This article was originally published in the Summer 2018 issue of The Record.
What led you to Microsoft and what have you found to be most exciting about the role so far?
I’m excited to work for Microsoft at this pivotal time in the industry. No other vendor today has what Microsoft has. We have the most complete offering in the market, from infrastructure to applications, and an established ecosystem of ISVs and fintechs that can utilise our technology to create game-changing solutions for financial services. Our ability to support regulatory compliance – which is critical in financial services – is unrivalled. Even more exciting is to be part of this cultural transformation, learning from outstanding leaders like Satya Nadella and Amy Hood. It’s a great time to be at Microsoft.
What are the main drivers for transformation in the financial services industry?
The financial services industry today is subject to the kind of change no one has seen for over 200 years. The confluence of a dynamic regulatory environment, non-traditional players entering the marketplace, and evolving customer expectations has led to a tipping point. Institutions recognise the importance of digitally transforming their business processes to address these challenges; many are weighed down by legacy systems that hinder agility.
What are your key focus areas for the coming year?
We see opportunity in financial services in several key areas: customer experience; financial crime and compliance; risk management; and core systems and payments modernisation.
Customer experience is critical in a ‘switching economy’ where younger generations of financial customers lack loyalty to financial brands. Accordingly, financial institutions need to up their game, and they need technology to make the customer experience smarter and more personalised.
Financial crime and compliance is also key. Banks have paid over $280 billion in regulatory fines since 2009. The ability to track and ensure compliance is critical for financial institutions.
Successful management of risk is central to a financial institution’s business. Incumbents are vulnerable to competitive pressure where, as McKinsey notes in ‘The future of risk management in the digital era’: “aggressive fintechs, some prominent non-bank lenders, and early-adopting incumbents have enhanced their customer offerings, largely automated their processes, and made their risk models more precise. As a result, they can undercut traditional banks on price.” McKinsey’s research found that digital attackers’ cost/income ratio is 33%, compared with 55% at incumbent banks.
Core systems and payments modernisation is another priority area. According to a September 2017 Forbes report, only 25% of firms have adequate levels of operational flexibility. Financial services institutions must establish modern infrastructures to enable business agility, as well as lowering IT cost ratios.
How do you see the industry evolving in terms of regulation, compliance and overall culture?
Financial services is in the midst of a major transformation, and we will begin to see major transformation in the next 18-24 months. Financial services are fundamentally built with technology, and a raft of innovation will continue to be applied to make services smarter and more personalised, and to make financial institutions more profitable. Most specifically – artificial intelligence (AI) will come to the foreground.
The revolution brought by AI – a blend of three advanced technologies: machine learning, natural language processing and cognitive computing – has profound implications and most banks have by now taken a glimpse at the transformative power of AI in the form of chatbots, robo-advisors, and robotic process automation (RPA). The financial services industry now sees AI as a key enabler in accelerating digital transformation. However, it is important to understand the steps of the journey necessary to create significant value, from streamlining and automating financial process tasks to delivering data analytics and insights that allow bankers to make informed decisions – with speed and accuracy – that will result in more profitable growth, less risk, business model scale and provide customised service to the always-on customer; and will enable them to stay ahead of the game and keep up with the pace of environmental changes driven by regulators, changing customer preferences, and advancing technologies.
How is Microsoft empowering financial firms to thrive as the industry evolves?
Financial services companies are embracing Microsoft cloud and AI technologies as they transform their business. Nedbank, for instance, has deployed an intelligent bot using the Azure Bot Framework and Language Understanding Intelligent Service to instantly answer investment clients’ questions in a conversational way, on their channel of choice.
Barclays Bank is using Blue Prism RPA technology integrated to Microsoft Analytics to enable continuous improvement of processes, with full data recording for analytics and discovery. Increased recovery rates, decreased risk levels and improved regulatory compliance are among the benefits the bank has seen.
Another great example is Novum Bank’s AdviceRobo psychographic credit scoring model, which runs on Microsoft Azure analytical suite and applies big behavioural data and machine learning for automated thin-file credit scoring. It has helped the bank increase its acceptance rate by 18% while decreasing default rates by 38%.
What can we can look forward to from Microsoft at this year’s Sibos event?
We’re excited to go to Sibos this year to talk with our customers about how we can help them address these major trends. Microsoft is uniquely positioned to help institutions address their most pressing issues and digitally transform their businesses. Only Microsoft has the secure and compliant cloud, AI platform, and expansive partner ecosystem that financial institutions need to better manage risk across the enterprise, optimise compliance operations, drive to modernise real-time payments, core banking and insurance and infrastructure, enable a modern workplace, and deliver differentiated customer experiences.
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