Skip to Main Content

Technology is transforming the banking industry, and you’re at the centre

Bank: derived from the Old Italian word banca – a bench used in the marketplace for the exchange of money and bills. When a banker failed, their bench was broken, and they became bankrupt

Around four thousand years ago, merchants in Assyria, India and Sumeria began giving out grain loans to farmers and traders who transported goods between cities. Fast forward to ancient Greece and the Roman Empire, and lenders in temples were providing loans, accepting deposits, and changing money, paving the way for the modern-day banking systems, providing new opportunities for people to spend, save and grow their money.

While the core of banking has remained relatively unchanged for thousands of years, today the industry is undergoing an era of transformation, moving beyond the basic apps and features that have become expected.

Long-established banks, steeped in tradition, are now facing competition from new players – startups and industry disruptors who, within a short time of entering the scene, are offering more innovative features, centered around customer needs.

Every company that wishes to remain relevant and competitive must become a technology company, and the banking industry is no exception. Here, we discuss the latest trends in banking and finance, based on the innovation and discussion with our customers, partners, and leading influencers.

The law of survival isn’t about being the strongest or the fittest. It’s about being the most adaptable to change.

The drive for transformation
“Change is happening, and there’s a sense of urgency,” says Patrice Amann, Regional Business Lead, Worldwide Financial Services, Microsoft. “This industry is under huge pressure, with challengers coming in through several angles. There needs to be a balance between the need for speed, agility and meeting customer expectations on one hand, while meeting regulatory requirements on the other.”

Leading finance influencer Chris Skinner echoes this need for change, describing how banks must evolve with their customers in mind, if they wish to remain competitive. “The law of survival isn’t about being the strongest or the fittest. It’s about being the most adaptable to change – but are you adapting to the right thing?”

While banks are undergoing using technology to transform, some, in Skinner’s words, are lead by bankers, while others are lead by bankers that truly understand technology. In essence, introducing technology simply for the sake of it, isn’t enough.

This is echoed by David Scola, Acting Chief Executive – Americas and UK at SWIFT: “Tech is an enabler, not an endpoint. Lots of people enter the space with a hammer, and view everything as a nail. Innovating for the sake of innovation, simply to say you’ve used it, is not a game plan that we follow.”

Think of some of the banking apps you use. If you want to check if an expected payment has been deposited into your account, or whether or not money has been taken out, you need to check yourself. “Traditional banking isn’t very good,” Skinner elaborates. “They provide you with historical transactions, but no useful information.”

Customer-centric banking means that customers get real-time information such as sending instant notifications for deposits or withdrawals. They also include the location of payments to help detect fraudulent use, as well as offering a statistical breakdown of where your money is spent to help you budget. This is the extra customer-focused features that entice new customers to become loyal ones.

Driven by the cloud
The cloud is a vital foundation of this transformation process, and new players in the banking industry are building their services around the cloud from day one. But what about more established, traditional financial institutions?

“A few years ago, we didn’t see as much of a willingness to adopt the cloud from banks,” Amann states. “When we started this journey with the first-movers, discussions with regulators were more complicated, as it was a new space. Microsoft’s cloud services meet all of the required regulations, and as a result, banks are now proactively coming to us, asking for help in unlocking their innovative cloud capabilities.”

Using services such as the Azure cloud not only ensures that banks are compliant with regulations, but it also offers the ability to scale resources up and down, depending on demand, providing a more reliable service to users than a traditional on-premises solution. This is supported by Nigel Walder, COO, ClearBank, who states that “We couldn’t predict the speed at which our customers would come on board. Thanks to the cloud, it takes us minutes to scale up resources, before scaling down again. This means significant improvements in efficiency, and a reduction in costs.”

Automatic updates which include Microsoft’s stringent privacy protection and cybersecurity services, also allow banks to focus more time on delivering the best service to their customers, without worrying about keeping up to date with regulations and security practices themselves.

One such example is SWIFT, the industry standard and world leader in secure financial messaging services. The company chose Azure services to ensure that SWIFT Cloud Connect achieves the resilience, security, and compliance demands required in the financial services industry. Microsoft is the first cloud provider working with SWIFT to build public cloud connectivity, and has performed its testing with SWIFT by leveraging the Azure Logic Apps service to process payment transactions – a process which now takes weeks, instead of months.

“I think the impact to the end user clients, the typical banking client, is that they get more transparency into their payments,” says David Scola, Acting Chief Executive, SWIFT. “They get greater visibility on what’s happening with them, with the fees that they’re being charged and ultimately with the speed at which those payments are being processed, but also ultimately that they’re as safe and secure as possible.”

Data and automation
Data is an incredibly important asset, but it needs to be used in the right way to achieve maximum impact. Combining data with automation solutions, for example, can help customers make the best investments to reach their goals.

UBS Partner is one tool that drives this innovation forwards, by enhancing the capabilities of financial advisors. Run on the Azure cloud, it screens client portfolios, identifying whether their investments are on track to meet their individual goals, or whether there are any changes that need to be made. Concrete sell and buy recommendations are then generated, to help keep portfolios on track and improve their likelihood of meeting objectives.

Using the UBS Partner tool’s algorithm, advisors can tailor investments for each person, to help them manage their portfolio and meet their individual investment goals. The end result is a hyper-personalised service which is built around the client’s needs, while freeing up time for financial advisors to spend more focused time with clients.

“When we initially started this at UBS, people thought we were replacing client advisors, but this was not the case,” says William Kennedy, Head of Products, Platforms & Specialists at UBS Asset Management. “We know our customers are looking for advice, and this tool allows advisors to be more scalable, by freeing up their time to focus on clients, while increasing the size of our partners by bringing in new clients. Ultimately, the tool is something that augments – not replaces – the trusted guidance advisors give to their customers.

The faster money moves, the more customers need to trust on a technology ecosystem to engage and protect them.

Another example of innovative automation is Blue Prism’s Robotic Process Automation, which uses ‘software robots’ that are programmed to execute tasks. Running on Azure and using various Microsoft tools such as API integrations with Azure Cognitive Services, Machine Learning and Text Analytics, these digital workers follow programmed rules which help organisations such as banks to automatically improve process quality, efficiency, consistency, accuracy, and compliance.

Blue Prism digital workers can, for example, process loan applications and insurance claims at a much faster rate, through customers’ preferred digital channels. Customers also receive 24/7 access to applications and real-time answers to their financial questions. Organisations can also reduce departmental operational costs and drive employees to focus on high-value work, versus repetitive tasks — leading to increased job satisfaction.

Ultimately, this means freeing up employees’ time to focus on tasks that require human ingenuity, such as emotional intelligence, judgement, reasoning, and direct customer interaction.

With 1,330+ banks in over 50 countries as their clients, Blue Prism has placed its trust in Microsoft’s services, to deliver innovative results to end users. As Claire Hulett, EMEA Alliance Director, Blue Prism, states: “The faster money moves the more customers need to trust on a technology ecosystem to engage and protect them.”

Happy young couple shake hand of bank manager broker buy insurance services take mortgage loan, mixed ethnicity customers handshake agent make agreement financial business deal at meeting

The future of banking
As with all industries, banking and finance are evolving. Technology, coupled with the right culture, can lead to growth, innovation, and the offering of new services to help attract new customers, while maintaining the loyalty of existing ones.

“Banking in many people’s minds is seen as a very narrow, highly regulated somewhat stringent set of products,” says Daniel Gould, Deputy Chief Executive Officer, Anglo-Gulf Trade Bank – the world’s first trade finance bank, hosted entirely on the Microsoft cloud.

“Today, like many other sectors, those boundaries need to be blurred. Banks need to move and should move beyond the old school product set and really begin to be more imaginative about what they offer across a wide spectrum of services.”

The end result of this innovation and transformation? Better, more convenient, and efficient banking, for us all.