110 Microsoft’s Peter Hazou explains how modern technologies like artificial intelligence can improve customer service, combat financial crime and increase profits BY ALICE CHAMBERS The traditional core activities of a bank are to process transactions, take deposits and issue loans. These activities are managed by systems and processes in the back-office of financial institutions that are decades, even hundreds of years, old though. “A lot of banking was designed in Victorian times and still survives to this day,” explains Peter Hazou, director of business development for financial services at Microsoft. “Back then, payments were processed overnight and across the following days, but a lot has changed now. Payments – both physical and digital – are being processed instantaneously in real time.” But how have banks got to where they are today? As far back as the 1970s, banks led the way in applying data-processing technology to the modernisation of their business. Over the last 10 years, though, core legacy functions quickly became outdated as individuals grew more accustomed to instant and personalised services that were readily available to them through their mobile devices. Retail banks were the first to recognise this shift in customer demand, according to Deloitte’s 2023 banking and capital markets outlook, and now look to deliver digital, data-rich solutions and tailored advice. “Clients began to demand more features and functionality to be provided by their banks,” says Hazou. “What we found was that as technology evolved, so too did client expectations. So, the financial services industry was forced to provide more capabilities onto their pre-existing systems, such as through online bank accounts, virtual assistants and process-automating solutions.” Deloitte’s research found that 87 per cent of retail merchants agreed that digital currencies have a competitive advantage in the market and 85 per cent of those merchants concluded that the use of digital currencies for everyday purchases will increase exponentially over the next five years. As such, banks and other financial institutions are heavily investing in new client service models to digitise operations. Hazou says: “The revolution is already underway and is focused around the concept of data banks. Traditionally, banks take deposits to make loans and achieve profitability. But now the entire model of banking is changing to include much more of a focus on data and, of course, the value that can be generated for both the bank and its clients. Banks have the richest historical data because everything flows in and out of them, and it’s this information that is the key to transforming the industry.” FEATURE Why banks should invest core in their
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