Why automation is important for financial institutions

Technological innovations have enabled financial institutions to offer numerous innovative services and multiple payment channels to the customers. Due to the convenience of these channels—online banking, credit cards, e-wallets, and peer-to-peer transfers—offer, more and more users are now preferring digital over traditional methods of transactions.

Balancing security with customer expectations

All these online services require customers to create digital accounts and log-in to them for access. Since cyber criminals are always looking out for opportunities to attack, an increase in digital channels has opened up another vector for attack. As a result, the risk of exposure to users' personal data has also proportionately increased. Directives, such as the GDPR, mandate digital businesses—primarily those dealing with customer data—to ensure the security and privacy of data they hold. Financial institutions have large volumes of customer data and with such directives, the pressure to ensure safety of customer data has also increased.

With transactions going digital, financial institutions must also ensure their genuine users can access the services without any problems, while cyber criminals are identified and stopped before they can strike. However, in an attempt to prevent cyber criminals from accessing their networks, if businesses force online users to prove their authenticity at every step, it will add a lot of friction and impact customer experience. Customers may find it irritating and switch over to a competitor that provides a better customer experience. Therefore, financial institutions need a review mechanism that enables them to sieve out inauthentic users without impacting the genuine users.

Keeping pace with increasing transactions

Traditionally, financial institutions reviewed every transaction manually. There were teams of reviewers who would scrutinize every customer request to ensure the customer was legitimate. With the transition to digital, the volumes of transactions have multiplied exponentially, making it difficult for financial institutions to keep pace with the growing customer requests and distinguishing between genuine users and cyber criminals. Further, in a bid to prevent cyber criminals, manual reviewers may quarantine genuine customers as well.

Why consider automation

In today's digital era, when customers expect instant transactions, any delay on the part of the business is considered a shortcoming. Continuing with manual reviews and delaying authentication can adversely impact customer experience as well as customer engagement. Therefore, financial institutions are racing against time to take real-time decisions when it comes to correctly authenticating large volumes of customer requests and allowing them access.

This is where automation can prove helpful. Automating the review process using artificial intelligence and machine learning not only speeds up the process but also helps improve operational efficiency and fight cyber criminals with greater confidence.

• For improved operational efficiency: An automated review process can screen the users in real-time and accurately leverage digital intelligence to identify cyber criminals from genuine users. Since artificial intelligence and machine learning can analyze large volumes of data, they can unearth deviant patterns that may be overlooked by humans and help connect the dots better to arrive at a larger picture. Larger the volumes of data, the more incisive the analysis. This, in turn, improves the overall efficiency of the middle- and back-end operations.
• For prevention against cyber attacks: Machine learning algorithms iterate better over large data sets to detect anomalous behaviors, which helps tell genuine customers from cyber criminals with greater precision. In a landscape, where cyber attacks are rapidly evolving and cyber criminals are leveraging technology to launch sophisticated attacks, financial institutions must consider automated solutions to protect their businesses from the onslaught of growing cyber attacks. Automated solutions powered by artificial intelligence and machine learning can be potent tools in fighting cyber crime.

Greater intelligence with wider automation

Despite the many benefits that automated solutions offer, at present financial institutions have only automated the tasks that are either repetitive or process-driven. However, to unlock the world of digital intelligence that can help gain real-time insights into customer behavior, fuel business growth, and proactively fight cyber crime, financial institutions must automate a wider set of processes.

The article has been written by Neetu Katyal, Content and Marketing Consultant

She can be reached on LinkedIn.