The COVID-19 pandemic has “drastically accelerated” a digital transformation agenda in the financial services sector, according to fintech firm, ABAKA.

The digital retirement solutions specialist has suggested the industry is set to benefit from the cost reduction and enhanced revenue stream that innovative technologies such as artificial intelligence (AI) can provide.

ABAKA reported that it has seen a first-hand rise in demand from providers for technology which can help support customer engagement – such as conversational chatbots powered by AI – because of their ability to guide customers financial planning with intelligent nudges.

“Many financial services providers have been slow in the past few years to adapt technology which can enable digital access for their customers,” ABAKA founder and CEO, Fahd Rachidy, told MoneyAge.

“Although we can demonstrate that operating costs for digital banking are 67% lower than traditional branch-based costs, and digital customers can generate twice as much revenue, with customers’ interactions via digital channels 16 times more frequent than branch-based interactions.”

Rachidy described that “some” providers have kick-started moves to adopt new technology during the crisis, but added that many remain in the early stages of their “digital journey”.

“We have seen some providers use technology to rise to the challenges of remote customer interactions, but it’s clear there are areas where vast improvements are needed,” he commented.

“For example, providers rarely have good quality data on their customers and their financial behaviours. Often this is because that data is difficult to access, or because they simply don’t have the data. This makes it much harder for providers to effectively engage their customers in saving more or planning properly for retirement.

“AI can support that process, either by assisting in the data capture process and helping build a clear ‘profile’ of each customer, or enabling providers to process and augment their own data. With better understanding of what each customer ‘looks’ like, providers can use technology to build hyper-personalised communications powered by AI.”

Rachidy also suggested that customers across all segments have become “more comfortable” using technology for their finances than ever before, following the easing of lockdown restrictions in parts of the UK.

He said it is “highly likely” that customers will continue to demand “slick digital services” to manage their finances beyond the crisis, and that he believes that COVID-19 will broaden the scope of services that the financial services sector should provide its customers.

“This is definitely becoming a top priority on the agenda of financial services providers,” Rachidy added. “Customers expect a hyper-personalised experience which holistically covers their needs, from health care, insurance and protection to debt repayments, emergency savings and retirement planning.

“The coronavirus crisis has presented a unique opportunity for providers to build a platform-ecosystem for mass-customised engagement and deepen their relationships with customers.”

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