Cognitive Banking Definition
One of the current challenges of banking is to improve the efficiency and agility of processes for the client. Cognitive banking and automation will be the key to defining future banking. The context in which the banks are is a state where margins are getting smaller, profitability is low and it is difficult to grow. On the other hand, the “Fintech” are emerging, which mainly attack the most profitable sectors within the bank itself and arise as new competitors or allies, depending on how they approach it.
The capture of the new generation of customers focused on technology is one of the priority challenges of the banking sector. Through disruptive technologies such as cognitive banking coupled with robotics, it will be possible to empathize with new clients and focus on their needs.
What is Cognitive Banking?
We can define the cognitive banking as those technological processes based on artificial intelligence that offer solutions applied to the banking sector.
Cognitive models try to offer the most appropriate solution depending on each context. They are based on continuous learning mechanisms based on experiences and feedback received.
The digitalization of banking, not only includes online banking platforms, but artificial intelligence (simulation of human behaviors by a robot that acts on data) will be one of the main revolutions when innovating in the banking sector. Creating user experiences focused on the particular needs of each client, will provide greater agility to all the procedures that customers wish to perform and reduce operating costs.
Where is Cognitive Banking Applied?
We are not talking about a distant future, but it is already being applied in certain processes such as; in customer identification, risk control, compliance monitoring, prevention of money laundering and financing of terrorism.
The implantation of robots that are able to process the natural language and to converse with a client is one of the great and controversial revolutions of the cognitive banking in the customer service. We are talking about chatbots or virtual assistants , that is, a robot capable of answering and solving doubts of a client, at any time and place, such as:
- How to open a bank account or how to access your data online
- Act as technical support
- Processing claims
- Answer doubts and queries regarding your contracted banking products or which is more convenient, check your bank balance, the latest movements.
How is Cognitive Banking being Implemented?
The banking sector must invest in digital transformation to define a long-term strategy and adapt to the market, but without losing sight of short-term results accounts. The race for innovation in banking is a fact.
IBM Watson, a mechanism able to understand the way humans express themselves and process language. A system that, with training and data processing, is capable of interacting with a human and acting as a virtual assistant, while remaining a machine. It is one of the most relevant cognitive revolutions worldwide and has also reached the bench. Entities such as Caixabank or BBVA are already implementing certain utilities of this mechanism and conducting pilot tests.
The use of big data in the bank offers infinite possibilities for the amount of data and parameters that it handles. The crossing and interpretation of these data, identifying trends, financial models … can be an optimal model in the management of the general and particular risk of each client and combat the fight against fraud, being able to identify and register suspicious movements. The blockchain is contributing to these results to a great extent.
The bank is not only betting on hiring experts in finance, but is betting on digital talent and expanding its range of professionals to integrate the cognitive and technological processes.
What are the Advantages of Cognitive Banking?
- Agility and simplicity when consulting clients through the internet and with virtual assistants, at any time and from anywhere. Time is the prime factor in clients and through the cognitive banking; it gives a great deal of speed to many processes.
- The integration and study of big data in the bank, allows optimizing risks in the bank and the client , obtaining real-time reports of customer segments and conditions of the products they have contracted, offering more personal advice and Study an improvement in them in a much more agile and simple way for the manager. In short, a more personal and efficient service for the client and the bank.
- The customer is the center of any business strategy. In this sense, the demand of the millenial new generation in banking pushes us to digitize many processes and adapt to their needs. Mainly seek; Integration of services, agility and simplicity when making procedures, immediacy in obtaining information and consult doubts and a personalized experience. Cognitive banking responds to these interests.
What are the Disadvantages of Cognitive Banking?
- Identifying models and learning through artificial intelligence and for something as delicate as the financial sector is a process that will require a lot of time and is still in a very incipient state to optimize results.
- The implantation of the technology in the banking will reduce the number of employees mainly in the branches. They will replace those repetitive processes that the employees do, giving them more time to dedicate to strategic tasks or advice.
- The capture of new customers adapted to the technology is important, but the retention of those that are not digitized is not less. There are still many clients who come to the banking offices and need the financial adviser as a natural person, the implementation of the technology on a large scale, can mean the loss of confidence of these less digital profiles but are adapted properly.
In short, technology is changing the business and banking culture. The day a robot manages to replace a human brain is still a long way off, but we must not lose sight of the giant steps being taken. The technology is at the service of banking and customer employees, but for the moment, we see it as a complement to traditional services.