Jun 25, 2020

Deloitte: AI and financial ecosystem transformation

Matt High
2 min
According to an article by Deloitte, artificial intelligence is significantly changing the traditional operating models of financial institutions...

The proliferation of artificial intelligence in the financial services sector if shifting strategic priorities and upending the competitive dynamics of the traditional ecosystem models, says Deloitte. 

In How artificial intelligence is transforming the financial ecosystem, the global consultancy firm considers how financial services players can better embrace AI technology to succeed.

The technology, says Deloitte, is likely to have a significant impact on every sub sector of the industry. 

In payments, for example, Deloitte explains that AI is behind new and innovative tools that allow for the combatting of fraud and security risks. 

It is also increasing customer engagement and confidence by enabling real-time interventions and responses to any potential threat. 

Deloitte explains that “AI enables payments providers to generate new revenue streams by using their databases to provide unique insights. 

Likewise for deposits and lendings, it is suggested that banks can increase profitability through the delivery of personalised lending operations. By using AI, organisations are able to deliver advice at scale and redefine and improve the value proposition. 

AI, Deloitte adds, “can deliver smarter and more nimble workflows that improve the productivity and reach of lending operations. It is launching a commercial banking renaissance through improved data integration and analytics tools that unlock a vast underserved market.”

The insurance industry is undergoing significant digital disruption. 

AI in particular is enabling insurers to predict risk with greater accuracy and to customer products to better suit customer requirements. 

The use of AI in insurance is allowing a more agile operating model to emerge for organisations, while also driving efficiencies in underwriting, claims and distribution channels. 

AI impact: key findings

Deloitte highlighted several key findings that further outline the impact of AI on the financial services. These include: 

  • Customer loyalty: Deloitte explains that AI gives companies the chance to use new methods to interact with customers, thus distinguishing their service proposition and escaping a ‘race to the bottom’ approach.
  • Self-driving finance: Following from the above, AI will see much of the customer experience automated, giving customers a much greater control over their financial wellbeing.
  • Collaboration and collective solutions: Shared datasets will give rise to greater collaboration over products and solutions for customers.
  • Data regulation and alliances: On the former, Deloitte believes that greater regulation over the sharing of data will drive how financial players adopt AI. That sharing of data may become more challenging, or will need a greater strategic oversight, in order to thrive. 

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Jun 10, 2021

FIVE things fintechs must do to keep investors onboard

Brandon Rembe, CPO, Envestnet...
4 min
Fintech innovations drew in first-time investors who reshaped the markets. What new advancements will help them continue their rise?

New investors flocked to the stock market during the COVID-19 pandemic. Thirty-eight percent of investors said they had never had a brokerage or similar account before opening one in 2020.

Low or no-fee trading options have helped accelerate the trend – nearly half of new investors said they accessed their account primarily through a mobile app. As FinTechs, how do we create the trust needed to keep new investors in the market and create a fruitful customer experience for them?

The financial industry does a disservice to individual investors if we merely offer tools that focus on making money quickly, an approach that usually backfires. Instead, the surge of interest presents an enormous opportunity for those who want to help more consumers use financial technology to educate them on responsible spending, saving, and investing in order to achieve financial wellness current fintech tools have welcomed individual investors in the door.

Now, it’s time to focus on education and improving their experience going forward. There are several ways those of us in fintech can step up to shape the future of retail investing so that it works better for everyone, starting with the following areas.

Equal access to financial wellness education

Financial health should be available to everyone — but today, not everyone has the educational resources to achieve it. One study shows that only 3.9% of students from low-income schools were required to take a personal finance class. What they aren’t learning in school or from family members, fintech companies can provide on their platforms.

The companies should move from solely offering financial services to a more responsible model of education, advice, and prescriptive choices to help consumers develop better habits and make wiser financial decisions. Not only can they empower consumers and bridge historical wealth divides, but they can also stimulate growth by opening up new consumer segments.

More personalisation

Just as we’ve come to expect that our fitness routines are tailored to our individual bodies, we’re also ready for finance tools that go beyond one-size-fits-all solutions. But only six percent of financial institutions say they’re using the kind of technology that allows them to deliver a deeply personalized experience. Fintech tools need to reflect that financial success looks different for each of us.

For one consumer, it may mean providing guidance on how to pay off student loans early; for another, it may mean prescriptive actions that enable them to stick to a budget for the first time; for a third, it could look like prioritizing environmental, social and governance (ESG) investments, so that her portfolio aligns with her political beliefs.

Now, we are seeing financial technology beginning to meet the demands of personalized finance in a substantial and meaningful way.

The rise of AI-Powered Advice

Big-picture advice and predictive guidance used to be a feature of high-end financial advisory firms — a perk only available to those who could afford it. But thanks to rapid advancements in data analytics and artificial intelligence (AI), that kind of holistic advice is now more accessible than ever. AI-driven robo-advisors can parse many different streams of financial information, delivering customized answers to key questions: Is it time to buy a home, or is it smarter to keep renting? Can I afford to take out another student loan?

Intelligent connectivity powered by AI can anticipate consumers’ needs and next steps, making proactive suggestions that guide them along the path to financial wellbeing. Fintech companies can also help consumers identify when their financial picture becomes too complex for a robo-advisor, and help them find a human financial advisor to meet their needs. 

Focus on financial mental health

New investors are quickly finding that the market can be overwhelming. That’s not surprising, financial anxiety is common and studies show that financial stress can have an impact on mental health for some.

It’s not enough for fintech companies to give retail investors access; they also must provide the guidance and support that help consumers manage their financial well-being. Educational tools can ensure that consumers are well informed about their options.

Predictive analytics can anticipate consumers’ questions, serving them key information and insights before they ask. Features that emphasize a comprehensive notion of financial well-being, rather than short-term wins and losses, can also help ensure that consumers are keeping their eyes on the bigger picture.

Gamification for good

The surge of gamification apps has done an impressive job making investing as engaging as playing a video game or joining a social media platform.

Much of the current use of gamification emphasizes short-term thinking, but there’s also an opportunity to help consumers think more broadly about their overall financial picture. One example is peer benchmarking, a feature that enables help consumers to see how their financial habits compare to those of friends and fellow consumers.

Gamification can also be used to incentivize making smaller, smarter choices — for example, rewarding saving over making an impulse buy.

The future of fintech is about more than just broadening access to the markets. It’s about making sure more individuals have access to the tools that can help improve their financial well-being—in the ways that suit their own circumstances and needs. The potential to act within their own set of individual priorities, with their long-term financial wellness in mind is much more empowering to a consumer than simply relying on short-term, high-risk investments.

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