FINANCIAL SERVICES

KAREN CONE: MICROSOFT

According to a recent PwC report, artificial intelligence (AI) will play a substantial role in the reshaping of client engagement in financial services over the next decade. Smart businesses will develop new forms of virtual engagement capable of integrating themselves into customers’ lives. They will stick because they will be personal: informed by intelligence gathered from data about consumer behaviours, choices and volunteered preferences.

This is something we explore further in the following pages, where we discover how AI is already proving transformative across both retail banking and insurance. Plus, there’s the usual mix of case studies and thought leadership from across our partner network.

58 FEATURE How AI can enhance the customer experience

We explore how artificial intelligence could improve banks’ ability to personalise the customer experience and identify patterns in ways that humans can’t

BY REBECCA LAMBERT

hat makes a consumer choose one Upper Class. A separate app then measures their particular brand over another? Cost? reaction and collects data that Virgin can use to WConvenience? The overall customer refine its customer experience. experience? For over 20 years, airline operator Of course, Virgin is not the only company Virgin Atlantic has put its success down to its doing this kind of thing. Look into any indus- unswerving focus on providing the best possible try and you’ll see the most successful businesses customer experience. Ask a frequent flyer and focusing their efforts on continually improving loyalty programme member why they choose the customer experience. to fly with Virgin, and many highlight its atten- Some are more innovative than others. tion to detail, brand ethos, and general ability to Retailers have long been regarded as leading the make flying a pleasurable experience. It’s not just way when it comes to staying relevant and antic- about the cost of a seat. ipating their customers’ needs. Banks, on the Over the years, Virgin has introduced various other hand, have been accused of needing to do innovations to keep its customers excited about more. One report, The evolution of private bank- the flying experience it has to offer. In 2015, for ing and wealth management resulting from digiti- example, it worked with Microsoft to create an zation, published by Efma and Comarch in 2016, app called IDA (immersive digital adventure) says that banks need to be ‘Amazonified’ to stay that its sales team could use to give custom- in the game. “In other words, banks are advised ers a realistic view of what it’s like to travel in to consider using demographic, contextual and

59 www.technologyrecord.com FINANCIAL SERVICES

VIEWPOINT

A similar story in insurance

Heloise Rossouw at Willis Towers Watson explains how insurers are also upping their efforts to become more customer centric

As is the case in banking, expectations of customer try new things. A useful approach may be to identify experience and service in insurance are being shaped opportunities that can deliver pockets of value to the by the likes of online retailers who have taken attributes business, but with an ‘if you’re going to fail – fail fast’ such as ease of use, algorithms that can pre-empt mentality. This requires a culture of confidence where the customer needs, fast or real-time service, and management can act quickly – a situation facilitated by individual customer recognition to new levels. accurate real-time analytics and rapid monitoring. Distribution and customer service nirvana for insurers Until insurers fully address the back-office implications is therefore increasingly likely to involve an omnichannel and the delivery of real-time analytics, the benefits approach to customer connectivity, allowing customers of more customer-focused business models are likely to interact with insurers in a way that suits them. to fall short of expectations, no matter how great the The challenge for many insurers will be to organise their front-end proposition looks. existing capabilities differently to meet more customer- focused and cross-functional goals. Having done that, Heloise Rossouw is a senior consultant in the Insurance they will also need to be prepared to experiment and Management Consultancy at Willis Towers Watson

60 FEATURE behavioural data to learn more about those they we’re starting to see more and more experimenting cater to – and to provide services that truly reso- with this technology,” Hamblin says. “Applications nate with their audiences,” the report says. range from using robo-advisors to help answer Indeed, as customers get used to more person- common customer queries before reaching the call alised, engaging and seamless interactions and centre all the way through to running algorithms experiences in all aspect of their lives, so too that anticipate customer issues before they arise.” have they come to expect a similar level of ser- Monique Dahler, worldwide director of Financial vice from their financial services provider. Services and AI lead at Microsoft, says that finan- Chad Hamblin, global industry director of cial institutions see AI as a key enabler to accelerate Financial Services at Microsoft, says that most their transformation journey to a digital business. banks understand this, and are exploring how “Through AI, banks can provide innovative they can improve their ability to better engage customer experiences at any point in time with their customers. through any channel,” she says. “AI is a key drive “Today, every customer is a digital customer to realise cost and operational efficiency, better and this requires banks to not only digitise their risk management, and secure customer acquisi- services, but make their entire offering better tion and growth. aligned to customer needs,” he says. “They need “In its simplest form, it can automate manual to treat every interaction with the customer as tasks – such as generating reports or answering more of a conversation – one that is natural, common enquiries, freeing up staff to carry out intuitive and personal.” more value-added tasks. But it also has the poten- To achieve this, many banks are beginning to tial to transform entire business models and revo- explore developments around artificial intelli- lutionise more strategic functions such as financial gence (AI). “It’s high on their priority agenda and analysis, asset allocation and forecasting.”

VIEWPOINT How to remain relevant with customers

Paul Bowen at Avanade explains why banks are stepping up their AI developments

The customer experience is becoming the single that is a bot framework for customer-facing activities, biggest challenge affecting banks. PSD2 across Europe predictive analytics via machine learning or intelligent and the open banking legislation in the UK are opening automation of back-office processes, are critical too. up banks’ most prized assets – their clients – to Many banks have already launched AI services. competitors. Bank of America has been developing a voice- and Banks have to find a way to make themselves the text-enabled chatbot, Erica, to help its clients improve financial services platform of choice for their clients. decision making. Capital One has launched Eno for This has to be through a combination of things: mobile phones, and Barclays Africa has launched a leveraging other institutions’ APIs to build single client chatbot which moves services to Twitter and Facebook views; a focus on their differentiators, notably trust; so clients can bank within their preferred social media and an increasingly fluid proposition with new offerings app. Many of these deployments remain relatively non- available in days rather than months. invasive, but indications are that all organisations are Today, customers want a personalised experience, actively looking to accelerate. Regulatory issues may whether that is seeing just the information they still make the more cautious delay and, of course, the want or getting better advice based on their specific legacy estate on which they sit may present challenges circumstances. AI is key to enabling these demands. to be overcome. As banks come under more pressure to reduce costs and improve regulatory compliance, the capabilities Paul Bowen is senior vice president and banking that AI can provide in workplace automation, whether executive leader at Avanade

61 www.technologyrecord.com Market leader in innovative risk scoring goes global AdviceRobo applies big behavioural data such as psychographics and machine learning technology to discover and monitor patterns that reduce credit risk. Our solutions, delivered via Microsoft Azure, include automated underwriting, thin file psychographic credit scoring and near real-time risk tracking. AdviceRobo is one of the 50 hottest fintech Banks and lenders across the region benefit with 20% increased acceptance firms in Europe, as rates, decreased risk levels of up to 38% and lower operational cost. chosen by some of the biggest names in the sector. www.advicerobo.com FEATURE

To help banks on their journey towards adopt- understand the creditworthiness of applicants and Microsoft’s Bot ing and harnessing the power of AI, Microsoft has customers by using behavioural data and machine Framework helps developed the Microsoft Bot Framework, which learning. The company applies psychographics to create intelligent bots which interact provides everything needed to quickly build and scoring, financial and other behavioural data to with users naturally connect a bot to whatever channel and integrate create richer insights that help lenders make the wherever they are with popular tools such as Skype and Office 365. right credit decisions and better monitor risk. “This is not just about providing a product, And Blueprism has developed Robotic Process though,” Dahler explains. “At Microsoft, we believe Automation, which enables business operations to that the value of AI is not about getting a quick be agile and cost effective through rapid automa- chat bot in place. Where we make a difference is tion of manual, rules-based, back-office admin- that we help banks take advantage of our entire AI istrative processes, reducing cost and improving value chain or Cortana Intelligence Suite. We give accuracy by creating a digital workforce. them access to our entire product suite and con- nect them with industry experts, helping them to transform data into intelligent actions.” “Where we make a difference is that For banks that are considering exploring the we help banks take advantage of the potential of AI but are put off by the time, effort and costs it could take – or think that the tech- entire AI value chain” nology is still undeveloped – Microsoft also has a number of AI early adopter programmes. MONIQUE DAHLER, MICROSOFT “For example, the Intelligent Bots EAP is a pro- gramme that delivers a customer or employee Hamblin says that for those banks who are will- facing bot into pilot in a short timeframe – ing to explore the potential of AI now, the possi- around five weeks,” Dahler explains. “We help bilities are endless. “We’re in conversations with them to create a solution and pilot it with real customers who are developing everything from end users. It’s a great way of getting AI develop- robo-advisor capabilities – using AI as a vehicle ments off the ground quickly.” to do low cost trading without human interven- Understandably, as with most developments tion or as a first line of communication with around AI, practical applications are still in the customer – through to using AI and social their infancy. But there are solutions out there, capabilities as the canary in the mine to identify delivered by Microsoft partners, that banks can problems and issues before they progress and take advantage of. For example, AdviceRobo has cause problems. This is just the beginning of the created a way for financial institutions to better transformation of our industry.”

63 www.technologyrecord.com Connecting the insurance world, modernising insurers

BrovadaOne seamlessly connects the insurance world and propels it into the digital age. Using advanced technology, insurer and broker systems join together, modernising legacy systems and overcoming back-office limitations. This improves process efficiency and enables the real-time interaction now demanded by the market. With BrovadaOne insurers can realise their digital ambitions with minimal business disruption; putting them firmly on the path towards digitalisation.

Visit: willistowerswatson.com/brovadaone

willistowerswatson.com VIEWPOINT Taking the guesswork out of customer service

WIM GEUKENS: VERIPARK

An overview of Veripark’s Customer Insights for Banking solution and how it helps bankers see the bigger picture

magine this scenario: a customer calls his bank personal and quick. However, bank employ- to confirm that the funds from a cheque they ees are unable to deliver on these expectations Ideposited have been transferred. After ver- because they lack the ability to tie together cus- ifying the customer’s account, the call centre tomer preferences, decisions, previous conversa- employee assures the customer it will be trans- tions and more; they miss the bigger picture. ferred tomorrow. The customer is relieved and With nearly every transaction in the banking satisfied – but did the bank make the most out of industry executed electronically, the amount this phone call? of data generated is staggering. However, while Modern banking requires efficient customer data is pervasive, it does not always yield insights engagement and meeting more than the mini- immediately. Banks have a plethora of informa- mum standards of customer satisfaction. Imagine tion at their disposal – from product usage to if the employee had the ability to go beyond the channel usage data – but they need a data man- customer’s initial request and add value to the agement approach to bring this data together customer relationship. If the employee could from all parts of the business. view the customer’s channel usage information, According to the 2014 Capgemini study of banks, Big data alchemy: How can banks max- imise the value of their customer data?, 57% “Modern banking requires efficient of respondents cite data silos as being the big- customer engagement” gest delay to effective decision-making in their organisation. For all our advancements in data collection, often banks are faced with the chal- they could have seen that the customer did not lenges of unifying data from separate channels have the bank’s mobile app installed. Then, the and integrating it for a holistic view of the data. employee could offer to help the customer set Banks that empower all their employees with up the banking app and to receive notifications actionable customer insights will be better posi- when funds become available. Or, if the call tioned to address customer issues for increased centre rep was aware that the bank was missing customer satisfaction. Before this is possible, key parts of the customer’s account information, banks need to solve their major pain points they could have used the call as an opportunity ranging from siloed customer data, compliance to fill in data gaps. issues, inconsistent channel integration, usage of Traditional banking interactions are inefficient, expensive, highly assisted channels to poor port- with overly narrow engagements, limited by folio management. minimal or inaccessible customer data. Today’s With these challenges, banks today are just customers want their banks to be proactive, operating blindly, without a specific target in

65 www.technologyrecord.com BANKING

mind. Suppose instead, you could easily iden- tify which customers were at risk for churn. Or you knew a customer frequently worked with the call centre to resolve issues that could more quickly be solved on the mobile app. What if you could solve data compliance issues by work- ing with customers when you have them to fill in missing information? With more visibility into the information that banks already have at their disposal, banks gain data from external sources such as real-time stock Customer Insights for an easy way of knowing the right customers to market data, economic events and sentiment Banking provides a focus on at the right time. analysis, Customer Insights for Banking gives complete customer profile to help Customer Insights for Banking, built on your employees an insight about product usage, bank employees Microsoft cloud technology, empowers banks channel interactions and more. This enables them have meaningful and bank employees with a holistic, 360-degree to deliver informed, personalised interactions, conversations with view of their customers. The solution consol- offers and services to customers. clients idates data from across the business, enabling Without this capability, banks stand to lose to bank employees to drive more informed conver- competitors that have replaced guesswork with sations with customers. With role-based views, data-informed decision-making and seam- dashboards can also be customised to deliver the less customer experiences across all channels. most pertinent information in real time – increas- Bringing your data together with Customer ing servicing efficiency across all employees. By Insights for Banking is the first step towards collecting relevant customer data from a variety standing up against the competition. of customer contact points, including e-mails, mobile apps, call centres, in-branch interactions, Wim Geukens is managing director ATMs, social media channels and relevant market of VeriPark Europe

66 VIEWPOINT Bringing bots to insurance

DENNIS VANDERLIP: MICROSOFT

Insurers are exploring the potential of artificial intelligence to better serve their customers and run a more efficient operation

arlier this year at the FinTech Ideas Festival interacting naturally with customers and agents. in San Francisco, US, Microsoft CEO Satya Using this toolkit, they have everything they need ENadella explained how the insurance indus- to create intelligent bots that have the ability to try is leading the way in the adoption of artificial understand natural language, and see, hear, inter- intelligence (AI) through the use of chatbots and pret and interact in more human ways. These bots other innovative applications. can be integrated into a range of platforms, includ- It’s something we’re seeing more of in the ing Skype, Slack, e-mail and the web, providing a industry, particularly as insurers look to improve range of services including the ability to locate and the customer experience. In fact, when I speak share documents internally, answer simple cus- with insurers, there are two main factors that are tomer queries, handle file claims and so on. driving them to explore the potential of AI: low- For those who are just starting out exploring the ering costs and delivering a customer experience potential of AI, we have some recommendations. that is more personalised and intuitive. First, look to build a bot internally, where the risk is low, and serves as internal purpose – dealing “The future of customer with employee IT issues, for example. Then start thinking about offering simple customer-facing experience management lies bots, Q&A bots for example, on your company website, to help solve basic enquiries and direct in a cloud-first approach” them to the best resources. You can then move to more sophisticated interactions such as selling a At Microsoft, we believe that the future of cus- simple insurance product. tomer experience management lies in a cloud- Looking ahead, we expect to see widespread first approach and involves four distinct layers: adoption of AI services within the industry and creating data lakes to analyse the vast amounts of beyond. Ultimately, we can look forward to making data at our disposal today; processing that data to better use of workers, freeing them up to deal with deliver insights around next best offer, next best more challenging customer queries and deliver action, churn prediction, fraud detection and so high-value services. At the same time, insurers can on; using Dynamics 365 CRM to deliver insight look forward to reducing the cost of selling basic to agents and customer service representatives; insurance, more efficiently serving customers, and then using bots and intelligent devices to understanding their needs better and more accu- communicate with customers and agents in new, rately predicting their future requirements. more efficient ways. Already, insurers are making use of our Bot Dennis Vanderlip is industry solutions director Framework to build their own bots capable of of Worldwide Insurance at Microsoft

67 www.technologyrecord.com VIEWPOINT INSURANCE Taking the challenges out of AI

STEVE MAGENNIS: AVANADE

Artificial intelligence systems bring a new host of challenges for insurance companies, but if deployed well, they will drive more personable customer experiences

ew people would argue that the insurance However, AI will help them to push the envelope industry has struggled to sustain an exemplary with DesignOps so they can implement thought- Fcustomer experience at scale. Evaluating and ful, user-centric systems to engage naturally with managing risk in the real world is a complex mix customers at scale. Similarly, the insurance indus- of regulation, nuance, subjectivity and humanity. try needs to re-visit its long-held beliefs about ‘the As artificial intelligence (AI) technology way things work’ to encourage innovation. evolves, the systems that insurance companies Moving to AI will bring new challenges for use to support their customers’ experience will insurers. A business’s reputation can collapse become more personable. Natural language in the blink of an eye if its intelligent systems interfaces and agent bots that advocate and act result in damage to customer privacy, equip- for the customer are just a few of the technolo- ment or people. It’s impossible to anticipate all gies that will help them to make this change. the potential consequences, so carriers need to Insurers must ensure that the tools they pro- understand the interplay of risk, design errors, vide to their workforce also keep pace. This is negligence and poor ethical judgment. critical in closing the knowledge gaps caused by Trust relationships between insurer and insured will be challenged. For example, prod- “AI will provide more than just ucts that involve continuous monitoring of confidential information – such as machine smarter help systems” operations, driving habits, and activity in the home – could potentially make the insurer an an aging workforce that is starting to retire. It is inadvertent source of damage or ethical misuse. also critical in addressing a shift towards solv- The notion of acceptable risk, liability and ing more human-like problems that employees compensatory damages will evolve along with are increasingly expected to grapple with. These AI. The now classic example of self-driving cars include: what events (natural, personal and that weigh ‘greater good’ scenarios prior to colli- professional) are likely to happen? What is an sion do not represent a product failure. Instead, appropriate response to a customer in a given they represent a choice that was informed by, but situation? How do groups of people across vari- not actually made by, a human. ous social networks respond to insurance issues? By thoroughly understanding the topic, insur- In the same way that television was more than ance carriers can help articulate and quantify the just a radio with pictures, AI will provide more costs and benefits of the technology. than just smarter help systems. Insurers will be left behind if they continue to apply design principles Steve Magennis is North America that are optimised only for existing technology. insurance lead at Avanade

68 VIEWPOINT AI: be aware of the risks

TOM SRAIL: WILLIS TOWERS WATSON

While the rise of AI is providing many new opportunities for insurance companies, it is also presenting a number of risks

rtificial intelligence (AI) is expected reasoning should not be cut from the equation to become a US$36 billion industry by of decision-making. A2025, impacting almost every sector. The Responsibility is also a concern. The legal insurance industry is no exception: through issues surrounding liability of machines will AI systems, insurers will be able to predict continue to increase as AI develops. Using risk using multiple data points and algorithms. machines to complete tasks traditionally per- Armed with this information, they will be able formed by humans leads to the issue of respon- to determine the best premium pricing with sibility. Who bears the burden of liability if greater granularity and have greater uniformity something should fail? The machine manufac- in decision-making. turer or the owner? In the automotive indus- While its potential is plain to see, AI is also try, autonomous vehicle manufacturers have presenting a number of risks, many of which are said they will accept liability in the event of often overlooked. an accident. This is a major flip in the current The first risk is around bias. Contrary to system of the insurance sector that attributes the vision of neutrality and objectivity that responsibility to the driver. The legal issues surrounding liability of machines will continue to increase as AI develops. “Conclusions drawn from Another issue is regarding privacy. The machines should never be relied increased collection and processing of personal data as part of AI to make machines more intel- upon as being flawless or absolute” ligent raises the question of who should control that data, whether consent is required, and the technology industry may promote, there how it should be given. It will become easier is always an element of bias when writing an to identify an individual, even with minimal algorithm. If AI is used for decision-making, data points, and many users may not be aware such as predicting risk for insurers, it could of the amount of personal data they give out in lead to a biased decision for a particular indi- the course of their online activities. Too high a vidual policy, with the added difficulty of not regulatory burden might hinder the progress of being able to pinpoint where the bias comes the market, but the lack of a strong framework from. The use of technology to make a decision may also lead to abuse. gives an element of certainty to that decision, but conclusions drawn from machines should Tom Srail is regional industry leader for never be relied upon as being flawless or abso- Willis Towers Watson’s Technology, Media lute. As the inventor of machines, human and Telecommunications practice.

69 www.technologyrecord.com PROFILED: BEYOND BANK AUSTRALIA FINANCIAL SERVICES Going above and beyond

DXC Technology helps Australian bank improve how it interacts with individual customers by deploying Microsoft Dynamics CRM

eyond Bank Australia, one of Australia’s larg- est customer-owned banks, aims to offer its B200,000 customers a consistent, high qual- ity and personalised service. In the past, this was almost impossible because customer data was stored in various siloed systems and employees had to switch between multiple applications to find information when interacting with customers. “The customer service representative was more focused on processes than on building a strong rapport with the customer, and could miss vital information,” says Robert Aitken, Beyond Bank CIO. “It could take more than 30 clicks to get the remarks Aitken. “We anticipate that this will Beyond Bank’s new information required. Importantly, this meant the lead to improved staff satisfaction and more Microsoft Dynamics bank couldn’t see the underlying issues or reasons motivated employees since they can contribute CRM platform helps it to provide a consistent for customer behaviour, and therefore couldn’t directly to organisational success.” customer service capitalise on up-sell or cross-sell opportunities.” Moving to the cloud has also significantly Beyond Bank wanted to implement a low-cost, reduced Beyond Bank’s total IT costs and min- cloud-based customer relationship management imised downtime. (CRM) platform that would integrate with its “The cloud-based delivery model means we get core banking system to simplify workloads and upgrades and patches directly without having to provide comprehensive reports, marketing man- wait for, and plan for, an on-premise upgrade,” agement and automation. Aitken says. Working with Eclipse, a DXC Technology Beyond Bank is rolling out Microsoft Dynamics Company, Beyond Bank rolled out Microsoft Marketing, Social Listening, Voice of Customer, Dynamics CRM integrated with Office 365 and Power BI and Azure Machine Learning so it can SharePoint. DXC Eclipse used Microsoft Azure analyse customer data to better predict future Service Bus to integrate the CRM platform behaviour and product demands. with the core banking system and external data Aitken attributes the project’s success to DXC sources, streamlining and automating data Eclipse’s team of consultants who spent 18 sharing processes. months working with Beyond Bank’s employees Now, employees can instantly access a 360-degree to understand the company’s banking processes. view of customer history, accounts, correspond- “By embedding its team in the Beyond Bank ence and portfolio information so they can serve team, DXC Eclipse was able to proactively add people in a personalised way, both inside and suggestions regarding how to get the best possible outside of the bank. This is expected to increase results,” Aitken concludes. “This project is one of intra-business referrals and sales per customer. the most significant projects Beyond Bank has done “The solution will give staff members more in 10 years. This has been truly transformational ownership of the customer relationship,” and a real game-changer for the organisation.”

70 PROFILED: UNICRE Security made easy

Portugese payment provider Unicre is benefitting from enhanced security thanks to Barracuda Networks’ Web Application Firewall

ounded in 1974 in Lisbon, Unicre has grown to be a successful provider of payment solu- Ftions and credit card management systems. Several years ago, it became clear that Unicre’s legacy IT infrastructure had become too costly to maintain and manage. What’s more, it lacked the scalability that Unicre required as its business grew. At this point, Miguel Vidal, production, systems and communications manager for the company, along with chief security officer Pedro Pereira, decided to explore alternatives. Pereira had previously hosted on Microsoft Azure, and was impressed with its high reliability, flexibility, scalability, and cost-effectiveness. “We were committed from the beginning to making a complete switch to a public-cloud environment. We were familiar and satisfied with Azure, so it was an easy choice,” he explains. Two requirements were very important. First, the transition had to be transparent to custom- ers, with no service interruptions. Second, the like OnepointSale, I would rate Barracuda as highly regulated nature of their industry – and 100% excellent.” the business risks associated with a security By the end of the three-month POC deploy- failure – required their applications to be com- ment, Vidal, Pereira, and Saramago were satis- pletely secured against cyber threats and crimi- fied that the Barracuda Web Application Firewall nals. Compliance with EBA regulations and PCI would effectively secure Unicre’s ­outward-facing DSS standards was critical. applications and ensure that the company Unicre chose OnepointSale as the solution pro- remained compliant with all regulations. vider, who recommended the Barracuda Web Furthermore, they were impressed with how Application Firewall to ensure security and reg- easy it was to configure and deploy the solu- ulatory compliance, and set up a 90-day proof- tion within Azure. The fact that Barracuda Web of-concept (POC) to evaluate the product. Application Firewall can auto-scale right along Paulo Saramago, IT Development Manager at with the Azure deployment – instantly extend- OnepointSale, recommended the POC based ing protection to new instances as they are spun on others’ reviews, along with the fact that the up – was also a big plus. Barracuda solution was the first web application OnepointSale executed the entire transition firewall available on Microsoft Azure, easily config- in just three months and no Unicre customers ured and deployed through the Azure Marketplace. experienced any service interruption. “To be Working closely with Barracuda support, and honest, I expected the project to be more dif- with Microsoft Cloud solution architect Valério ficult,” says Vidal. “Thanks to OnepointSale’s Farias, they completed the POC with no diffi- expertise and the support we had from culties. Saramago says: “In terms of their com- Barracuda and Microsoft, it ended up being mitment to supporting partners and resellers surprisingly easy.”

71 www.technologyrecord.com