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IBM’s Bharat Bhushan on strengthening customer trust in digital banking

IBM’s Bharat Bhushan on strengthening customer trust in digital banking

A recent YouGov and IBM survey has found that 82% of UK citizens cited data security and privacy as their top priorities when using digital banking following the Covid-19 pandemic. Furthermore, 43% of respondents said they wanted their banks to launch more cyber-security and privacy features.

In an interview with Finextra, Bharat Bhushan, CTO for banking and financial markets at IBM, notes that the rise in the number of scams during the pandemic has contributed to this fear. He comments: “the scammers and fraudsters potentially have access to some of the data which has been lost over the last few years, and they are combining this with social engineering skills, which means that they're able to tap in to our human side.” He added that it is not just consumers who are facing these attacks, but the banks themselves, adding, “it’s getting increasingly difficult for financial institutions to differentiate between good and bad actors.”

While discussing what banks needed to do to deal with these problems, and to increase trust, Bhushan pointed to the existing education drives for consumers. He also emphasised the need for banks to increase their digital transformation, and do so at pace. “On the digital transformation side we are seeing financial institutions moving to cloud, including industry-specific cloud, as well as adopting emerging technologies like artificial intelligence (AI) or data analytics, and overall, much cleverer solutions end to end in the context of security. Quite often that means that financial institutions will need to use trusted solutions from third parties, and do that at pace so they don't have to spend 12-24 months validating those solutions.”

The pandemic pushed more customers towards digital banking, bringing these concerns to the forefront. The survey found a 15% drop in customers visiting physical bank branches after the first lockdown ended. However, despite this, YouGov also found that only 15% of respondents had a digital-only bank account. On this, Bhushan said: “the pandemic acted as a catalyst on both sides, on the consumer side for adopting digital services, and on the bank side, because branches were shut, they had to find more innovative ways to enhance self-service channels.”

Bhushan noted that due to the pandemic, the adoption of digital services happened regardless of age group, however, the survey did find some age specific findings. Unsurprisingly, younger people were more likely to worry about their money, with just 22% of 18-24-year-olds and 26% of 25-34-year-olds not worried. This compared to 55% of over 55s. Interestingly , 62% of 18-24 year olds stated they would like help from their bank managing their money and planning for the future. The same question saw an average of 34% in other age groups.

Additionally, younger groups were more likely to be interested in AI being incorporated in their banking. Bhushan explained: “Historically AI has at times been misunderstood. However, over half of under 34s are saying that they want their banks to use AI. This shows that the digital literacy in our society is increasing, as people are getting more comfortable with using mobile apps, internet banking and digital services generally.” This is contrasted with the 52% of over 45s who were opposed to greater AI services.

One element of this AI service is chatbots and other text-based messaging services. Again, young people were more likely to be amenable to these, with 48% of 18-24-year-olds and 49% of 25-34 year old respondents stating they are happy to conduct banking services through a text-based messaging service, either with a bank employee or an AI-powered assistant.

In light of the findings, IBM have offered three recommendations. Firstly, “adopting security frameworks fit for the cloud era”: here they offer their own ‘confidential computing’ solution which provides, among other things, to data protection in the cloud; second, “deliver innovation that matters, faster”, pointing out that many banks take up to two years to get new technology solutions fully vetted and used due to regulatory and compliance requirements; and finally, “enhance digital customer experience with AI”, pointing to the survey findings to show this is one of the best ways to ensure customer needs are met.

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