FST Media Event

FST Media’s 2016 Future of Banking & Financial Services Event

Written for Cincom.com on December 7, 2016

The banking and financial services sector, long seen as stodgy and conservative, is experiencing disruption from multiple sources as 2016 draws to a close. Innovation and changing demographics will have profound effects upon this market now and well into the foreseeable future. Most recently, Blockchain and Artificial Intelligence (AI) have started making waves as well. These topics were the subject of much discussion and consideration during the annual gathering in Sydney, Australia of bankers and financial services providers this past November.

Customer experience and relevance remain core to the institutions’ technology initiatives. Sam McCready from BankWest tells us of the dangers of getting technology just for the sake of technology.

Human contact is still central to interactions, but only for those most important “life events”.  Convenience, accessibility and immediacy all trump the “human touch” in the eyes of consumers. Consumers who are used to 24-hour online shopping, booking air travel and locating the nearest pizzeria via their smartphones will not be impressed by a facelift of their local bank’s branch office. They are more likely to expect something resembling an internet café or Apple store than a traditional bank.

It is well accepted now that customers interact across many channels, and being able to seamlessly hop from one to another is a given, albeit still a challenge in many cases. Mobile is just an enabler – a platform to deliver a strategy to the customers – not the end game, argues Sam McCready.

As of 2015, the millennials have become the largest demographic group worldwide and the number-one source of income, spending and wealth creation.  The year 2015 also saw the emergence of the mobile device as the primary platform used by consumers to engage in financial services with more than 50% of the interactions with banks done through a mobile device. With those devices as their current weapon of choice, Rocky Scopelliti from Telstra shared with us that trust, relationship and technology make up the new trinity for connecting with millennials.  The concept of “always on” is also demonstrated by David Boyle of NAB in their commitment to zero downtime, and the bank’s focus on customer centricity and fast response times seen with the recent launch of their new banking app.

The Commonwealth Bank of Australia has been leading the pack in terms of innovation with their banking app. The results demonstrate the impact of their efforts: Number one in customer satisfaction with 5.8 million active customers, over 1.4 million transactions per month and some 5.1 million logins per day.  Peter Steel asserts that close to a quarter of their sales were across channels. Dorus van den Biezenbos, Director, Financial Services at EY, tells us that 82% of consumers first go online to do their research, but 59% will still want to talk to someone.

Security and the fight against cybercrime could be finding help with the increasing use of biometrics, such as voice biometrics. Again, the focus is on the customers’ experiences – simplifying the identification process without compromising security, especially when we consider that one in two calls to a call centre is fraudulent.

The new kids on the block, Blockchain and AI, are also receiving a great deal of attention and mindshare.

There is an evident recognition and drive towards simplification from industry players. Millennials have made it clear they find “finance” aspects too complicated and convoluted. The industry has been showing ongoing commitments to simplify products, services and processes (e.g., onboarding and claims). However, there are still challenges associated with regulatory compliance. Kevin Davis, Professor of Finance at the University of Melbourne and a Panel Member of Murray’s Financial System Inquiry, lays it out clearly. To get regulatory changes, we also need the regulator to change. Both regulators and innovators suffer from deficiencies in information.

Digital, apps and Fintech have certainly contributed to simplification, but as an emerging technology, Artificial Intelligence is clearly going to be one of the game changers. Robots and machines are increasingly part of our daily lives. Dr. Catriona Wallace, founder and CEO of Flamingo, explains the rising role of the chat bots and the difference between focused and general intelligence bots like Siri or Cortana. Conversational commerce is the new thing. Today, AI can play a significant role in dealing with the routine and allowing the freeing up of people to deal with the important things.

One equally notably change is the industry’s attitude towards Fintechs and start-ups. The last few years have demonstrated that regulations and barriers to entry cannot stop the wave of change. While the big banks have created their own innovation labs, many, along with other players, have looked for ways to engage and partner with start-ups. This should certainly assist Fintechs in taking ideas into production. However, the jury is still out as to how fruitful and successful this increase in cross-pollination will truly be, given the cultural differences amongst other hurdles. Fintechs in Australia nonetheless have a difficult and challenging environment to deal with – the lack of funding generally driving them to move overseas.

Not all of the innovation is outward-facing. Blockchain offers great utility to financial institutions that literally depend on accurately and permanently timestamping every movement of every cent throughout a 24-hour day and seven-day week.

We are certainly deep into an evolutionary period. Financial institutions, although late to the innovation party are now answering the bell. They are becoming less about finance and more about embracing a broader service experience. The drive towards mass personalisation has added a layer of complexity by overloading consumers with too many choices and options making the decision process harder and often ending in buyers’ paralysis. AI can mitigate this by empowering guided-selling technology thus simplifying complex and tedious tasks.

The opportunities are huge. Investment package evaluation, loan product comparisons, insurance option comparisons and overall financial portfolio development and other areas offer ways that complexity can be made less intimidating to the individual consumer via AI and allied technologies.

IoT

First published on cincom.com on Mar 11, 2015

Internet of Things – Friend or Foe?

Definition – Internet of Things

There is a lot of chatter about the Internet of Things (IoT) and it is often waved as the latest best technological advance and game changer for the insurance sector. The concept actually goes back to the early 80’s when a couple of computer science students at Carnegie Mellon University solved a serious problem: being able to check if the local Coke vending machine had been refilled and if the bottles cold yet.

The Internet of Things technology boils down to four key capabilities:

  • Allow a piece of hardware to capture data without human intervention using sensors
  • Give that piece of hardware a unique ID (IP address) so it can be identified and tracked
  • Connect that hardware onto the internet
  • Allow for data exchange

Friend?

Today, most of us are familiar with consumer products such as wearables devices (Microsoft band, Fitbit, jawbone, etc.), but the Internet of Things also includes heart-monitoring implants and cars with built-in sensors monitoring engine performance and other safety aspects such as tyre pressure. It also includes larger scale scenarios such as sensors monitoring the environment such as soil for irrigation, or movement for early detection of earthquakes and tsunamis across large areas − all without the need of manpower.

Other examples of applications include:

  • Media and advertising to connect with consumers via smart devices and push the most fitting content at the best time and best location
  • Infrastructure management
  • Manufacturing
  • Energy management
  • Healthcare
  • Home automation
  • Transportation
  • Urban “smart city”

All of these devices collect valuable data and autonomously feed that data to other devices using the internet as well as receive information remotely.

The number of applications is most likely to grow as well as opportunities. Driverless vehicles are a reality with manufacturers forecasting commercial availability as early as 2017. Many already predict that car insurance premiums would be significantly reduced as accidents will become a rarity.

Building and content insurance could also benefit from IoT with sensors monitoring appliances, security cameras, smoke detectors or lights being turned on/off remotely. All of these could reduce risk and cost to the insurers and ultimately, reduce premium costs to consumers.

On the surface, it really does sound like a game changer.

Foe?

However, some sceptics are already waving the red flag.

If you thought Big Data was big, you haven’t seen anything yet; with all those devices recording and sending data 24×7, it’s only going to get bigger. There is already no shortage of data available to insurers, but are they already making the most of it? Do they have the capabilities and capacity to absorb more? In other words, are they ready?

Is there a risk that all of that granular information about each one of us, on a second-by-second basis, about everything we do, how and where we go and when is going to create segregations and penalisation amongst us? Is my life-insurance premium this month going to skyrocket because I have been too busy or lazy to do my daily 10,000 steps? Will people with better genes and who are naturally healthy with less effort get access to better policies and greater benefits than those of us who don’t? Will having our lives and bodies monitored 24×7 become part of the “duty to disclosure”? Or will this instead, create an opportunity for new insurance companies to cater to those of us who are not perfect. Just like there are “low doc” loan providers, will there be “low-data-collection” insurers?

Conclusion

In the end, one thing is certain, we cannot stop the Internet of Things tsunami. But what we must do is get ready for it and learn to embrace and harness it. There are clearly some terrific benefits at many levels and across many aspects of life and health. However, there are also risks.

We all need to become a lot more technology savvy especially in areas of cyber security; we all need to learn to spot a phishing email, a dodgy website, and what is a safe site to download a program or game from and what is not. Distributed Denial of Service (DDoS) are constant attacks on banks, insurance, government, gaming and entertainment websites, causing significant losses, cost and frustrations. DDoS makes use of infected PCs and devices all around the world unknown to their owners. Whatever the motivation of a hacker, their capacity to cripple the rest of us is proven. But with more and more devices connected, the danger is even greater. Protecting our devices from unauthorised access and hacking is not just about protecting our own data, bank accounts or identity; cyber security is a social responsibility.

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