Reshaping banks and financial institutions to compete and thrive in the digital age

cognitive-bank

Everyday AI At Work Blog Series

A banking license is no longer a guarantee to print money.  After years of ultra-low interest rates, increasing demands from regulatory and compliance, and cost-cutting measures, yields are not returning meaningful results.

The ever present 24 hour banking scene, and the convenience of out of branch servicing, has led to the anonymous and unaccountable network services center model that has a tangibly negative impact on client satisfaction. This model has also increased the public awareness of service standards, and service impact, while not increasing yields or customer growth. Being the incumbent players in the world of financial commerce, the banking industry has long established processes and procedures that have enabled efficiencies and structure within the established industry. But new players are not burdened by this legacy and are embarking on disruptive technology that offers niche services targeted at high volume highly profitable services.

Small wonder then that customers are increasingly turning to services offered by financial technology companies to fulfill their commoditized service needs.

International funds transfer is a case in point. While banks cleave to the long-established SWIFT process, with its unpredictable delays and lack of transparency to the customer, fintech players offer fast and reliable service at as little as 10 percent of the cost of conventional international bank transfers. The inevitable conclusion that customers make is that they are charged higher fees to cover the all-inclusive services offered by a full function bank serviced by its individual and collective inefficiency.

Bold steps needed

Bankers are aware of these problems, and the boards are asserting pressure on the business units to turn this around.

Results from a recent global survey of 2,009 C-suite executives in banking and financial services carried out by IBM’s Institute of Business Value show a fairly clear consensus about the challenges. 64 percent of those surveyed felt their bank’s overall operational efficiency had remained the same or declined over the last three years. The top three strategic objectives were cited by more than half the respondents: improve operational efficiency (58 percent), improve customer satisfaction and engagement (51 percent), and grow revenues (50 percent).

Given the current circumstances it is clear that incremental change is not going to be sufficient. The industry needs to take a non-traditional position, to achieve the desired level of operational performance and business result, by embracing the potential that fintech disruption provides.

Blockchain revolution

To continue our international transfer example: rather than individual banks spending time and resources on improving their transactional back-end processes to make SWITFT transfers work faster and cheaper, the entire funds transfer ecosystem needs to be reviewed. The obvious foundation for a replacement ecosystem would be based on an irrefutable shared ledger network (aka Blockchain).

The power of a Blockchain network is already proven in a more conventional field of financial services with China UnionPay recently completing a successful pilot in collaboration with IBM that leveraged the technology to share loyalty bonus points between banks, enabling consumers to pool points from their various credit cards in less than a minute.

Fixing the transaction layer is, however, only half the battle; the service layer also needs a complete makeover.

Cognitive transformation

The emerging suite of cognitive computing technologies – such as artificial intelligence, natural language processing and machine learning – provide a toolkit with the potential to completely transform banking services. Cognitive tools are starting to appear on the financial services radar and a few leaders are already deploying them.

For example, The Royal Bank of Scotland has just gone live with Luvo, a webchat service that leverages IBM Watson Conversation, a cloud-based cognitive service, to enhance customer experience. Luvo is initially expected to handle about 10 percent of webchat queries, answering simple questions in a split second while directing customers to a human to answer more complex questions.

By enabling systems to process and act on data in a human-like manner fast and accurate cognitive solutions can transform how financial service organizations think, act and operate. By applying four basic cognitive principles – learn and improve; build speed and scale; collate human intelligence; and interact in a natural way – banks can exploit the benefits of available data to generate a range of transformational operational and business outcomes.

Banking’s treasure trove

Of course cognitive technologies are going to become widely available but their impact will depend on access to data, which is the banking industry’s strategic advantage. Tapping the huge quantities of dormant bank-owned data, much of it unstructured, is essential to offering the individualized engagement that customers demand. Cognitive capabilities are the key to unlocking this treasure trove and getting back to the point where banks understand as much about their relationships with their customers as customers know about their relationships with their banks.

By Mimi Poon, Director, Banking and Financial Markets, IBM China/Hong Kong Limited

區塊鏈全球通行 賦予鑽石名份

(原文於2016年11月24日在香港經濟日報刊登)

diamond-best-friend

Marilyn Monroe’s “Diamonds are a girl’s best friend”

有云:鑽石是女人的摯友。然而,鑽石的「名份」卻是一個困擾。

鑽石沒有世界通行的身份證。竊賊在甲地偷了寶石,拿到乙地去賣,神不知鬼不覺。因此,盜竊問題一直令人頭痛。業界嘗試了不同方法,如為知名鑽石發身份證,但當數據庫被黑客入侵,如去年十月美國寶石學院便宣佈,他們鑑定的逾千顆鑽石記錄失效。

英國初創企業 Everledger 最近利用 IBM 針對區塊鏈開發的軟硬件技術,發展出一套分佈式鑽石身份記錄系統,為鑽石賦予全球性的「名份」。日後即使個別系統被攻陷,電子竊賊竄改鑽石記錄,其他系統都能察覺,防患未然,為鑽石以至未來其他奢侈品,例如名畫等,提供前所未有的安全保障。

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區塊鏈出招 阻二噁英蟹橫行

(文章於2016年11月17日在香港經濟日報刊登,原題為「區塊鏈可保食品安全」)

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食品安全議題近來炒得火熱。遠至歐美等地的「瘋牛肉」及「注膠牛」,到最近驗出的二噁英超標大閘蟹,這些事件令我們察覺到,今天食糧供應跨越國界,預製食物更牽涉原材料供應商、烹調製作商以及物流配送三方,監管不易。

傳統方法會為合規產品頒發證書,但以紙本為基礎的證書容易做假。當食物供應跨越國界穿洋過海,面對不同文字註述的包裝食物,常人未必能輕易解讀,讓不法之徒有機會從中作假。

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認知運算系統 分析數據抗糖尿

(原文於2016年9月8日在香港經濟日報刊登)

lineriau_mengalahkan-diabetes-tema-hari-kesehatan-dunia-2016

Photo source: World Health Day

糖尿病乃香港十大慢性病殺手之一,每十個港人就有一個病患者,全球患病人數現時更逾四億人。如何透過像人工智能等科技協助對抗糖尿病,是醫療界近年的熱門課題。

近期的發展是,美國糖尿病協會 (ADA) 在六月公佈,會將其儲存達 66 年的數據,包括糖尿病醫學文獻及臨床研究等資訊導入 IBM Watson 認知運算系統,讓它自行學習及理解。ADA 計劃日後將系統對外開放,讓它可人性化地應對護理和科研人員的查詢、協助貼身管理患者病情等。重要的是,Watson 可按病人的潛在風險,作出有理據和令人信服的治理建議。

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Blockchain and the Internet of Things

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Blockchain continues to be a hot topic among businesses in Hong Kong. On November 11, TVB Pearl Money Magazine aired another Blockchain story that discusses how the new technology will revolutionize the logistics industry and make the Internet of Things more secure. IBM subject matter expert Iqbal AliKhan is again featured as one of the speakers. The full program can be viewed at here.

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電商採混合雲 迎瘋狂網購

(原文於2016年11月10日在香港經濟日報刊登)

(社會)(1)提早備戰“雙11”

圖片來源新華社

去年的「雙十一」,港人熟悉的淘寶創出多項世界紀錄,包括912億元人民幣的網上交易、逾千萬升牛奶和300萬部手機等銷售數字。

當網上瘋狂搶購、大量瀏覽湧入時,有機會令電貿網站癱瘓。「雙十一」期間,有網站的點擊率由平時的千萬暴增至億次,後台系統保護能力要求由原來的 100GB 跳升至 1TB,平時低峰期的故障恢復時間也由小時劇減至以分計算。

但消費者並不知情,只知點擊下單;網站如稍有差池,便會招惹投訴和不滿,並在社交媒體上發酵,演變成公關事件。

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