Shifting winds in the Cognitive Era for banking’s digital transformation

IBM Analytics Director - FSS Americas, IBM

In the face of stiff headwinds still being felt from the financial downturn, the rise of the FinTech disruption and internal cultural resistance, we are starting to see winning organizations wade through a sea of change to find pragmatic ways forward. Focus is on innovation: they are removing friction, streamlining processes, updating stale business models and leveraging insights to dramatically improve client engagements. Clients are transforming digitally, but they are also rethinking how humans and machines interact, outthink competitors and open up a Cognitive Era.

Strategic starting points

These cognitive systems have the ability to understand natural language to interact better with humans, capture the expertise of top performers, build upon knowledge from structured and unstructured sources and provide consistent expert assistance.

Already 89 percent of banks familiar with cognitive computing believe it has the potential to change the banking industry by combining digital transformations, advanced analytics capabilities and data—in all forms.  

In my work with banking clients, I have seen several strategic starting points for using cognitive computing. Each presents an opportunity to redefine the brand experience through new ways, extending artificial intelligence one step further by augmenting human intelligence and extending expertise to all corners of the bank. Now, there are no simple answers and every bank has to factor in its own realities and clients’ appetite for new services, but the roadmap to cognitive computing can begin with three possible approaches.  

Designing value and improving client engagements


Creating a customer-focused enterprise enables you to design value and improve engagements with clients. Consider new ways to interact with clients through digital virtual agents in which machine learning meets self-service. These new cognitive systems can interact with customers, listen to questions and offer solutions. They learn with every human interaction and grow its collection of knowledge, quickly adapting to the way humans think. We are now able to deliver unprecedented personalized support to customers in a way that fundamentally changes their experience. It goes beyond market segmentation or microsegmentation, by not only understanding a customer’s unique needs, wants and desires, but also engaging them in a dialogue. This method helps them answer questions and become more knowledgeable in an emotive and empathetic way.

Optimizing risk, compliance and security

Cognitive systems can improve enterprise-wide visibility into regulatory and internal compliance controls. By understanding the latest regulations and comparing bank activity against them, cognitive systems can help the bank’s risk officers detect when a bank cannot meet its obligations. They can also provide recommendations on how to correct course.

On the security front, these systems can understand, reason and learn about security topics and threats by tapping into security knowledge that has previously been dark to an organization’s defenses. These systems enable security analysts to gain new insights and respond to threats with greater confidence at speed and scale. They can perform statistical analysis on a corpus of data, look for patterns, define relationships among the data and form hypotheses to help people make better decisions. A cognitive system is intended to be a trusted advisor to security analysts, uncovering insights and patterns into security incidents while suggesting possible solutions to stop a threat.

Driving agility and operational efficiency

At the end of the day, we are still operating below pre-downturn levels. Even though banking may be changing fundamentally, it is still an attractive industry overall. The challenge is to be diligent about reducing cost and leveraging technology wherever possible, knowing that start-ups are cherry-picking our services and coming in at much reduced price points. Of course, we won’t compromise on data security and governance, but we have to shore up our enabling technologies to offer real-time payments, simpler interfaces and application programming interfaces (APIs). And we need to leverage new technologies such as blockchain, open source projects such as Apache Spark and utilize environments such as cloud-based platforms wherever possible.

Clever, pragmatic results

From my vantage point, taking a practical way forward isn’t so much about disruption, but rather about adopting new strategies and leveraging technology in new and innovative ways. It is also about adapting our organizations and changing culture to provide value to our clients in new, clever and pragmatic ways through greater efficiency, quality and speed. The bottom line is business leaders are facing a stark choice: either reinvent their enterprises or watch as their businesses decompose around them. Hail to the rainmakers, catalysts and change agents.

Begin reinventing your enterprise now