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  • @fintechna 3:35 am on May 5, 2018 Permalink | Reply
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    Banks: We need to talk 

    Forget mobile apps— to start talking to customers

    As part of our guest blog series, Accenture Nordic Banking Practice Lead Satu Pulkkinen explores how banks can take the next step in evolving customer relations. 

    First came online and mobile banks, with Nordic banks leading the way. The next wave of digital banking? The conversational bank that operates within messaging applications. that can see and hear us, continuously growing ecosystems around increasingly popular messaging applications, as well as the amazing progress of artificial intelligence (AI), are enabling personalized, fully digital banking assistants that you can to anytime, anyplace.

    Technology is an integral part of our daily lives. Increasingly, devices that used to simply respond to our commands and actions can now also hear and see us. We use mobile applications for almost everything, especially instant messaging. Since the beginning of 2015, WhatsApp, Facebook Messenger, Snapchat and WeChat have become the world&8217;s most used social media applications.

    Over 60 percent of customers prefer messaging applications over email or phone calls. And we are moving on from using several different mobile applications to services that are integrated within ecosystems of those applications.

    Towards digital assistants with human understanding

    The development of artificial intelligence (AI) technologies, like machine learning and deep learning, has progressed at such a pace that the chatbots many Nordic banks use today are already starting to look outdated. As AI technologies continue to mature, bots will become even more human-like.

    The increased volume of data and number of analytic tools create the possibility of offering individualized digital services on a mass scale. This has already led us as customers to expect each digital interaction to be as good as our best last experience—regardless of the brand or industry in question.

    The result is a bank that can talk

    Conversational banking exploits these technology trends in an intelligent way. Banking bots within messaging applications and virtual assistants (like Apple&;s Siri or Google Assistant) connect cost savings brought by the previous generation’s online and mobile banks, with the personal touch previously provided by bank clerks.

    Banks: We need to talk fintech
    Read the report

    What is behind all this progress? Talking is natural for people. Complex language and communication separate humans from other animal species. Stories form the cornerstones of civilizations. Talking is, therefore, genetically encoded in all of us.

    In much the same way, messaging applications are natural to current mobile devices. These applications are easy and funand effortless to use, even on the move. We can type or speak and we can hold one- or two-way, personal or group conversations.

    Therefore, brands have rushed to embrace messaging applications. For example, Facebook Messenger has over 33,000 bots offering customer assistance and counseling as well as providing interactive experiences. And we seem to like them: over 60 percent of consumers use messaging applications to communicate with brands.

    Paying the bills or looking for investment tips—all accessible from your couch just by using your voice

    For example, in the future, a bank bot could interact like this: &;Hi Satu! I noticed that there’s €100 left over in your bank account. Should we put it in a fund that matches your expected return by only investing in environmentally friendly companies?´´

    Capital One in the US is one of the first financial institutions to move into conversational banking. It offers its customers an opportunity to check their account balances or pay bills just by talking with Amazon&8217;s Alexa—and without once touching a device. The customer just has to link his or her bank account to an Echo device. Once that’s set up, the bank literally obeys the customer’s voice.

    Now it’s time for Nordic banks to move on from online and mobile banking and start talking to customers. Who will be the first?

    Banks: We need to talk fintechSatu Pulkkinen, Nordic Banking Practice lead at Accenture

    Banks: We need to talk fintechBanks: We need to talk fintech Banks: We need to talk fintech

     

    The post Banks: We need to talk appeared first on Accenture Banking Blog.

    Accenture Banking Blog

     
  • @fintechna 3:35 pm on March 13, 2018 Permalink | Reply
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    Q4 2017: U.S. credit card issuer snapshot 

    Although issuers are benefiting from increased spend and receivables, rising loss rates and rewards costs are continuing to suppress ROAs.

    Key themes

    • Receivables and spend increased year-over-year for all
    • American Express, Discover and Capital One led in terms of year-over-year receivables growth
    • Chase and Capital One led in terms of year-over-year purchase volume growth, although all issuers reported strong growth
    • Several banks have suggested that competitive intensity has moderated slightly
    • Although loss rates are normalizing, they remain below historical averages
    • Investments are being made in machine learning, mobile and advanced analytics

    Notable happenings

    Transactions:

    • PayPal announces an agreement to sell its $ 5.8 billion portfolio of U.S. consumer receivables to Synchrony

    Partnership Renewals:

    • Marriott signs renewal agreements with Chase and American Express

    New Partnerships:

    • Uber and Barclays introduce a new no-fee credit card
    • Alliance Data gains new partners IKEA and Adorama

    New Products/Features:

    • Hilton and American Express introduce a new high-end fee card, Aspire
    • Amazon opens its cashier-free store Amazon Go to the public
    • Chase introduces mobile payments as a bonus category on Freedom cards

    Mobile & Tech: 

    • Target introduces a proprietary wallet in its mobile app
    • Kroger and Chase Pay partner on mobile payments

    Industry trends (based on non-retail card issuers in scorecard section)

    Q4 2017: U.S. credit card issuer snapshot fintech
    Click to view larger

    1 Total receivables for non-retail issuers at end of 4Q17. 2 Total purchase volume of non-retail issuers in 4Q17. 3 After-Tax ROA excludes Wells Fargo, Chase, Bank of America and US Bank, which do not report credit specific income. 4 YoY = Year-over-year change versus 4Q16. 5 QoQ = Quarter-over-quarter change versus 3Q17. Note: PV is reported PV for the quarter (it is not annualized or TTM)

    scorecard—Q4 ($ in Billions)

    Q4 2017: U.S. credit card issuer snapshot fintech
    Click to view larger

    1 Chase no longer discloses an ROA measure directly attributable to Card Services. 2 Citi: Purchase volume includes cash advances. 3 Capital One: U.S. card business, small business, installment loans only. Purchase volume excludes cash advances. 4 Bank of America: Receivables, purchase volume and net loss rates are for U.S. consumer cards. ROA estimate is discontinued. 5 Discover: includes U.S. domestic receivables and purchase volumes only. Restated: ROA reflective of Direct Banking segment (credit card represents ~80% of loans) and implied U.S. Cards tax rate of ~40%. ROA denominator estimated from total loans ended totals. 6 American Express: Changed reporting method as of 1Q16. Figures are for U.S. Consumer segment only and exclude small business. 7 US Bank: Net Income attributable to Payments Services totaled $ 309M as of 4Q17, compared to $ 322M in 4Q16; Payments Services includes revenue from consumer credit cards, as well as commercial revenue and other sources. 8 A/R and PV for Retail Card unit only. 9 Loss rates and ROA include all of SYF’s business lines (i.e., Retail Card, Payment Solutions, and CareCredit). Retail Card accounts for about 70% of total receivables. 10 Average Receivables.

     

    Q4 2017: U.S. credit card issuer snapshot fintech

      Paul Sammer, Management Consultant

    Q4 2017: U.S. credit card issuer snapshot fintechQ4 2017: U.S. credit card issuer snapshot fintech

     

     

     

     

    The post Q4 2017: U.S. credit card issuer snapshot appeared first on Accenture Banking Blog.

    Accenture Banking Blog

     
  • @fintechna 3:35 pm on November 16, 2017 Permalink | Reply
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    CISO importance is prompting internal role change 

    The value of the Chief Information Security officer has never been more evident, but is the well defined and structured enough?

    have witnessed a spate of cyber breaches recently with the financial sector experiencing 300 percent more cyberattacks than any other industry. More than 75 cyberattacks against financial services companies were reported in first nine months of 2016.

    A string of regulations requiring banks to adopt a more open architecture will further expose them to heightened cybersecurity risks, and the rapid pace of digitization in banking will only add to it.

    However, the banking industry is yet to see an increased responsibility in the role of a Chief Information Security officer (). A study by Gartner showed that only 20 percent of CISOs report to the CEO with ~60 percent of them reporting to the Chief Information Officer (CIO) or an IT executive. With the growing of security in an organisation, this current reporting structure might need to more to favour CISOs reporting directly to the CEO.

    Fig 1. Majority of CISOs report to the CIO
    CISO importance is prompting internal role change fintech
    Source: Gartner- Determining whether the CISO should report outside of IT

    CISOs need to have impartiality when it comes to budget and ability to influence the CEO

    There have been instances of uneven allocation of the IT budget for spend on cybersecurity, resulting in CISOs getting a smaller piece of the pie. Studies have shown that information security takes only a tiny three to five percent of the overall IT budget.

    UK banks have seen some traction here: Barclays has merged its two security functions, with previous Chief Security Officer (CSO) and CISO roles coming together under a combined CSO. Lloyds has set up a cybersecurity advisory panel to bring an industry perspective on key cyber-related activities and threats. The panel is part of a subcommittee to the Board Risk Committee (BRC) and the Chief Risk Officer regularly informs the BRC of the aggregate risk profile of the bank.

    Decouple the CISO from IT?

    Having the CISO report outside of the IT leadership could have several advantages:

    • Direct oversight from the CEO and business leadership could ensure key security considerations are addressed in business strategy and associated investments.
    • Reporting outside of the CIO puts the CISO and CIO on more equal footing.
    • It could help organisations attract more experienced security executives who might expect to report directly to the CEO, not a CIO.

    IDC believes that by 2018, increases in cybersecurity threats could result in 75 percent of CSOs and CISOs reporting to the CEO. Some regulators are even making it mandatory: In Israel, there are laws dictating that CISOs report directly to the CEO. UK banks should take a cue and become the financial services gold standard in cybersecurity governance.

    Banks need to reconsider the CISO role for greater cybersecurity effectiveness

    The primary goal of the CISO is not to protect but to protect the business. Though the position has risen in the organisational structure to the inner circles of the C-suite, a CISO’s ability to dictate a budget and make decisions independently may still depend on where the position falls in the organisational structure. Further, the role of cybersecurity experts has become increasingly important on the board, which has translated to higher salaries and attrition as well. Empowering CISOs might help mitigate this, through increasing representation on the board, direct reporting to the CEO, independent budget allocation and a role in strategy formulation.

    The post CISO importance is prompting internal role change appeared first on Accenture Banking Blog.

    Accenture Banking Blog

     
  • @fintechna 3:35 pm on September 29, 2017 Permalink | Reply
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    ARTIFICIAL INTELLIGENCE: AUGMENTING THE HUMAN WORKFORCE 

    These are exactly the sort of words that would make you launch your phone into the nearest river, if they had been uttered by Siri. Fortunately, they are the fictional words of HAL 9000, the sentient system in the 1968 Stanley Kubrick film, A Space Odyssey: 2001. It told the story of a mission to Jupiter and the gradual realisation of the crew that the perfect piece of AI designed to help them, was in fact fallible, and plotting against them to preserve its existence.

    We don’t appear to have come much further in our collective sentiment towards trusting AI. The term “killer robots” has been splashed across the press headlines quite a bit recently, with some heavyweight names behind them, highlighting the potential dangers of using AI in warfare. Some of these warnings around the ethical usage of AI are undoubtedly justified. How do you prevent AI from learning bad characteristics as well as good? It doesn’t necessarily need to be as dramatic as the use of AI in war. It could be as simple as AI learning some of the sadly still intrinsic bias in society, such as that boys wear blue and girls wear pink. The stock archive this technology is likely to learn from has been written by humans. And humans have prejudices, fears, and ideas that they want to promote. AI may not be able to help learning some of these, and apportioning blame to the technology would be a mistake, but they could still have an impact on the service provided to us.

    Ethical issues aside, nervousness around AI in the workplace is much closer to home, and again in many ways, there is justification for some jitters from employees. Technology has a history of replacing humans in the —and the initial stages of this can be painful. Printing presses, weaving machines, mechanised farming, automated production lines, to name a few that have disrupted the workforce across industries. AI in banking could undoubtedly do the same if deployed without a long-term, sustainable plan from .

    In our upcoming series of reports on AI in financial services, Accenture looks at the potential advantages and pitfalls of embracing AI in banking, capital markets and insurance.

    “People x Process x Data = AI” is our view on the success of AI in the workplace. The process and data side we will come back to another time—but an equally important part of AI are the “people” that this technology will work alongside. Many have years of experience, most of which will not be written down for an AI colleague to pick up and assimilate into its own bank of knowledge. The importance of people is particularly significant in banking, where interaction between the bank and customer is still of vital importance to most, and must become a priority. Fifty-three percent of customers still go into their branch once a month or more. Customers like and want the reassurance of being able to speak to a person.

    That is not to say that many would not be happy with a “phygital” blend of interaction with their bank. But if this is to be a success, then the workforce needs to be ready and able to use this technology. And with 30 percent of banking executives unsure that their current workforce has the necessary skills and experience to use AI technology to its optimum, there is cause for concern that the rollout of this technology could pose a problem for banks.

    For it to be a success, a fully detailed proof of concept should be in place, with an inventory of the workforce skillset being of primary importance, before any decisions are made on how and where to use AI. Easier said than done? It needn’t be. Some simple “best practice” steps should help this along. To name a few:

    • Involving the workforce in decision-making and investigations into how and where AI could help them in their roles would go a long way towards easing any transition of jobs
    • Providing training to understand what the technology involves, and showing its limitations as well as its advantages
    • Showing how AI could take away some of the more repetitive and frustrating parts of a function, leaving the employee to do the more interesting parts of their role, and take part in more creative and stimulating work
    • Introducing roles that will make use of AI to create value within the business, and which need some human imagination to create. The lack of differentiation in products has long been lamented by customers. Using AI to simulate how a new product might work for a bank, in a fail-fast, low-risk environment, has its obvious advantages

    Maybe the ethics of using AI is less around whether there is a risk it will learn our worst traits, and more around what our intentions are from using it. If it is just to slash the costs of the workforce, then employers are missing a trick, and could find themselves on the receiving end of public and regulatory disapproval. Their employees have something AI cannot learn: empathy and understanding of human nature. Both of which are vital in a customer-facing service, and which in its current format AI cannot provide on its own, meaning a combined AI/human workforce is necessary to get the best from this technology. The future is bright; the future is still human.

     

    The post ARTIFICIAL INTELLIGENCE: AUGMENTING THE HUMAN WORKFORCE appeared first on Accenture Banking Blog.

    Accenture Banking Blog

     
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