The change in technology over the last 20 years has been transformational and, in many ways, has spoiled customers, claims Chad Hamblin, global industry director of financial services at Microsoft.
“Customers now expect the process for accessing financial services to be as seamless as ordering on Amazon, but there’s a big difference between buying a $10 item and securing a 30-year loan,” he explains. “However, people don’t see it that way due to the rise of rapid, personalised online services.”
Microsoft’s solutions, primarily in the Dynamics 365 suite of products, Power Platform and Copilot Studio, are helping financial services organisations to deliver on evolving customer expectations.
“With Dynamics 365, sales teams can track interactions, products and cases to understand customer preferences and communicate with them across multiple channels,” says Hamblin. “Dynamics seamlessly works with Microsoft Office so that professionals don’t have to switch back and forth between applications to serve customers. And, when they are able to work productively, employees have more time for meaningful interactions.”
Generative artificial intelligence is now integrated into most Microsoft products too.
“Microsoft has bet the house on generative AI,” says Hamblin. “We have copilots for Microsoft Power BI, Dynamics and Office, as well as Azure OpenAI. They have a dramatic impact on the customer experience. For example, AI-powered, intelligent chatbots provide customers with 24/7 information. They also streamline key banking processes such as mortgage handling, ‘know your customer’ (KYC) and onboarding.”
By enhancing operational efficiency, these AI tools are also transforming how financial services professionals engage with their clients.
“Generative AI can help employees provide more relevant and customised product offers, decreasing the amount of time they spend creating content or drafting emails and freeing them up to focus on other customer-related activities,” explains Hamblin. “In essence, it makes their daily lives more productive, reducing wasted cycles and giving more time back to customers.”
Working in tandem
Microsoft partners play a key role in identifying potential AI use cases for improving the customer experience.
“Partners are the lifeblood of Microsoft,” says Hamblin. “They do a good job of enhancing and extending our first-party capabilities. For example, VeriPark has a broad set of banking-specific capabilities built on top of the Microsoft stack, using Azure and Dynamics 365, and they integrate with Microsoft 365. VeriPark’s solutions enhance loan origination, KYC and teller management. And Zafin is a leading provider of product and pricing lifecycle management solutions that help banks to manage the products and services they offer to customers.”
Zafin is leveraging Microsoft technologies as the basis for its solutions, which provide access to financial data and modernise old core banking systems. Meanwhile, Backbase’s seamless integration to Dynamics 365 and Microsoft Teams is helping banking operations, especially tasks associated with mobile and online banking.
“With Backbase, financial services providers can connect mobile and online banking to a holistic view of customer activity, allowing them to communicate with customers across various channels,” says Hamblin. “Backbase provides banks with advanced business intelligence capabilities to help with renewals and best-offer actions. Meanwhile, Personetics uses predictive analytics and generative AI to analyse financial data in real-time to anticipate customer needs and ASC Technologies integrates with Teams to help financial services employees comply with regulations and enhance productivity.”
Hamblin predicts that AI-powered solutions will likely automate manual tasks, like checking for regulatory compliance and paper-based processing, in the next few years. But he believes employees should embrace this change.
“There’s a sense of concern around AI in that it’s replacing human jobs, but AI should be seen as a combination success story,” he says. “It automates some human-led tasks that are routine, laborious or time-intensive – and frankly, these areas will be improved by automation. However, there are many cases where there is a hand-off or an intersection between generative AI and those human interactions.”
For example, AI automation could cut digital debt, which Microsoft defines as the burden placed on information workers by “the inflow of data, emails, meetings and notifications” in the 2023 Work Trend Index Annual Report. Nearly two in three people (64 per cent) say they struggle with having the time and energy to do their job and almost two in three leaders (60 per cent) feel the effects, saying they lack innovation or breakthrough ideas from their teams, according to the report. This is particularly for true for the financial services industry.
“The sheer amount of data and apps banks use is basically causing information overload for a lot of employees,” explains Hamblin. “But they can use generative AI to draft emails, pulling together data from multiple sources rather than having to search three of four different systems, saving them minutes, if not hours.”
For instance, employees working in commercial or investment banking can use generative AI to pull together data from multiple sources in the Office Copilot suite to draft emails, create PowerPoint presentations with PowerPoint Copilot, track meetings and generate follow-up actions with Teams Copilot, and build dashboards showing key banking trends with Power BI Copilot.
“Investment and commercial banking requires employees to interact with large organisations and to understand regulatory documents like Securities and Exchange Commission Filings,” says Hamblin. “Generative AI can review a 100-page document and identify the most relevant data, preventing information overload.”
Additionally, a relationship manager can use generative AI for assistance during a conversation with a customer. “The manager may want to have details about the customer’s life events, recent purchases or any risks associated with their profile,” explains Hamblin. “A copilot product could feed them real-time prompts, links and product information to enable an informed conversation with the customers.”
This use case is particularly relevant for contact centres, where calls must be categorised upfront. A study commissioned by Microsoft found that some UK customers are waiting for an average of eight minutes and 27 seconds to speak with a financial services representative when phoning a call centre. This is 25 times longer than the optimal industry standard, says Microsoft, which requires agents to answer calls within 20 seconds.
“Generative AI can allocate those calls to the right agents,” says Hamblin. “Banks can also use the technology to more intelligently escalate cases to the right support groups or to specialist agents if the issue is complex.”
Several sessions were led by Microsoft at Money20/20 USA, including a Women in FSI panel led by Microsoft's Kathleen Mitford (far left) that highlighted the positive impact of using generative AI to manage workloads
Future milestones
Reflecting on the industry’s current mindset, Hamblin notes: “The high-level feedback that we’re hearing from our customers is that everyone is very excited about generative AI but it’s still very much a nascent technology. We’ve reached a critical stage where banks are trying to understand how they can more broadly use generative AI and track its benefits.”
As organisations explore these possibilities, they’re finding that generative AI is no longer limited to straightforward productivity enhancements but has the potential to transform other areas of work.
“While productivity, research and content creation are some of the more common AI use cases in banking, we are also starting to see a wide variety of other functionalities including fraud detection, product, risk and marketing,” says Hamblin.
Firms can leverage the capabilities of generative AI to enhance decision-making and streamline processes, enabling them to go beyond productivity use cases where the low-hanging fruit is.
“Banks should look beyond the traditional apps of generative AI by using it more dynamically to generate products and offers tailored to individual customers,” says Hamblin. “For example, most banks offer 30, 20 and 15-year mortgages but what if a customer needs a 13 or 22-year mortgage due to personal circumstances or specific financial goals?”
Banks could also use generative AI to facilitate dynamic payments and provide customers with a payment mechanism that best matches their individual financial needs. For example, different types of payments – like buy now pay later or credit and debit cards – could be offered to customers under one platform. “In a perfect world, you could even change the terms and conditions based on a person’s financial profile,” says Hamblin. “Customer A might have good credit while customer B may have bad credit, so banks could provide each of them with different terms and conditions.”
Another potential use case for generative AI is creating a financial education tool for customers to better understand wealth management, adds Hamblin. “Intelligent bots can be trained with data from wealth management to improve financial literacy. They will be able to break down information for the general public to understand their financial opportunities.”
There is a lot of opportunity with fraud prevention and detection too. “Current fraud systems use machine learning and predictive analytics, but generative AI can help to more accurately identify fraudulent patterns and trends, then use that intelligence to create models offering a higher prevention rate,” explains Hamblin.
To capitalise on the opportunities created by generative AI, the financial services industry must first overcome its biggest challenges: security, compliance and governance.
“A lot of banks are still trying to understand how they can tap into the power of generative AI but still protect themselves from a security and compliance standpoint.”
While Hamblin acknowledges these challenges, he believes the opportunities for AI adoption outweigh the burden of overcoming security and compliance regulations.
“There’s tremendous opportunity with generative AI,” he says. “Banks can offer more relevant products and upgrade their key processes and we’ll see generative AI being used across various departments, from marketing to compliance and risk.
“Over the next two years, the technology will mature, improving its reasoning and decision-making capabilities. We’ll also see different type of AI technologies merging. Whether that’s robotic processes, predictive analytics, machine learning, or even metaverse technology, they will all integrate with generative AI for more focused use cases and business scenarios like creating best-offer products, case resolutions and renewals.”
Perspective: Banking Industry Architecture Network (BIAN)
Hans Tesselaar, executive director of BIAN, offers his view on the impact of AI-powered technology on financial services.
“Conversational AI is being used to improve customer service offerings and answer frequently asked questions in a more personalised way. Organisations can also use AI to process past customer behaviour, demographic data, preferences to recommend products to increase customer engagement and drive revenue growth, this is something we’re exploring as part of our latest Coreless Banking concept.
When it comes to employee engagement, AI is making organisations more efficient, freeing up employees to focus on more satisfying tasks, and reducing burnout by automating manual tasks such as data processing.”
Partner perspectives
We asked selected partners how Microsoft-powered solutions are helping financial services firms to enhance customer experience and empower workforces.
“Financial services organisations need to meet regulatory standards such as the General Data Protection Regulation (GDPR), MiFID II and Dodd-Frank, while improving customer experience, productivity and workforce empowerment. Recording Insights, our Microsoft technology powered solution for Teams, addresses these needs by providing compliant recording and AI-driven analytics. This solution helps prevent fraud, provides actionable insights into customer needs, and enables financial institutions to respond quickly and effectively,” said Katrin Henkel, president, Americas, at ASC.
“Through our customer data and AI services, banks gain access to integrated AI and machine learning within the Engagement Banking Platform, maximising automation and enabling straight-through processing. This advanced integration allows banks to deliver tailored, data-driven interactions across all digital channels, meeting customers’ unique needs in real time while improving efficiency and service quality,” said Vimal Sethi, global vice president of partners and alliances at Backbase.
“Financial services organisations facing complex compliance and investigation challenges can implement SymphonyAI’s Microsoft-powered solutions to streamline operations and enhance financial crime management. SensaAI for AML (anti-money laundering) triages alerts, reducing false positives whilst identifying new risks. Meanwhile, SensaAI for Sanctions Screening also decreases false positives with AI-driven accuracy, lowering costs. Leveraging Azure OpenAI, SymphonyAI’s generative AI solutions empower institutions to transform workflows, boost workforce productivity and strengthen the financial ecosystem,” said Jason Shane, head of strategy and innovation, financial services, at SymphonyAI.
“Zafin empowers banks to achieve more by providing deep expertise in product and pricing solutions, seamlessly integrated with Microsoft's broad platforms including Teams, Dynamics 365 and Azure AI. Built on Microsoft’s Financial Services Cloud, Zafin’s platform helps banks modernise abstract product and pricing capabilities from core systems into a cross-enterprise product innovation layer,” said Chris Dickin, global head of strategic partnerships at Zafin.
Read more from these partners as well as contributions from Personetics, SAS, Synergy Technical and VeriPark in the Winter 2024 issue of Technology Record. Don’t miss out – subscribe for free today and get future issues delivered straight to your inbox.