Can AI detangle the spaghetti of banking systems?

Can AI detangle the spaghetti of banking systems?

At Microsoft’s Future Decoded event in London, AI was the principal topic for discussion, with financial services no exception.

"Everyone’s talking about it, everyone thinks everybody else is doing it, but we don’t think we’re ready to do it ourselves!” Rishi Srivastava, digital adviser at Microsoft, said before exploring the benefits of AI in financial services and picking out the most prominent use cases that he is witnessing in the industry.

He highlighted conversational platforms through chatbots, next-best-action decision making in customer engagement and fraud prevention analytics as the three areas with the most demand for AI-driven solutions.

While C-level executives are au fait with the potentials of AI in terms of expediting product developments and customer engagements, their expectations for its effectiveness are likely to be unduly high, according to Roshan Rohatgi, AI syndication lead at NatWest.

Describing interactions with senior managers who do not have the educational background in core system machine learning methodologies, he said: “Their expectation is that the answers provided are 100% correct all of the time.

“If you’re using a mechanised approach and computer-driven solutions, they think it should always be perfect, but that’s not the reality of the situation. There is an expectation gap, and that’s an educational thing.”

Kate Bohn, Lloyds Banking Group’s innovation and strategy incubator lead, echoed this and argued that while senior management must have the base understanding to map out a digital strategy, knowledge of the technology at a micro-level is not worthy of their time or expertise.

“Whether it is blockchain or AI or machine learning or any other type of buzzword bingo that we have going on in the tech world at any particular moment, that is not something the board should have to concern itself with.”

Rohatgi compared this to the approach of colleagues in analytical and innovation capacities, who often come from a STEM (science, technology, engineering and mathematics) background. “It goes back to the democratisation of information across an organisation. Transfer of knowledge must be clear, transparent and efficient.”

Financial services is a fragmented industry, as startups and disruptors often tussle with the incumbents. Bohn described the disparity in digital frameworks that one finds across financial services, particularly between young and old.

She related a discussion she had had with a representative of an Israeli bank who was heading up a new digital delivery and compared the infrastructures of challengers and incumbent banks in rather curious terms.

Challenger banks’ architecture, she argued, is akin to lasagna, with neat layers that can be dipped in and out of and filling easily added in between.

Incumbent banks meanwhile are more like spaghetti. They have multiple entangled systems, which often replicate the same functions with little communication or cohesion between them.
“What we should all be moving towards is rigatoni,” Bohn concludes.

“With microservices, you can take the piece out and shove another piece in, and you can do that without having to worry that you have impacted all your existing systems or removed regulatory pieces that are going to land you with a massive fine.”

Jamie Crawley, Reporter, Finextra

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