Exclusive: How technology is being used in the financial sector

Over the past couple of years, consumers have started relying more on technology to carry out their everyday banking activities, and to provide them with alerts and updates relating to their bank account, with UK Finance revealing that banks send over 16 text alerts every second.

Furthermore, the The Way We Bank Now report from UK Finance found that there were approximately 5.5 billion log-ins to banking applications last year, a 13% increase on the figure reported for the previous year. The report also highlighted that it is not only younger consumers utilising the mobile applications, with almost half of 65 year olds now using their smartphones to bank. In comparison, 59% of 16-24 year olds are using banking applications, while 25-34 year olds proved to be the most tech savvy with 69%.

As the popularity and reliance on technology grows, a majority of under 45s are becoming increasingly interested in banking products and services from tech giants such as Apple, Google and Amazon, according to research from Equifax. Despite the figure, the research illustrated that of the 51 per cent that were interested in products from tech giants, just 45 per cent said that products like loans, credit cards or current accounts would only appeal to them if they were able to offer better value and rates than their existing bank.

Although the interest in these products comes primarily from under 45s, 40% of people across all age groups state that they would be interested in products from tech giants on the provision that they can offer better rates, with only 27% of respondents saying that they would prefer to use their existing bank as they are more familiar and have built a relationship with them.

Equifax CMO and banking and financial institution expert Jake Ranson says: “The recent announcement that Apple is joining forces with Goldman Sachs to launch a consumer credit card highlights how tech companies plan to shake up the banking industry, creating products and services to compete against the big high street banking names as well as newer digital entrants.

“Although a sense of brand familiarity pins many people to their current bank, there’s an appetite for new products and a desire for alternatives that can offer something genuinely different. The tech giants have a loyal brand following in their own right, if they can combine this with a competitive product offering we’ll see an interesting shift in dynamics as the fight to attract customers heats up.”

However, consumers are not the only ones taking advantage of technological advances, as firms are incorporating artificial intelligence support tools into their framework to assist customers and to analyse data. Royal Bank of Scotland (RBS) revealed that it uses technology from data wrangling and analytics firms Trifacta to analyse and extract relevant information from customer ‘web chats’, allowing it to assess 100% of the conversations, compared to the 0.1% it was able to look at previously through a small, manual team.

Wade Financial financial planner Ian Little has also used technology to improve his relationship with his clients. Little says that he is looking for technology that helps him “add value” to his relationships with clients, which in turn adds value to his business, with a primary focus on what problem the technology can solve, rather than what it does.

“There are a lot of systems that firms put in place to monitor their behaviour in choosing which funds to invest in and which to sell out of, but in reality they rely, in the end, a great deal on an individual to make the final decision about buying and selling an investment and as behavioural finance theory has shown we have flawed biases that can get in the way of making the right decision at the right time.

“The Clever Adviser tool solved this problem for us. It is fund monitoring technology that assesses the performance of all listed UK open-ended funds every month and delivers a buy/sell/hold recommendation for every fund in my client’s portfolios. Since using the Clever tool the average time that any fund spends in my client’s portfolios is about 18 months, which is significantly less time than the average holding period across the industry and in the past for my clients. Importantly, this more active monitoring of performance value has had a really positive impact on my clients overall investment portfolio performance – they have seen significant uplift.”

While technology has improved efficiency when analysing data to improve the customer experience, it has additionally allowed financial services firms to automatically comply with the rapidly changing financial regulations.

Nordea Bank is one of the largest banks in Europe and is responsible for over 10 million customers in the Nordic region, meaning that they are subject to the highest level of regulatory oversight in the financial services industry. As the regulations demand fast delivery, the bank decided to invest in Trifacta’s platform, allowing it to cut data ingest times by 87% and simplify data management processes. Nordea also reduced data platform costs by 73% thanks to technology, creating a central data hub and freeing up IT resources. The new process allowed the bank to reduce the delivery time for the SEPA end date EU regulation from 15 days to 1 day.

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