A data-driven shift could be the biggest change for financial services in 2020
Monica Hovsepian doesn’t think that financial service institutions (FSIs) are going to change their priorities in the coming year. As a global industry strategist at OpenText, Hovsepian spends her days watching FSIs. She’s sure that their 2020 will be spent chasing the same goals they went after in 2019: “delivering the great customer and employee experiences, accelerating innovation, while curbing costs, and managing cyber security threats, risks and regulations.”
What’s changed, she says, is how they’ll be chasing those goals.
Data might seem like an obvious force at the end of a decade defined by big data companies, but in Hovsepian’s eyes, FSIs are only now shifting to the cutting edge of data technology, gathering customer and market data to inform insights and predict patterns.
“Artificial intelligence, machine learning and information mining will begin to take flight to reimagine the whole customer and employee journeys,” Hovespian told WP. “The uptake and the true realization of these kinds of technologies is likely to be slow, though, as there's likely to be constraints on resources and I think that's going to be key.”
Global AI and cybersecurity resources are lean at the moment, according to Hovsepian, and FSIs face the risk of regulatory intervention or bad press hamstringing their efforts to meet their priorities. She thinks that the industry needs to build out open banking platforms that will speed the realization of what the next wave of data tech can bring to the financial services industry.
PWC Canada has laid out the case for open banking in this country. They see a policy shift towards permitting banks to share internal customer data to other parties through digital channels, in line with a wider global trend towards open, accessible data.
An open banking environment would give consumers, and banks, a consolidated view of their accounts. A primary account with TD, a savings account with CIBC, and a brokerage account with RBC would be accessible in one place, to the consumer and to the banks. In Hovsepian’s view, this ease of access will offer key intelligence to the consumer and to the now-lean AI systems the banks are building out. Transfers will be efficient and offers can be made to the client in a moment.
“Frictionless for the client, and opening up competition for FinTechs,” Hovsepian explained. “The key is consent. Open banking will need to be explained in a very transparent manner. Clients need to know how their data will be used and how their data is going to be used and how their privacy is going to be protected.”
The key, in Hovsepian’s mind, is making the trade-off worthwhile for consumers. We already trade a lot of privacy for the use of platforms like Google and Facebook. Open banking needs to be explained on its merits so that consumers see the data they share as worth what they’re getting.
She thinks that the best way to explain the particulars of open banking to clients is in videos. Australian and British rollouts of open banking have been met with some confusion, but if Canadian banks can package their information well and show it to clients in the kind of 1-2 minute video almost everyone has the time and inclination to watch, they might be able to surmount that explanatory hurdle.
Not everyone will sign on. When the first ATMs rolled out, some people refused to use them. When banking went online or mobile, some customers chose not to download the apps. But Hovsepian thinks that Open Banking is a shift on a similar level, and forward-thinking, younger customers will turn to it, provided the cybersecurity framework that underpins it is solid.
“Open banking is going to require further rigor and concentration in Cybersecurity,” Hovsepian said. “Security is job number one and it is going to continue being job number one, especially for financial services.”