Limited functionality available
Q: With customers accessing accounts through mobile phones, paying with wearables, moving savings to AI-managed ETF portfolios and hedging currency risks with crypto, are we best to mitigate risk by addressing wider consumer banking trends?
And if so, how do we create intelligent risk management systems using Cloud Solutions that can adapt to these changes as fast as our customers do?
COVID has accelerated our move into a cashless society. Governments are urging people to use less cash to reduce leakage in the economy. Businesses are instigating new and interesting ways of businesses interacting with customers as they shift to mobile payments and neobanking. Plus locally Afterpay has disrupted traditional forms of credit with their buy now pay later offering.
Recently across APAC, we’ve seen Singapore issuing six new digital banking licenses, Indonesia planning to roll out digital-only banking licenses, and Vietnam working with traditional players to create alternative digital-only banks. In South-East Asia some companies evaluate consumers’ creditworthiness using social media data and other unstructured data.
It’s clear that consumer behaviours are changing, and the shape of banking and transactional nature of banking is changing very fast with it. There’s no holding back the tide at this point. Companies are going to have to lead or be led.
Businesses have to start thinking: how do I play to where the puck is going? Are you going to build these digital capabilities yourself? Or are you going to use strategic partners that have ready-made platform layers and artificial intelligence (AI) and machine learning (ML) capabilities to give you a strategic edge?
At Google, we are lucky to already have advanced AI and ML capabilities that we use today. For example, users can turn on captions in Google Meet and watch our AI engine translate what they say in real-time.
Once you see the value of the base capabilities of AI and ML we can start to build customer solutions on top of these that suit individual organisations’ needs.
That might be deploying Document AI to detect fraudulent documents in a credit origination process or Call Centre AI to ensure we are meeting clients obligations when we talk to customers. This is where the value of leveraging a partner platform comes into play.
Considering credit risk is a little different as it involves considering the regulators and compliance. Organisations have to balance what goes into your credit models and what the regulatory authorities are going to expect you and need you to be able to comply with. Any AI models that you create need to be traceable, explainable and comply with all the regulatory bodies.
We’re thinking about industry-based solutions to regulation at Google. For example, for the financial services industry, we’re asking questions like what kind of capabilities do we need for anti-money laundering laws? How do we work with regulators to deliver compliant Cloud solutions?
This kind of grunt work was previously the remit of the banks, but now we can take the heavy-lifting off financial organisations so they can focus on servicing their customers better. That’s why we think in terms of where the puck is going rather than where you think it is now.
Q: How do I ensure that my FSI business is future-proofed against advances in cyber fraud and how can the Cloud enable advancements in cyber security?
The technology doesn’t matter if organisations don’t have the right policies and culture in place. Cloud can help because it provides access to technologies that enable rapid deployment from patterns, infrastructure-as-code, and other such advancements — but this means nothing without the right policies and governance structures in place. Organisations that do it well build compliance into their infrastructure code and templates that enact the policies they’ve created. As a result, it’s easier to maintain compliance across the landscape.
In the technology sector, there’s a concept of ‘pets versus cattle’. In the previous generation of technology prior to Cloud, there was a mantra of ‘pets’, where each of an organisation's infrastructure, services and systems had names and were fed, watered, and looked after in a particular way that catered to their individual characteristics. This took a lot of bandwidth and made it difficult to maintain consistency, and thus the ability to be compliant.
In modern Cloud-enabled landscapes, this concept can shift to ‘cattle’, where instances are defined from templates and designed to have their lifecycle handled automatically. While not a new concept, in the field of compliance the mantra of treating your infrastructure and systems as cattle in a Cloud-enabled landscape simplifies the act of maintaining compliance and security standards.
Cyber fraud is increasing in sophistication. New methods of evading traditional controls being used every day globally which is creating a digital game of cat and mouse. Managing and mitigating the risks of cyber fraud requires a capability that is flexible, adaptable, and powered by real-time insights. Cyber Fraud solutions must integrate insights from disparate data sources and perform rapid and instantaneous analytics. To deliver this type of capability that is responsive to real-time threats requires a scalable flexible solution, which plays right into the core strength of Cloud solutions.
One of the biggest challenges facing any financial services institution or regulated entity is keeping up with the ever-changing compliance landscape. When you’re building platforms from the ground up, Cloud provides organisations with the capability to build automated software-based controls into the solution as code from day one. This enables organisations to move at pace safely and allows them to report in real-time against their compliance obligations. This capability significantly reduces the overheads and costs associated with regulatory compliance and reporting, allowing financial institutions to respond to market demand quickly through innovative cloud-based solutions.
When organisation implements this ground-up Cloud-based approach to reporting, they can simply provide a dashboard to demonstrate how they are in compliance. Whereas previously, it might have required weeks or even months to gather the necessary paperwork that demonstrates that the controls have been implemented.
The automated nature of Cloud and the concept of ‘software as code’ makes the whole reporting process streamlined in what can be a moving regulatory landscape.
Intelligent risk management is only the tip of the iceberg when it comes to the power that Cloud can bring to the financial services sector and regulated entities. For organisations to fully realise the value of a Cloud-based digital transformation is to analyse their current digital infrastructure and pinpoint opportunities to innovate and optimise.
Cloud also provides a low-risk platform for organisations to experiment with disruptive technologies like blockchain. Discover how to leverage cloud to drive data innovation in our next blog in the series.
Matt Pancino is the Industry Solutions Lead for Financial Services at Google for Asia-Pacific. He is experienced in leading organisations through large-scale technology transformations that enable business growth.
James Allan leads Deloitte's Cloud Engineering business for Victoria with over 70 talented engineers working across a variety of technologies to deliver meaningful business transformation to a broad range of clients. He also holds various geographic roles, including leading Deloitte's alliance with Google Cloud across Asia-Pacific and acting as the global lead for Deloitte's Cloud Strategy and Transformation offering.
Shane Lyell is a Director within Deloitte’s Cloud Engineering business, based in Victoria. He works with a number of large financial institutions to accelerate business growth through the adoption of innovative cloud solutions.
James Allan, Partner, Consulting, Deloitte Australia
Shane Lyell, Director, Consulting, Deloitte Australia
Matt Pancino, Director, Industry Solutions Practice Lead, Google APAC
James is a Partner in Deloitte’s Consulting practice. He has played an instrumental role in the development and leadership of the firm’s Cloud and Infrastructure team. Several years ago, he had a vision to have a more focused technical team in the IT infrastructure space, as a catalyst to technology transformation work. James has been successful in leveraging the intersection of the team’s deep technical capabilities, and an understanding of client issues.