Banking on customer experience and security via technology-based innovation

I’ll never forget the look on my first mortgage clients’ faces as they signed for their new home – the joy and relief washing over them in equal measure. After weeks of exhausting back-and-forth requests and paperwork transferred in ways that seem naively unsecure by today’s standards, their prize was the key to the front door.

Since then, automation has filled the gap in improving customer experience and security. Workflow automation and data analytics are streamlining document management, cross-checking data, assessing for risk, ensuring regulatory compliance, and so on. For a borrower, there is more visibility into the process, less wait time, and better protection for their personal and financial information.

Customer experience and security

But as in most industries, customer expectations and security challenges continue to grow along with technological advances. Quick loan approvals, online applications, personalized lending options, and massive data breaches create pressure for banks to focus on customer experience and security to compete with more technically mature and agile competition.

To better understand the impact of specific technologies on banking, Iron Mountain conducted digital listening research that analyzed public conversations about emerging technology tools. This research indicates that established banking institutions are deploying technology-based innovation to stay competitive with more agile and tech-savvy FinTech startups in two significant areas:

• Customer experience. Banks continue investing in technologies that make the customer experience seamless, including mobile apps and peer-to-peer payments.

• Security and privacy. Banking professionals recognize the importance of security and cutting-edge data storage technology in an industry that is a prime target for cyber attacks.

Regulatory requirements will temper developments in these two areas:

Technology, banking, and innovation

To accelerate innovation and improvements in customer experience, security, and privacy, banks are turning to three technology-based capabilities: blockchain, artificial intelligence (AI), and metaverse. Our research revealed that:

1. Blockchain conversations are the highest volume because of greater investment from venture capital firms and a widespread belief that the technology could disrupt the financial industry.

2. AI conversations ranked second in volume, with attention focused on AI-enabled banking applications and limiting potential harm from AI technology deployments.

3. Metaverse conversations are low volume due to the relatively few commercial opportunities in the space currently.

Blockchain

Our research shows that blockchain is a leading technical capability that is being heavily discussed in banking. Finance professionals and government officials are exploring blockchain technology to bolster customer experience and safeguard customer and privacy data while navigating pressure from cryptocurrency startups. While significant investment has been made in blockchain technology, most industry professionals do not expect blockchain-based innovations to occur until governments provide more guidance and regulation.

Blockchain discussions focus on financial services use cases such as payment processing, investing, and digital currency replacements. In banking, other blockchain-powered use cases include facilitating international transactions, verifying customer identities, securing customer financial data, and offering digital bank notes.

Artificial intelligence

While AI is an increasingly important topic to banks, our research indicates they’re cautiously deploying AI. Among the prevalent risks we uncovered are the potential for AI model bias in areas such as loan approvals and concerns about data collection practices that enable AI-powered services such as chatbots and voice assistants.

Banks recognize that using AI at scale can accelerate and streamline internal processes and regulatory checks. AI use cases mentioned most often include fraud detection, virtual assistants and chatbots for 24/7 customer service, personalization of services, and, for larger legacy banks, warding off competitive capabilities from FinTech startups.

Metaverse

According to our research, one attractive consideration is that early adopters of metaverse skew younger, thus representing a valuable demographic for banks. This increases banking incentives to establish brand touchpoints in the metaverse. However, industry experiments with banking in the metaverse decreased dramatically through last year as banks waited for clearer commercial incentives to emerge. Metaverse conversations involving banking often overlap with those about cryptocurrency, as many see the two technologies as intertwined.

Metaverse use cases mentioned most often include virtual banking, consulting, and training services, remote processing of claims and mortgage lending, managing gaming finances and micropayments, and advertising and brand building.