Recently we had a chance to interview Rina Pandalai at the Digital Marketing for Financial Services, Toronto about the changing market scenarios and technologies shaping the financial services industry in North America. Rina Pandalai is the financial services strategy and digital transformation lead at SapientRazorfish, where she consults top financial companies in the US on their business strategies and digital transformation.

She emphasised that AI(Artificial Intelligence) will change the banking industry for good and will play an important role in the digital transformation of banks and other companies, not just in the front client facing office (like robo-visors have tried to do), but also in the back offices to assist the employees to provide a better service to the customers. She envisions consolidation happening in the financial sector in the future with Banks collaborating with fintechs to produce better products and services. Getting around compliance and bringing a cultural shift in the organizations is what she thinks is the biggest hurdle in achieving the dream of a digital banking society. Let’s dive into the interview and see what she has to say.

What are some of the digital transformation trends financial companies are acting upon?

I think AI has a huge potential. Today technology is really advanced in the context of commands. SIRI is a good example of that. We need to put in an exhaustive use case of AI in the Bank’s front as well as the back office. Whether it’s lending or wealth management; we need to figure out how AI can internally help an organization change. For example getting an exhaustive set of data for a customer and getting it ready for the underwriter to make a decision. By using data, cognitive and artificial intelligence, there are endless possibilities; from chat-bot to virtual systems to completely reimagining customer service. It’s not about just managing the interaction with the customer which is super important at the front end but also streaming your employee interaction for an end to end integration. At the end of it, the organization becomes a completely different organization.

How successfully are these financial companies using Big Data for digital transformation?

Data is everywhere and it can be used in so many forms; it is in the form of big data, Meta data and intelligent data. It is a prerequisite to have a big data strategy, but how you use this strategy and determining how intelligent the data is, helps companies in their transformation. Most firms do have data strategies; they collect day to day insights and the insights drive business but making sure that your data is intelligent, is learning and is being deployed in customer and employee interactions through an entire lifecycle, which I think is difficult to achieve. 

What’s your opinion on Robo-visors? Are they replacing investment advisors?

It has been a good 3-4 years that we have been trusting robo-visors. A lot of banks that are deploying them would say that they are average from a success standpoint and there still is something missing. What I think they might be missing is to prove a potential to be useful to the customers. The early adopters would say that they want a computer to help them with the portfolio of their investments, but the reality is that it has to be a hybrid model for big life decisions like an investment. I think robo-visors can help but it’s always better to have a dedicated advisor and that’s why I would say that the applicability of robo-visors and data is best used when it helps to transform the entire wealth model. It is good when it is used for customer interactions but there is more we can do with robo-visors. Thinking the overall customer experience and reimagining the wealth business holistically is where it will make a difference. Robo-visors aren’t integrated with any large wealth company and own only 1% of the marketing share. I think they are setting a new standard, but I don’t see them disintermediating the large banks for asset management.

What major changes are we expecting in the financial industry in the next 10 years?

In 10 years I think there would be a huge consolidation, it hasn’t happened in the market in a long time and largely because the banks are coming out of the financial crisis and the interest rates have been low. I think we are at the beginning of this perfect storm because budgets are going to be looser and the interest rates will help grow books. If deregulation happens, we would not need an army of compliance and regulatory people in the banks and would use technology to drive some of that regulation and compliance upkeep. I think that will open up the pockets for reimagining what is possible and you can build and what you can buy or partner. There haven’t been any large acquisitions of fintechs by the large banks in the past but we can’t say about the future. I think there will be huge consolidation in the market and it’s just the economic cycle. As the budgets start to grow, banks would look at acquiring smaller banks or fintechs. It is going to be an exciting time for the banking sector.

As the millennial population is growing, most banks are seen to be moving towards branchless banking. Is it the end of traditional branch banking?

I think there would be fewer branches, I don’t think it will be a branchless society because even millennials are humans and they will grow up and will have kids and they will want to have to talk to a real person for big life decisions. I think there will be fewer branches in the market place but they will not completely disappear.

Can you please elaborate on open banking and the risks involved in opening up the APIs?

I think you need to have an open banking environment to be able to collaborate. It’s about speed to market. You can’t always build because it is costly. If you want to create an ecosystem for your clients, you need open APIs to collaborate and there’s nothing wrong in that. The risks are that they may become too commoditized. If everyone has the access to the same APIs, there’s no point of differentiation because everyone will have same sets of services. The question now lays that can you truly differentiate an experience because your products over time will continue to become commoditized. It’s hard to say if we are ready for open banking yet because I see a very few banks starting to open their APIs. Banks see that as a threat, maybe they do not want to partner with Fintechs because they see that as sharing too much information and giving away customers.

What are some of the roadblocks you see for digital transformation in the banking industry?

I think there are some cultural barriers internally. The CEO and the executive team may embark upon this vision of transformation, but how do you bring everyone else on board. It is the notion of “oh if I deploy technology, the team size is going to reduce” and you then have this challenge to drive execution because there is an uproar around letting go of the people. You can use technology for almost everything in banks and companies these days to really change the game but how far does a company go and then what does the regulatory bodies deem as safe and sound means to do business. It is always paired up with the lines of regulations.