AI Conversations in Financial Services: How a Human + Machine Approach Helps Financial Services Firms Enhance Client Relationships

On-demand webinar

Leaders need to accelerate cloud adoption in order to digitize effectively and quickly in a post-COVID world. Financial Service firms are no different and have been investing and adopting a range of innovations for the past 20 years.

Movius welcomes IBM financial services expert, Robert Grant. During this session, we will deep dive into cloud innovations from Analytics and AI to BYOD and hear how the Financial Services industry is leveraging these innovations to create the new digital customer experience.

 

Transcription of Webinar:

Sean Winter, Movius :

Good morning all. My name is Sean Winter. it’s about two minutes after the hour, so we’re going to get started today. Thank you for joining this Movius webinar. As you know, we’ve had a series of these over the past seven or so months, as we all deal with the new reality of working from home. And today I’m thrilled to be joined by Rob Grant, who’s an associate partner from IBM. I’ll introduce Rob in a second, but first just wanted to kick this off.

Sean Winter, Movius :

This topic today is one that’s super interesting, and one that we’ve been doing a lot of work on at Movius over the past few months. The notion of AI conversations in financial services and how typically regulated firms that are highly dependent on communication directly with customers are now using new technologies and tools to ensure that they maximize those relationships. And so Rob is certainly an expert in this space from IBM. We’re thrilled to have him get into a conversation.

Sean Winter, Movius :

I would love to talk about some of the high-level themes that I think to lead to this conversation. I wanted to set this up in a way that hopefully makes sense coming from our Movius perspective. So number one is this notion of a shift to work from anywhere world with companies offering more flexible work from home policies and re-evaluated the need for office work. I think we’re all on this webinar today because we realized that things have changed drastically about seven months ago today. We probably went to work on a Tuesday and then Wednesday came and we were home. So the world has definitely changed significantly in that respect. And we need to understand that from technology compliance and customer perspective.

Sean Winter, Movius :

The second theme that we’ve noticed is the increased importance of digital. Really across the board as industries, especially like financial services, are setting the new standard for client communications interactions. The third theme is the notion of new compliance challenges. Especially if we’re in financial services, our tools that we use are highly regulated, whether I’m on a desk phone that’s recorded or I’m using specific collaboration technology on my computer. These new challenges have forced companies, especially in regulated industries to adjust their policies and systems, for now, remote workforce. And as we start to go back to work, which we’re starting to see in some sectors, that’s going to be even more complicated. Because it’s not going to be a scenario where everybody goes back exactly like they were. You’ll have some people at work, some people at home, some people in between. So we have to think about all of that from a compliance and technology perspective.

Sean Winter, Movius :

The fourth impact is the notion that customer expectations are rapidly changing as they want to a more human approach to problems and demand better engagement with firms. We all know as a customer, whether it’s my cable company or my mobile phone company or my bank that we require and we prefer certain modes of technology that are comfortable for us, whether it’s messaging platforms, phone calls, video conversation, you name it. And so as customers demand those technologies, which has been more so now during the pandemic, obviously, the companies that provide those services need to adapt. The fifth one is the adoption of innovative technologies, which is super near and dear to kind of the core of our conversation today. Things like artificial intelligence and analytics provide deeper insights into consumer behavior and personalized machine approaches to customer interaction can certainly help. You’ve dealt with chatbots where sometimes you know they’re chatbots and others where you probably didn’t know. So what’s going on in that world to make those better and more personalized as we move forward.

Sean Winter, Movius :

And finally, the bad news is oftentimes we come out of these types of situations into a recession. Hopefully, that will not be the case or will not be the case for a long time, but cost-cutting measures will certainly be top of mind as companies deal with the negative fallout and an uncertain economic recovery. So any way we can do more with less, that certainly makes a lot of sense.

Sean Winter, Movius :

So those are just six themes that I wanted to throw out there as sort of a series of guideposts for this conversation. Moving now, I did want to introduce our special guest Rob Grant. Rob is an associate partner at financial services at IBM. He is located down in lovely Atlanta, Georgia, where Movius has a large office ourselves. So, Rob, I would love to give you a minute or two to just to kind of introduce yourself, give us a bit on your background, and then we’ll get into the topic of the day.

Robert Grant, IBM :

Sure. Thank you so much for having me today, Sean. And looking forward to our conversation. So I’m an associate partner within the financial services, wealth management practice at IBM Global Services. And I work primarily with customers helping automate end-to-end processes, change the customer experience, and reduce the overall cost associated with conducting operations and really trying to figure out how we can re-engineer for the future. How do we better leverage data? How do we better leverage automation and technology? And then ultimately, how can we create better customer experiences? In addition to my financial services work, I’m also a mastering venter. I’ve filed probably close to a hundred patents at this point. And on the weekends I enjoy mountain biking, hiking, and getting out into the outdoors in North Georgia.

Sean Winter, Movius :

Wonderful. That’s great to hear. I know the pandemic has led to a massive increase in outdoor activities.

Robert Grant, IBM :

Oh yes. Yep.

Sean Winter, Movius :

I do a lot of kayaking myself and it’s been challenging to find the right gear at times.

Robert Grant, IBM :

There you go.

Sean Winter, Movius :

Let’s start with sort of at just a high level, based on your expertise in this space, what do you see as some of the biggest challenges facing financial institutions? We’ve talked about digital transformation for a long time and that’s obviously ramped up in the pandemic. So what are some top-of-mind challenges that you see these days with your clients?

Robert Grant, IBM :

Sure. And that’s a good question. So relative to COVID itself, you look at the market volatility that we saw within Q2 and if Q1 timeframe that March, April, May, and there were a number of different wealth managers, banking companies that were struggling with dealing with the volume of customer requests. So high level, between PPP loans, SBA loans, the market at large, our equity markets, you’re seeing tremendous volatility and many of these customers were actually really only focusing on that specific operation. So if you look at, I think it was Chase that was actually turning away customers for anything other than SBA and PPP loans. If you look at the new account opening across TD Ameritrade, Schwab, and E-Trade, they were actually seeing a 300% increase year over year in terms of new account opening. So the expectation of the volume that they’re seeing has just been exponential. Some of these companies have been able to deal with that volatility. They’ve had automation and tools in place already that allowed them to scale very quickly against those additional pressures that they were seeing within the market.

Robert Grant, IBM :

Past that, you also have this kind of explosion of customers looking for new ways of interacting with the markets at large. So if we look specifically within wealth management, one in four Americans is actually turning to a financial advisor for the first time. And one in two were saying that the pandemic made them realize they needed help with finances and investments. And so what that does is the expectation of advice, right? And when you come from the banking market at large, interacting with your customers in much more targeted ways. The ability of banking customers to proactively provide value-add products to their customers and create better-tailored advice to that particular customer is really the expectation. And then past that, if we look at the pressures introduced by the lower interest rates, traditional cost models and revenue streams are actually changing and not really actually available to them anymore. So you’re seeing significant pressure to reduce costs, both because of interest rates as well as due to the high-level volumes that you’re seeing, but the ability to identify new revenue streams coming off of this tailored customer advice.

Sean Winter, Movius :

Yeah, it’s interesting you say that. Me and some colleagues that our call with a financial advisor late last week who specifically spoke to the changing nature of his relationship with his customers really, and the pandemic has sort of amped this up with the notion of the relationship being way more proactive than it historically has been.

Robert Grant, IBM :

Absolutely. The idea of a digital experience and really tailoring how you’re interacting with your customers as well, providing them a very specific next best action based on a particular set of data inputs has become absolutely critical. You look at the kind of digital landscape out there, the market landscape, so to speak, you have a larger wealth allocation to millennials in particular who have interacted with Netflix with Amazon that have provided very tailored TV shows and new products. And that’s their expectation of being able to interact with financial services and financial advice within the market at large.

Sean Winter, Movius :

Makes sense. So let’s dive in a little deeper. So from a client perspective, we definitely are seeing a trend of using AI to empower clients in their buying journey, right? And we’ve all experienced chatbots and virtual agents and those types of things. Why should businesses be looking to invest in AI for customer service needs? I think we’ve touched on sort of the need for proactive communication. We’ve touched on, at a high level, the desire for clients to have every relationship maybe operate like a Netflix, where there are proactive recommendations being made. I would love to talk more about that, or maybe some other ideas you have in the space on how AI can effectively help customers in their buying journey.

Robert Grant, IBM :

Sure. And I think ultimately it comes to a question of scale, right? The ability to provide personalized advice at large is, and the expectation of your customer base in order to do that, you’re not going to be able to have a person physically doing that within the timeframe that a customer expects. So your ability to analyze the trends and understand these insights across all of your different customer interactions and all of the different channels that they have for interacting with your business has become absolutely critical, right? You want to be able to understand suggestions and complaints and be able to proactively go out and respond to them and make sure that you are addressing any issues with those particular types of products. And then ultimately, the data and the AI allows you to interact with the insights at a micro level, right? You want to be able to understand the emotions of your customer across thousands of different interaction cases on a day to day basis. And then allowing you to wrap that up to a macro level enables you to keep a pulse on your customer basis questions, and then actually re-interact with that at an operational level and reduce costs and create a better and more custom and excuse me, personalized customer journey.

Sean Winter, Movius :

That absolutely makes sense. From a customer perspective, if we turn on a dime here a bit and think about the employees, so whether they’re financial advisors, wealth managers, traders, bankers, et cetera. Analytics has been a huge trend for years now in terms of we have multiple systems as you mentioned interactions with customers and we’re able to now look at those to find trends and to find things that are going well and maybe things that aren’t going as well. Organizations are certainly shifting to the use of AI by using natural language processing, something that some of our customers are very interested in in order to actually analyze customer voice interactions, which is super interesting to me. How are you seeing this trend optimized by some of your customers? And what are some common use cases and trends that you’re seeing for customers using natural language processing, again, to help the employees be more effective at their job and provide more value for their clients?

Robert Grant, IBM :

Sure. So from a natural language processing and voice interaction perspective, the ability to scale a customer call center and allowing basic operations to be conducted by an AI is absolutely critical. The vast majority of the volume that you have coming into a call center is going to be for basic operations that many cases have already been automated. Change of address for instance, that sort of stuff can be taken directly off the phone call and input into the actual back-office automation channels and operation channels that you already for the most part exist. So why would you want to take that customer call in the first place?

Robert Grant, IBM :

Secondly, natural language processing and detects types of technologies allow you to deflect the phone calls that are really not value add, right? So if there is a, and actually IBM has partnered with a number of different companies to provide COVID facts, right? And how these basic levels of information in terms of how you can interact with mortgage deferments, forbearance, that type of stuff. And instead of actually having your customer calling in and interacting with an actual physical agent, instead, you can have your digital and automated call center interact with that call and deflect it so that the associate can focus on more value add activities.

Robert Grant, IBM :

Past that, if you look at natural language processing and [inaudible 00:15:00] helping you track systems that are out for example. We actually saw outages in a number of different brokerages due to the volume that they were seeing. And they actually received a spike in phone call volume ahead of time. And it took them some time to figure out what was going on and through using NLP and speech to text and natural language understanding technologies, you can actually map that back from a macro level across the organization. So it’s really acting as another channel for customer feedback rather than as a standalone for operational components.

Sean Winter, Movius :

They don’t even know they’re giving the feedback. Because they are based on behavior.

Robert Grant, IBM :

Exactly. So it really enhances the customer journey and it ensures that you’re really getting a voice for your customer base, right? And that’s ultimately what you want to have, whether it’s a physical associate interacting with that customer, or whether it’s a machine directly to your back office services.

Sean Winter, Movius :

Absolutely. Well, that makes sense. Rob, let’s look forward a little bit. So you’ve mentioned current situations like compressed interest rates and the need to… We’ve talked about artificial intelligence and natural language processing, the need for advisors to be more proactive. When you look at all of these factors in this kind of very quickly ever-changing world, what are some of the trends you see going forward and how will they transform this sector? How does this all come together in terms of the new way of working and the way companies really be leading edge in terms of servicing their clients?

Robert Grant, IBM :

Sure. So 88% of global banking firms have either be done or will start a digital transformation journey by 2021. That digital transformation journey is going to be spread across four key pillars. Digital experiences, digital operations, digital innovation, and then a digital ecosystem. And what you want to ensure is that that overall automation journey is being approached as a company-wide initiative. Gone are the days where you can focus on these sorts of vertical pillars of business of automation. And instead of having to focus on automating and using very micro level RPA robots, that sort of stuff, you need to approach it from a program perspective. And that’s where our customers have seen the greatest amount of success.

Robert Grant, IBM :

If you look across areas like lending or payment, you can actually reduce the cycle times associated with those processes by 50 to 90%. if you look at something like wealth management, you’re creating a 24/7 operational capability such that if customers have problems or if they’re geolocated around the world, you no longer have to staff phone call centers 24/7, you can actually have automation capabilities managing that for you.

Robert Grant, IBM :

And then pass that we have a number of different customers that have started to look towards creating out of the box automation capabilities. So when you’re looking at new products like security-based lending or fully paid lending, these sorts of new revenue streams that wealth managers and banks are going to have to focus on because of interest rates, right? You really focus on having out of the box automation capabilities. You don’t want to sit there piecing and parting together and drawing all these things. You want to just drag and drop, right? It reduces the overall cost. It gets the revenue quicker, and it integrates that product into your overall product ecosystem substantially quicker to get it to revenue faster than you would otherwise. And then pass that, how are we subsequently identifying customers for our advisors, for our wealth managers that would actually benefit from that particular product. And having a customer portal that you can really drive that interaction with and have it both a customer representative, who’s saying the same thing that they’re interacting with, and that customer portal is absolutely critical. Common messaging across all of your different channels is a very, very important part of that customer journey going forward.

Sean Winter, Movius :

Robert, are you seeing patterns now and is IBM able to say, “Look as companies, especially financial services firms start to encounter some of these challenges, based on our understanding, and our expertise in the space, this is where you should start, and then you should go here and then you should go here? Are there patterns like that that are emerging?

Robert Grant, IBM :

Absolutely. And it’s a question of the current state and the future state that you’re trying to work towards. So how can you put together the toolbox? And you have this set of capabilities and some companies may already have some of those capabilities, but how do you piece and part it together, right? And ultimately you want to ensure that that piece and part together is compliant and reduces your risk for the overall organization itself. So it’s a combination of how can we quickly scale and automate and ensure that we can handle the volume as well as the new customer requests that are coming in, but then ultimately make sure that it adheres to our regulatory bodies, ensures that we’re not exposing ourselves to additional risk. So really those are the kind of the critical parts.

Sean Winter, Movius :

I do want to work in a question or two from the crowd. I know we’re low on time, but I do want to work on a few of these. Which do you see more of financial services firms using, AI or analytics to improve customer experience or more of the employee side, employee productivity, engagement, etc, or are you seeing both? Is there a common place to start?

Robert Grant, IBM :

Yeah. And I think it’s a question of a pain point that you’re trying to solve, right? You don’t want to bite off more than you can chew relative to the beginning of a particular AI journey, right? If you start diving across the entire organization, it’s going to be difficult to actually get something to persist and carry on and take the base. Secondly, though, you don’t want to focus on just these operational to tactical level transformations. You have to have a vision you’re putting forward at the strategic level that you can work towards. So where a lot of these companies I’ve had problems, you look at kind of low-level tactical level automation tools, RPA, aspects of artificial intelligence, and machine learning. And the problem is, is that they’re automating without a vision for the strategic level. And they’re automating things that are actually out of compliance without really realizing it. So you have to have that program level vision for every single automation effort that you put forwards. If it’s something that you really want to have your enterprise transform with.

Sean Winter, Movius :

Yeah, that’s a good point. And it makes me wonder on the scale of digital transformation, digital maturity, which is a mouthful, where would you put financial services? Are they trendsetters, are the laggards? Are they somewhere in between when compared with other verticals?

Robert Grant, IBM :

I hate to say the word laggard, but the risk and compliance issue within financial services is really the critical part, right? You have a lot of very risk-averse firms that are not interested in shaking up the norms and potentially exposing themselves to problems with like GDPR. And that’s where a lot of our innovative solutions that IBM have focused on to ensure that you’re creating a solution that is not just adhering to the particular problem that you’re trying to solve, but ensuring that you’re not exposing yourself to some sort of additional risk. And that’s where we’ve put together tools such as IBM Financial Services on the cloud that are actual GDPR compliant toolings that have allowed these organizations to scale their IT automation as well as the automation of their actual operations across the entire enterprise.

Robert Grant, IBM :

And I would say, relative to your ability to flip on and flip off right now, the volume that you’re seeing in the marketplace, it’s going to change just inherently. And if you look at also the industry at large, the consolidation of many of these businesses as well. Morgan Stanley purchased E-Trade for example consolidating a great deal of those operations into one organization. And if they want to effectively scale their brokerage operations into E-Trade, they need to have a vision for how to actually transform towards cloud. You look at Schwab and TD Ameritrade, same type of story. If they want to scale both their IT side, as well as their operations, you have to ensure that it’s a compliant solution.

Sean Winter, Movius :

That makes sense. Let’s talk about, that was a beautiful segway, because I want to change slides here for a second and we’ve had a few exciting developments at Movius over the past few weeks that we’d love to talk about real quickly. Number one is that we announced last week in a blog post our attention to deliver our compliant mobile-unified communication service to the IBM Cloud For Financial Services. So we get what you’re saying, and we’re thrilled to partner with you on that front. And secondarily, we are excited to announce our banking and financial services competency. So with these certifications, our platform will truly be ready for any financial services firm to deploy back with, of course, the security and compliance needs of the industry, which I think goes back to our comment about, again, we don’t like the word laggers, but financial services has just had a very complex journey of digital transformation when you consider compliance and you consider security in the cloud. And I think this provides a very, very modern, secure and compelling solution for our customers. So I don’t know if you had any comments specifically due to the nature of your financial services cloud, but I know it’s something where we’re thrilled to be a part of.

Robert Grant, IBM :

Absolutely. Yeah. I would say it’s a very innovative approach and it’s really an interesting industry to have a very specific tailored plot towards just due to the highly regulatory nature of the work that they’re doing. As well as the scale. So it’s an exciting time to be part of it. And relative to the cloud industry as a whole, a lot of these companies are trying to put together, how do we scale without vendor lock. And I would say the big thing for financial services is really the idea of why would you want to take on that regulatory risk trying to look at vendor lock?

Robert Grant, IBM :

And not suggesting that IBM Cloud For Financial Services locks you into anything, but it’s more of a distributing that risk across your vendors is absolutely critical and important to the success of any cloud transformation. You want to ensure that you have a partner that is committed to the longterm vision and journey that you are trying to achieve, and that they can take on some of that risk along with you to ensure that you’re compliant regulatorily speaking, and you have actual true security provisions and measures that you can scale against. The partnership between IBM and Promontory as well is unlike any other in the industry. So you can ensure and be confident that IBM Cloud For Financial Services itself actually adheres to all of those pieces and parts as they change on a fairly frequent basis.

Sean Winter, Movius :

It’s exciting stuff. And like I said, we’re thrilled to partner with you. And Rob, I wanted to thank you for your time. I think we’re right up at the bottom of the half-hour here. You’ve been a great friend and partner to Movius, and I’m thrilled to chat with you. And hopefully, someday I’ll be back down in Atlanta to visit our office and we can get together.

Robert Grant, IBM :

And thank you for having me, Sean. It’s been a pleasure joining today.

Sean Winter, Movius :

You Got it. And for those of you on the call, again, if you want to learn the multiline and our relationship with IBM, head to moviuscorp.com. Learn more about our products and solutions, and we are thrilled that you joined. So thanks so much. I’m Sean Winter, and we’ll see you next time.

 

 

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