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Client is king: How two US banks optimise tech execution

Client is king: How two US banks optimise tech execution

In anticipation of Sibos 2020, we zero-in on a key focus area that financial institutions across the payments landscape will be paying close attention to as technology becomes more complex, consumers more sophisticated, and margins ever-more slim. That is, getting the most out of technology investments by improving execution.

Ahead of the conference, Lisa Frazier, chief innovation officer, Wells Fargo, and Ayeesha Sachedina, head of cross-product solutions in Global Transaction Services, Bank of America (BofA), break down their stances regarding the opportunities presented by ever-evolving technology and how to optimise new products and solutions within a truly competitive landscape.

Addressing four key areas that will be canvassed during their Sibos panel, we see both alignment and divergent areas for prioritisation presented by the two speakers. Importantly however, the pair conclude that fundamentally, in matters of technology and its execution across financial services, success absolutely comes down to keeping the client and the client’s needs at the fore.

Meeting technology’s potential

When discussing the potential of technology to transform financial services, we find little resistance to the premise that there really isn’t much that technology can’t solve. Yet, the reality for financial institutions often means legacy systems, certain regulatory hindrance and expense can impact adoption.

Given such obstacles, can we ever truly expect to see technology such as artificial technology (AI), quantum computing, distributed ledger technology (DLT), augmented/virtual reality and more reach their potential within financial services? Frazier says yes, but caveats that this would adhere to “different time horizons as each of these technologies are on different adoption curves.

“We see the value of adopting new technology within the industry on a continuous spectrum - some of these new technologies are already operating within financial services at scale whiles others are being explored. Today robotics process automation, artificial intelligence and cloud are operating in production with large pipelines of opportunity. Other technologies are moving toward pilot, for example our DLT platform is built in preparation for our Wells Fargo Digital Cash pilot.”

Sachedina underscores the value of deploying technologies strategically during a Bank of America press roundtable. She elaborates on a suite of BofA solutions which leverage AI such as the auto-FX tool, an incoming data-driven cash forecasting product and the natural language processing tech for commercial clients being refined using the technology from their consumer virtual assistant chatbot ‘Erica.’

She notes that these developments were crafted not only to greatly improve their own processes, but to the enthusiasm and positive reception of commercial clients: “What we've been able to do is really leverage that technology and extend it throughout other parts of the bank and use that technology to improve our internal processes as well as exposing it to commercial clients to help automate systems including service and advice. So that's quite exciting.”

Where to inject innovation investment

When asked whether banks allocate sufficient resource to the implementation of financial technology compared to that invested in the innovation itself, Frazier explains that banks do invest significantly in financial technology, and Wells Fargo’s investment alignment is no different.

“Each year investments are made in ‘running the bank’ and ‘changing the bank’. Innovation in financial services does not need large amounts of investment, instead it requires a more agile, test-and-learn resource model so that an idea can be evaluated, moved through to discovery and pilot, and then to production quickly. This final step is where the larger investment is needed to execute on implementation.”

On the same question, Sachedina responds: “We invest the exact amount needed for the solutions that our clients are asking for, so it really centres around the client. Our evaluation of the correct investment, the correct solution from a piece of technology or support, really is dependent on what we're trying to build and the challenge we’re trying to solve for the client.”

Client-centric tactics to improve execution

Pointing to the technical areas banks can work on in order to improve execution, Frazier explains how the use of innovation and technology to build stronger relationships with customers is one of the most exciting aspects of the financial services industry today.

Frazier believes the most three most important areas for banks to prioritise in order to improve execution for new tech products, services and structures are first, determining “a clear point of view on the value of new technology can potentially bring to customers and/or the business. We need to avoid technology for technology’s sake or playing with shiny toys.”

Second, Frazier argues that firms must have the mindset to learn quickly and iterate as new technology is test-driven (safely) in practice, not just in theory. And third, “banks need to become more data driven. Data will underlie all we do in real time across all channels. Therefore, the access to data and our ability to leverage that data efficiently is key.”

Sachedina points to the methodology BofA uses within cross product solutions (the innovation team within BofA global transaction services) in order to stick to a framework for bringing-in new ideas.

She explains the importance of truly engaging with the client’s need, challenge, or pain point in order to determine the appropriate solution. From this point it is vital to consider whether the necessary technology exists, must be built internally or outsourced through partnership with an external firm.

Elaborating on the process, Sachedina echoes Frazier noting that the essential testing phase must be robust and truly pressure test the technology and solution with the client’s involvement: “We have a new environment called ‘GTS R&D’ which is a proprietary sandbox environment which allows us to not only test and learn, but to build solutions into production.

“In my opinion is not only about testing and learning anymore, it’s about executing for our clients.”

Technology isn’t a threat, it’s the main event

Both asserting that disruptive technologies are most definitely not a threat to banks, Frazier and Sachedina believe that the opportunity at banks’ fingertips is immense. Though Sachedina notes that there was an interesting dynamic between banks and startups when the ‘fintech’ buzzword first emerged, “I think we've come to a nice point - a symbiotic relationship if you will - where both banks and fintechs really do need each other and we at Bank of America want to partner with the best and brightest in the industry.”

Looping back to the customer, while it is these technologies that allow a reimagination of customer experiences and business models, Frazier observes that “it’s also important to recognise that customers are not asking for disruption - our efforts to advance products, services, and experiences are about creating personalised solutions and increasing choice. Being part of the FinTech evolution is a great place to be, and it is an exciting time for the industry.”

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