right is by putting
from a one-way ‘broadcast’ towards an active dialogue, which architectures, and the analytics function, for example data developments as they can no longer own the whole value chain. it on the agenda of the strategic committee, managing risks and
helps support more accurate profiling as the relationship develops. science teams. These areas are becoming so intertwined that the While they didn’t have to think about hyper-personalization making it the key source for delivering outstanding experiences
2.
divide naturally leads to fragmented approach. There needs to before, the customer environment is now an ecosystem play - to customers.
be convergence between the functions at a strategic level, meaning banks need to focus on what value they can deliver to
Take a Customer Lifetime Value (CLV) feeding through to the tactical level, or else the organization will the ecosystem and integrate with third-party products and
Perspective never be able to achieve customer understanding at scale. services into a seamless digital customer journey.
Banking & financial services regularly involves decisions that
4.
can have large consequences for the customer. If the messages Decisions on what services and applications to provide need to
they’re receiving from their bank pushes them towards decisions be made on the strength of the organization’s data, focusing on
that ultimately prove unfavorable, the outcome can irreparably Address Data Risks what unique value they can bring to the customer. Otherwise, it’s
harm the relationship and drives them towards competitors that Senior management need to understand how their organization not worth building products where they can be integrated from
better understand their goals and time horizon. is using and applying data - or else there could be major other sources such as APIs.
20 Banking & Financial Services Reinvented 21Key Take-Aways
1. Put customers in control of their own data and
enable them to utilize it their way.
2. Make human contact with your consumer smarter
by embracing digital augmentation of staff.
3. Be accessible and relevant in the physical world
through branches and outreach centers instead
of going purely digital.
4. Help customers cope with the digital change
in finance and society. Embrace your social
responsibility and help customers become digital
and financially literate.
5. Discover the possibilities and boundaries of new
technologies. Ask the question: is what is possible
“ Technology
also what customers want or need?
6. Utilize predictive technologies to encourage
responsible consumer spending and saving.
changes 7. Embrace open banking to provide a superior
all the time; customer experience.
8. Work on ethical guidelines for the development of
human nature, AI-driven services.
hardly ever.“
9. Combine behavioral data with data science to
enable data-driven banking using AI.
10. Realign processes and upskill employees parallel
Evgeny Morozov with AI implementations.
22 Banking & Financial Services Reinvented 23ABOUT COGNIZANT Cognizant (Nasdaq-100: CTSH) is one of the world’s leading professional services companies, transforming clients’ business, operating and technology models for the digital era. Our unique industry-based, consultative approach helps clients envision, build and run more innovative and efficient businesses. Headquartered in the U.S., Cognizant is ranked 194 on the Fortune 500 and is consistently listed among the most admired companies in the world. Driven by a passion to help our clients build stronger, more agile and more innovative businesses, we enable global enterprises to address a dual mandate: to make their current operations as efficient and cost-effective as possible and to invest in innovation to unleash new potential across their organizations. What makes Cognizant unique is our ability to help clients meet both challenges. We help them enhance productivity by ensuring that vital business functions work faster, cheaper and better. And, our ability to conceptualize, architect and implement new and expanded capabilities allows clients to transform legacy models to take their business to the next level. Learn how Cognizant helps clients lead with digital at www.cognizant.com World Headquarters 500 Frank W. Burr Blvd. Teaneck, NJ 07666 USA Phone: +1 201 801 0233 Fax: +1 201 801 0243 Toll Free: +1 888 937 3277 © copy right 2021, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is subject to change without notice. All other trademarks mentioned herein are the property of their respective owners.
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