The Financial Sector: Meeting Tough Challenges Head On

These days the banking and financial industry is finding itself in constant flux. On top of having to deal with the pressures and challenges brought about by the industry’s constantly shifting technological landscape, banks and financial institutions also have to deal with increasingly demanding consumer expectations, regulatory concerns, security challenges, and other pressures.

This article offers a sneak peek into some of these challenges for which the financial sector is also finding creative and innovative solutions.

Ensuring Compliance to Regulatory Directives

Banks and other financial institutions are consistently subjected to regulatory mandates from local, national, and international regulatory bodies. For example, in the United States, the Federal Reserve maintains a regulatory framework known as the Comprehensive Capital Analysis and Review (CCAR), whose main purpose is to make sure that banks efficiently oversee their capital reserves. This is in order to account for variabilities in financial and economic conditions, and to allow them to absorb losses. With banks constantly monitoring their capital adequacy, they can make certain that they will have the capability to perform capital distributions like stock repurchases and dividend disbursements, even during periods of financial and economic stress.

Because of the huge transaction volumes that are often involved in ensuring compliance to regulatory mandates, financial institutions often turn to modern data integration solutions with real-time analytics capabilities. With these as their tools, these organizations are able to handle the large amount of data generated by daily banking and financial transactions, ensuring that all processes comply to all directives set by regulatory agencies.

Protecting Customers from Financial Crimes and Security Breaches

Understandably, protecting sensitive customer information from financial crimes and security breaches also come at the top of priorities of financial institutions. This goal is closely intertwined with regulatory concerns, since banks and the merchants they work with are enjoined to implement standards for security policies, technologies, and processes.

An example of such standard is the PCI DSS or the Payment Card Industry Data Security Standard, which were created by the PCI Security Standards Council. This global organization was founded by the payment networks Visa, MasterCard, American Express, JCB International, and Discover to help protect payment systems from security breaches and to safeguard customer card information from fraud and theft.

Since financial institutions occupy a special position at the intersection of an astonishing stream of data, they rely on automation solutions like artificial intelligence and machine learning in order to discover and study patterns of information at incredible speeds. By doing so, these institutions are empowered to uncover fraud and other financial crimes even before they happen.

Improving Customer Service and Customer Experiences

Financial institutions are often early adopters of sophisticated information technology systems, and it’s a good thing, too. Customers typically demand urgency when it comes to learning about their financial information, so it’s important for institutions to be able to provide the answers they need, when they need them.

For this, banks, insurance firms, and investment companies turn to self-service technological solutions that allow customers to be able to do more on their own, especially when it’s simply performing routine transactions, whether it’s getting responses about frequently asked questions, transferring money, disputing transactions, or something similar.

When self-service technologies mediated by artificial intelligence is not enough, the system can then automatically escalate the communication to a live agent. Typically, inquiring clients want customer service representatives to be immediately knowledgeable about their support history from the moment their call is picked up. To do this, financial institutions can rely on data integration solutions to integrate historic customer data across all channels in near real-time, allowing agents to have both broad and granular view of the kind of support that they already received beforehand.
While financial institutions experience problems, technology is doing more and more to insulate them from challenges that were once considered insurmountable. Next generation big data and artificial intelligence technologies are sure to only improve further what can be done in the financial sector during the years to come.