How banks are getting future ready with Cognitive Virtual Agents



Do you know what has changed banking in the last decade? If technology is your answer you have made a wise guess. But your answer is only partially correct. It is in fact a combination of factors from financial crisis to the fintech wave that has altered organizational structures, systems and processes in the industry. It is the accelerated pace and scale of the changes that is the most instrumental factor that would continue to reshape the banking ecosystem.


Managing fast-paced change

Change in the banking industry used to be a slow and gradual process. But, not anymore. Banks were traditionally weary about technology deployment. The trend now has been turned on its head, thanks to the fintech wave.


The industry’s attitude towards technology reflects a monumental shift in mindset. According to a PWC survey, 56% of the financial institutions, while accepting the disruptive nature of technology, is willing to put it at the heart of their strategy. What does this signify? The obvious answer is that the they are trying to adapt. But it is the not so obvious answer that is exciting and much closer to the truth. Disruption is no longer seen as a threat but an opportunity to capitalize on.


In order to capitalize on disruption banks are trying to re-organize themselves around technology. They are now trying to adopt new set of values which enables them to leverage technology to build information-enriched customer solutions delivered as seamless customer experiences.


Customer experience in banking

Traditionally, financial organizations were not associated with values such as user experience and transparency. It was only after fintech companies began making inroads into their customer base, that customer experience became a bank’s business objective and customer-centricity its key operational principle.


How are banks addressing customer experience wakeup call? Collaborations with fintechs, acquisitions or developing inhouse capabilities are the strategies that most banks resort to in order to create a digital environment conducive for innovation and delivering utmost customer experience. According to Satista, collaboration with fintech is the most preferred digital business strategy with 91.30% of the survey respondents opting it.


Source: Statista

This digital convergence of banks, fintechs will shape the future markets. Globally, banking organizations will evolve themselves into a one-stop solution with maximum mindshare and market share.


Customer service as a competitive tool

In the Asia-Pacific region next-generation customer service is now viewed as a strategic differentiator. According to a recent survey published by PWC, customer service is the key area of concern for banking executives especially from the region. Almost half of the survey respondents were in agreement that customer service requires considerable improvement. With the industry witnessing a lot of new entrants, the cost of customer acquisition is soaring. Hence, the traditional players are adopting a customer-first strategy, which would be a key differentiator that would enable them to retain their customer base in the long run.

Industry giants from the region believe that technology would be a great enabler of exemplary customer service. Hence technology adoption is on the rise among players from the region. Banks are deploying Cognitive Virtual Agents that offer 24X7 customer services without human intervention. The adoption of cognitive technologies is expected to transform customer contact centers into customer engagement centers in the near future.


AI becoming business ready

Recent advancements in AI technologies like Natural Language Processing and Machine Learning have rendered them business ready. Even though the current rate AI technology deployment doesn’t accurately reflect the level of the enthusiasm that the bankers share, most continue to remain upbeat. According to a research report published by Celent, most of the US banks are deploying fraud analysis and risk detection and Natural Language processing. Despite the huge potential of cognitive agents and chatbots most of the banks are yet to deploy a fully developed one. This presents a huge opportunity for the US banks to grab the early-mover advantage.


Source: Celent

Increased investment in ‘Robo- Advisors’ among Asian countries with China leading the pack and Japan and Singapore following suit is also a trend to watch out for.


Downsizing physical footprint

We are in the middle of a multi-wave trend, where digital solutions are primarily resorted to improve upon the existing products and services. Banks are now slowly starting to accept the disruptive technologies as it has become more than a necessity to withstand competition from traditional and non-traditional players. What this has eventually done is that the existing business and operational models have undergone fundamental transformations.


The transformation, however, is not a smooth sail from an organizational perspective. The end customers are the biggest gainers here. Most of the overhauls that the organizations had to make while adapting themselves to this fast-paced change is that it had made the life of the end customers easier.


Empowered with digital capabilities, the banks are now downsizing their physical footprint, especially in the developed economies, as the competitive reach is no longer determined by the network of branches.


The game changer

Information perhaps is one of the most valuable assets in the digital age. And the information that the customers now generate is humungous. Apart from traditional sources, banks now look at non-traditional avenues like social media and other cross-channel customer bank interaction as critical sources for behavioral data that could form the building blocks for building an analytical regime that would power the process of informed decision making. As financial organizations are gearing up to face the future, big data would definitely be one of the biggest game changers.


Designing for success

The future has already arrived. To be successful, banks need to make a transformation from being digitized to truly digital organizations. Becoming digital is about creating new value propositions. It is about providing digital offering platforms that is wrapped in customer experience. A digital platform is not something which will become obsolete as time goes on. Rather it is something which is constantly improved with the help of customer inputs. Yes, success will no longer be an accident. It will have to be designed.


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