2023 Global Banking Predictions

AI & ML Harnessed in Fight to Build up Customer Financial Resiliency

Financial institutions are under intense pressure to look after their customers as economic uncertainty and recession hits people’s lives and livelihoods. What has happened already in the UK in 2022 suggests it may get uncomfortable for some in the industry who do not do enough for customers in trouble. For example, the UK regulator, the FCA, has already forced financial service providers to compensate struggling customers for failing to properly support them. They and other national regulators are going to be keeping a close watch on how the financial sector behaves in 2023. 

Banks will need smarter antenna about their customers’ financial situations and to be able to proactively step in and offer help before matters get worse. This means very personalised support and messaging that has not been achievable to date at the scale and speed needed. 

What will be key to being more responsive is how banks exploit machine learning to sense what is happening. However, they need to recognise that previous models to predict customer behaviour are not suited to current economic uncertainty. 

Rebuilding models frequently as the economy evolves will be critical. But even more so, being able to manage the deployment and lifecycle of these models in operation will be the key to extracting value from them. A super-adaptive but stable platform for data science innovation, management and operational execution will be critical.

War on Friction in Digital Banking Not Stopping 

Rubbing out those process ticks and bumps that get in the way of smooth customer experiences is an ongoing programme for banks across their channels from online to in-person.

This is a positive trend that nonetheless comes with tensions because of how impatience has intensified. Everyone is super-sensitised to the slightest delay and buffering in a process given we are all remote and online so much. Slightest slip ups in design and functionality are micro-aggressions that customers will not accept anymore.

But plans to streamline customer experience could be subsumed in how banks are looking at their operating costs when risks to their business are rising. There is a danger that the reasonable determination to control costs may undermine the goal of delivering more personalised experiences and positive outcomes for customers. This will need to be resisted.

Also, with the fight for talent, financial services businesses who give greater consideration to how their systems and processes support and relieve pressure on front line staff will be those who win that battle too. Staff, like customers, desire and demand more frictionless experiences.

Keeping Faith in Net Zero Banking

The war in Ukraine and ensuing energy crisis have seemed to side-line the Net Zero commitments. 

But no business can be complacent as decarbonisation targets remain for 2030. As banks and other financial institutions support businesses achieving this and other ambitious goals, their role will increase in importance in 2023. 

Discussions about ESG reporting were more frequent at SIBOS 2022 than SIBOS 2021 and this lends substance to how Net Zero banking is going to progress, not reverse, over the next 12 months or so. There are other drivers too. For example, reporting standards are starting to emerge with bodies like the EU leading the way with financial and climate disclosure requirements

The checklist that banks and business customers will be ticking through in 2023 will cover supply chain and lending, plus other areas where a bank has an indirect influence on spend habit such as providing information on carbon footprint spend, raising awareness of leading ESG partners to do business with and so much more.

Banks being credible Net Zero transition guides will gain real value when there are so many other pressures on their business customers.

CBDCs Added to Payments Mix

Those declarations and experiments by central banks in creating digital currencies may become less hot air and vapourware in 2023 with fifteen governments undertaking trials with central bank digital currencies (CBDC). There is a sense of momentum growing as central banks from across the developed and emerging economics seek to coordinate their plans. Some countries like India may take the lead here. 

Whatever the actual progress of CBDCs in 2023, it will make more sense for corporate banks and corporates to begin to prepare for new payment methods. Those who have invested in modern payment platforms built for change should be in a pole position to have the requisite agility to seize the opportunity most comfortably. 

Straight Thru Processing Economic Lifeline

No surprise that everyone has a bad feeling about 2023. But banks can play a heroic role.

As their corporate customers are hit by severe price variability and supply chain stresses linked to energy price rises and the aftereffects of the pandemic, banks will need to do as much as they can to build out a service backbone that simplifies servicing of business accounts. The goal must be to minimise unnecessary delays that add further stresses onto the already stressed business operations of their corporate clients. 

As you might expect AI and intelligent automation will play a crucial role here. Banks will be increasingly leaning on solutions that use natural language processing to monitor inquiry channels and auto respond much faster. The goal is to dramatically reduce duplicate requests and have fewer employees reading and responding to emails and instead processing answers. The secret sauce to success will be how intelligent the bank’s AI is in intelligently routing inquiries and communications to automatically reply instantly, create cases to get a job complicated by some exception done faster or immediately triage to a team or individual with the resources and skills to sort the issue out. 

A Careful Autonomous Service Tech Revolution

When the first ATM was inserted into a wall, banks appointed themselves the pioneers of self service. Nowadays, self-service banking extends well beyond the hole in the wall machines of the 1960s is pervasive from mobile apps to websites to assisted self-service devices in new style bank branches. 

But there is further to go, and in 2023 we will see more evidence of what is known as autonomous service in how banks serve customers across their channels. This will be a natural maturation of the accumulated changes that have affected how customers seek help, buy, and use financial service products and offers. 

Self-service has been in place for many years now. But we must be honest and say that the experience can be patchy. These systems too often fail to resolve a customer’s request, requiring a human service agent to intervene and start the whole process over again. Quite simply, self-service does not do what it says it does: empower the customer. The same goes for some assisted service systems which frustrate service agents who depend on them to advise customers. 

So how will autonomous service fill the gap in 2023? 

Autonomous service marshals real-time AI, intelligent automation, and event/pattern detection to provide progressive levels of autonomy across service interactions. In this respect, autonomous service does not replace agent, assisted or self-service at all. It provides a platform to support and drive those engagements in a much more effective and empathetic way that focuses on a customer’s journey to get answers, help or information. 

The analogy is how autonomous systems support a driver in a car when and where they are best needed. This spans from no involvement at all through driver assistance, occasional self-driving, limited self-driving and self-driving in some or all conditions. There is no one size fits all mode of autonomy, which is dialled up or down depending on the needs of the driver, and real time conditions and context of where and what the vehicle is doing. 

The same model will apply to autonomous service in banking. Levels and details of autonomy are raised or enhanced to support, accelerate, and assist current service practices through to fully automating service requests from end to end. And like how the autonomous system within a Tesla adapts to the road, so does autonomous service respond to the twists, turns and bumps in the customer’s journey.

Autonomous service will begin to appear during 2023, having been road tested in several use cases among some pioneering institutions around the world.