The changing world of technology in financial services | Deloitte

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The changing world of technology in financial services

Cognitive and analytical technologies on the rise

Cognitive and analytical technologies are set to bring about widespread change in the financial services industry, not just when it comes to ‘defense’ functions such as risk and compliance, but also in “offense” activities that drive marketing and revenue growth.

Defense and offense technologies

The past decade or so has seen a strong focus on risk and compliance technologies that make use of analytics in financial services. These technologies, which might be called “defense” technologies – in contract to “offense” technologies that involve marketing and revenue growth – include applications and infrastructure for risk management, fraud prevention, regulatory, and anti-money laundering (AML) compliance. They bring the power of analytical insights – initially used for identifying marketing opportunities in many companies – to risk mitigation in banking. While these distinctions are somewhat blurred by integrating risk-based insights into “offense” activities, they are a useful shorthand. 

The changing world of technology in financial services

Automation of key processes

But the context for financial technology is likely to change over the next several years. There is an increased focus on cost efficiency in risk and compliance organizations and processes. Changes will likely be driven, in part, by cognitive technologies that promise to significantly enhance the automation of key processes. 

There are many activities on the defense side that involve either processing or generating text where new technologies can provide considerable assistance. Regulators require financial institutions to produce AML-suspicious activity (SARs) and model validation reports – these are already being generated by companies (including Deloitte) using natural language generation (NLG) technologies. Then there is natural language processing (NLP), a system that can analyze a new regulation to extract meaningful terms, determine what entities within a bank might be affected, and may even assess which banking products or businesses might be at risk of noncompliance. Many compliance processes are highly structured and require access to multiple information systems. A technology called robotic process automation (RPA) is increasingly applied for such tasks.

Time is of the essence

In general, the broad adoption of analytical and cognitive tools can help enable a shift to higher-order skills and value-adding tasks for human workers within an organization. The time to plan for such changes and to begin to educate the workforce about the task and job implications of smart machines is, of course, now. It’s important to remember that the pace of employing these technologies will be driven not only by traditional banking rivals but, increasingly, by financial technology (fintech) startups and technology vendors for whom this technology is in their very DNA. Wise leader embrace these technologies before fintech firms can develop a large customer base. Time is of the essence, because start-ups usually start with a clean slate and no legacy of processes or antiquated skill bases.

More information?

If you have any questions on cognitive and analytical technologies, please contact Kees Wim van den Herik at kvandenherik@deloitte.nl / +31683339562.

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