By Monica Hovsepian, senior global industry strategist, financial services and Chirag Patel, lead solutions consultant & Magellan technical lead, AI & Analytics, OpenText
COVID-19 compressed decade-long digital transformation roadmaps into a matter of days and weeks as financial services organisations made quick changes to adjust to widespread remote working. In fact, research shows that as many as 96% of UK enterprise decision makers believe the pandemic sped up their company’s digital transformation plans. Over a third confirmed changes in operations due to COVID-19 increased digital transformation budgets in 2020 “dramatically”.
Despite this acceleration of UK digital transformation efforts in 2020, the vast majority of financial institutions remain unstructured data rich yet insights poor. Now more than ever, data is everything if a business is to compete in the digital economy. The more data they have, the more they can know – yet many organisations are struggling to process and extract value from both big data and big content.
So, how can financial institutions overcome these challenges in 2021? What role should AI play in helping these organisations effectively manage, protect and harness the value of their big data and big content to maximise the benefits of their digital transformation journey?
The magnitude of the information management challenge
It’s no secret that in recent years, organisations have seen a huge rise in the amount of data they are capturing and storing. The huge consumer shift to digital banking spurred by COVID-19 last year only exacerbated this for the banking industry. Research has shown that between 14th March and 14th April 2020 alone, 200,000 people in the UK downloaded their bank’s app for the first time every day. This uptake in consumers managing their finances and communicating with their banks through different digital channels added to the data explosion occurring across UK financial services organisations.
Forward-thinking businesses are using their information to create a competitive edge – from offering exceptional customer experiences to improving operational effectiveness. However, achieving the competitive superiority which comes from using information to its full potential – or unlocking their Information Advantage – is only possible if a business can successfully transform the way it manages and leverages both structured and unstructured information.
Structured information fits easily into structured systems like databases and is therefore easier to capture, organise and analyse. However, Gartner has previously estimated that upwards of 80% of enterprise data today is unstructured. This includes emails, voicemails, written documents, presentations, social media feeds, surveys, legal depositions, web pages, videos and more. If this unstructured data is not considered within an organisation’s efforts to manage the creation, capture, use and eventual lifecycle of their data as they undergo their digital transformation journey, they will not be able to harness the full value of their information. Yet as many as 71% of enterprises are struggling with how to manage and protect unstructured data – clearly demonstrating the magnitude of today’s information management challenge.
AI and value extraction
COVID-19 accelerated digital transformation in 2020. However, a recent OpenText survey – in partnership with Jim Marous, CEO of The Financial Brand – found that digital transformation continues to top the list of strategic priorities for financial institutions globally in 2021. Looking ahead, it is paramount that financial services organisations manage the process of digitally transforming in the right way. If they do not, they risk ending up with a digitised transformation output that lacks the ability to achieve the potential efficiencies, cost savings and enhanced customer experience needed for their progression, or even survival, in a post-COVID world. For many, getting it right requires them to leverage AI to automate slow and inefficient business processes.
While banks are looking to exploit AI’s potential as they digitally transform, an OpenText report found that breaking down data siloes and managing data from multiple sources remain major barriers to their success. Essentially, information readiness is inhibiting AI implementation in the banking sector. In fact, information governance – the use and security of information – is being held back by legacy systems (72%) and data siloes (63%) that make it difficult to quickly and effectively access the organisation’s information.
Financial institutions have a lot to gain from overcoming their information readiness challenges. By creating one complete view across their structured and unstructured data, organisations will be able to analyse, understand and manage their digital ecosystem more efficiently. Achieving this comprehensive view across all of their data is the first step. Only then will financial institutions be able to apply advanced AI-powered analytics across their data to extract real-time insights and increase automation in order to drive operational efficiencies, maximise revenue and create a more personalised customer experience.
Applying AI across big data and big content to uncover context
As financial institutions embrace their digital transformation journeys, they need to consider how they can not only use AI and analytics to extract relevant information from the customer data they already hold but also utilise data throughout the customer journey to deliver optimal experiences.
Big data can help to uncover trends or patterns, but big content can help pinpoint what is happening and why those trends are occurring. Applying AI across a combination of both big data and big content is very powerful for a financial services organisation. It enables them to understand not only the business itself but also customers and competitors. Context is key to driving real business value and improving the customer journey when applying AI as part of broader digital transformation efforts.
Recent OpenText research with Jim Marous, CEO of The Financial Brand, revealed that more than half (53%) of consumers think a digital user experience would have the biggest impact in terms of improving their customer experience this year – followed by personalisation (45%). Financial organisations will find it difficult to provide either of these well if they are not applying AI across both big data and big content to better understand their customers’ needs and behaviours. This context enables them to create the right personalised digital experience for customers.
The pandemic changed the shape of the financial services sector and there will be no going back. Moving into 2021, the financial services industry will need to build on the digital transformation progress made last year – ensuring they focus on digital transformation that adds value, from better customer experience to increasing efficiencies. To do this, business and IT leaders must consider how to best to apply AI in order to make the most of their big data and big content. Without considering both, they will struggle to reap the full rewards of their digital transformation investment.