Advancements in the internet of things (IoT) and artificial intelligence (AI) are disrupting traditional business processes in the banking, financial services and insurance (BFSI) sector. While new regulatory requirements have put pressure on the sector to create more stringent policies, companies must – at the same time – look for ways to run a more efficient business and offer enhanced customer experience.
Companies in the BFSI sector are increasingly leveraging digital technologies to support innovative payment methods and transform their know-your-customer (KYC) processes.
As regulation for customer verification and authentication becomes more stringent, KYC processes need to improve without increasing the time customers have to wait. Concurrently, banks and insurers need to provide their end customers with advanced document upload options that can be supported on any device, any time, in addition to offering seamless experience across all channels. By using IoT and AI in payment methods, banks are working to transform their back-end processes and integrate them with front-end systems to develop a holistic and robust finance operation.
The processes below are the most impacted by emerging technologies and have created an opportunity for service providers and their BFSI clients to enhance process efficiency and thus offer a better end user experience:
- Payment processing – As IoT offers advanced connectivity for devices, it can help automate payments through sensors, tracking devices, near-field communication (NFC) chips and payment apps. Banks need to enable their back-end payment processing teams to support all these payment endpoints. Their transaction processing platform should be able to handle the operations in real-time, which requires banking professionals to collaborate with various departments in real time. IoT, along with blockchain-enabled smart contracts and digital identity, also can fully automate payments.
- Know-your-customer (KYC) processing – Banks and insurance companies require comprehensive insights about their customers’ behavior to do accurate profiling and verification. With the advent of IoT, various devices like smartphones, tablets, fitness bands, smart eye wear (i.e., Google glass and others) are linked with the customers’ digital persona and can offer vast amount of insight into financial behavior through advanced analytics. This data can be used to build banking and insurance products that are customized to consumers’ needs. Financial institutions can complete KYC processes faster, almost in real-time, by leveraging digital identities. They can use AI to perform pattern recognition and unstructured data analytics to identify high-risk customers. And they can use natural language processing (NLP) and chatbots to reduce staffing needs in KYC processing. With operations spanning the globe, financial institutions can leverage cognitive technology to analyze regulatory changes and ensure adherence to applicable laws in each geography.
- Workflow automation – Banks and insurers can use automation and analytics to generate audit reports and notifications, and leverage automated and cognitive workflow reports to develop risk profiles on businesses and retail customers. AI-based automation also helps provide in-depth due diligence information at a global level and by specific region. With the inclusion of links to data sources, the reports are auditable and can be used by both internal auditors as well as regulatory authorities.
To converge back-end and front-end processes, BFSI companies need to invest in an integrated end-to-end solution that will help them adapt to the ever-changing technological landscape at a faster pace. Companies can leverage available innovative solutions that are based on newer technologies like IoT and AI in addition to existing automation and analytics platforms, thereby bridging the gaps between siloed business operations. This would help them improve customer service by enabling meaningful and insightful customer interactions and enhance operational efficiency by reducing human intervention in error-prone and repetitive processes.