Finance in Focus Podcast: Fintech drives the adoption of cognitive
What role does fintech have in leveraging and driving the adoption of cognitive computing? Historically, the banking sector and financial services in general have been slow to adopt technology and move forward despite having access to a tremendous amount of data and information. Fintechs, on the other hand, are small and have fewer constraints, compliance and legal issues. They are seemingly able to bend space and time by quickly delivering technological solutions at a fraction of the cost that banks would spend if they created the solution themselves.
Financial institutions have large volumes of data, but they haven’t truly maximized the use of the data. They need to understand the value of the data to provide personalized, customized, textualized service for their clients. Fintechs may not have the scale, but they are agile and they’ve raised the bar on the expectations of technology. Banks want to know how to turn data into cash and are partnering with fintechs to realize their goal of delivering revenue through the technology.
As Brett King puts on his futurist hat, he ponders what if we were to design banking for 2025? As Elon Musk has done with cars, we need to go back to first principals to have banking embedded into our life and solving problems as they present themselves. Questions such as the following are really data problems:
- Can I really afford to go out for dinner tonight?
- What car can I afford to buy?
- Can I afford the latest smartphone?
The ability to surface this data at the right time and in context is key to success. The ecosystem should be smart enough to know what your interests are and to offer compelling credit offers as you step into a store or showroom. Credit cards or credit applications would not need to be involved because the data in terms of how you purchase would be built into the experience. Experience needs to be built from the ground up, and currently fintechs are much better at building experience.
Banks start with a customer base and trust, and have the ability to scale, but are challenged with the game-changing shift of technology due to legacy systems, culture and regulations. Fintechs are smaller and agile and therefore able to produce solutions more quickly and with less cost, but they are challenged to find ways to scale and truly penetrate the market. They think differently about technology, channels and customer segmentation than do large financial institutions. So who will ultimately transform the financial services industry?
Create individualized experiences for customers
We are seeing large financial institutions such as TD Bank in Canada and Westpac in New Zealand work with fintechs to adopt leading-edge technology. Banks want to be innovative, and bankers have great ideas, but they are often frustrated with the challenges they face. Fintech companies are even typically populated with frustrated bankers. Broadly speaking, the sponsor from the business perspective gets it, so integrating a fintech project within a bank is generally a successful collaboration.
Fintechs need banks for the access to the channels and revenue from large financial institution partnerships. Banks need fintechs to acquire the technology and skills to get timely solutions to market faster than they could on their own.
The ability to use data to change people’s lives
Data used in real time is more effective. The real time will have a real cognitive shift. Making people aware of their spending habits in real time causes behavior change. We’re only at the tip of the iceberg in the area of cognitive business now.
Brett King is a five-time Amazon bestselling author, a renowned commentator and globally respected speaker on the future of business. He speaks on how technology is disrupting business, changing behavior and influencing society. King hosts Breaking Banks, the world's leading dedicated radio show on technology impact in banking and financial services. He is also the founder of Moven, a successful mobile start-up with the world’s first mobile, downloadable bank account that is available in the Canada, New Zealand and the US. His fifth book is Augmented: Life in the Smart Lane (Marshall Cavendish International, May 2016). King has been featured in periodicals and on programming including ABA Journal, ABC, Bank Technology News, the BBC, Bloomberg, CNBC, The Economist, Fast Company, Financial Times, Fortune magazine, Fox News, TechCrunch, Wired and many others. He contributes regularly as a blogger in Huffington Post. Follow King on Twitter @BrettKing.
Matt Kinney is an offering manager in the IBM Watson Financial Services group, helping banks evolve and leverage cognitive technologies. Kinney joined IBM after 18 years consulting, leading teams, building strategies and executing for banks and other large organizations in Canada, Europe and the US. Follow Kinney on Twitter @matt_kinney.
Bill Sullivan, global head #FinancialServices market intelligence at @Capgemini has nearly two decades of a proven track record leading multicultural teams in Asia-Pacific, Europe and the US as well as having successfully run his own start-up for three years. Sullivan’s extensive experience includes enabling an approximately €2.5 billion financial services consulting business through insightful and actionable market intelligence, customized primary research and world-class thought leadership. He is a fintech influencer, an executive strategy consultant, researcher and thought leader in global financial services. Follow Sullivan on Twitter @WFSULLIVAN3.
Don’t miss other episodes in this podcast series. Banking analytics, combined with cognitive computing, provides the ability to segment customers and know each one as an individual in real time. This knowledge of each customer allows you to send personalized offers, making one-to-one relationships a possibility. Learn how you can create individualized experiences for your customers and realize tangible business benefits by watching the video, Getting Started with IBM Customer Insight for Banking.