Guest contributor |

05 March 2024

The next few years should prove to be transformative for the financial services sector. Many organisations are undergoing digital transformation to modernise their core services and payments.  

The introduction of generative artificial intelligence is set to revolutionise financial tools, back-office operations and overall customer experience in ways never seen before. Organisations are moving away from older technology and towards more modern, cloud-native core banking systems. These systems offer the agility and flexibility to provide enhanced and new services that meet or exceed their customers’ growing expectations.  

With Microsoft Azure cloud, organisations can tap into new technologies and accelerate their transformation journey by modernising their processes for data storage, management, analytics, risk management, fraud detection and regulatory compliance. 

Improving core services

Tracking and storing data enables financial services organisations to uncover AI-driven insights. These insights can modernise core systems, streamline financial operations and improve overall customer experience. Consolidating data and identity management into the cloud improves data quality and overall security posture while still providing the flexibility and agility needed to maintain operations at scale. This impacts an organisation’s ability to predict risk, market volatility and detect fraudulent behaviours earlier.  

The quality of an organisation’s data also affects its ability to report compliance accurately. Incorrect reporting can result in severe penalties. Moving data into a consolidated cloud environment allows firms to access their data in real time to complete audits, predict and mitigate future risks, and assess and ensure their organisation’s compliance.  

Modernisation use cases are trending throughout the financial services sector and many of them involve eliminating lengthy tedious processes that previously relied on extensive manual input. Not only does generative AI allow for the automation of these processes, but it also allows institutions to glean insights from their data. For example, using generative AI, financial services organisations can comb through vast arrays of data, identify patterns that align with fraudulent behaviours based on past identified cases, and compile these into a report for a human to follow up. This reduces the time and resources spent on fraud prevention, provides increased visibility and protects the institution’s reputation and credibility from harm.  

Cloud-based solutions like Microsoft Compliance Manager simplifies monitoring regulatory compliance and helps to reduce risk too. It provides users with a score for their current data protection status, based on standards from the International Organization for Standardization, the National Institute of Standards and Technology, and regulatory requirements. It then identifies key areas for improvement and prioritises recommended actions based on their impact on risk. 

An organisation’s approach to governance, risk and compliance (GRC) is tantamount to success in the heavily regulated financial services sector. Best GRC practices require an integrated, holistic approach that implement all three principles across the entire organisation, improving the efficiency and the effectiveness of the organisation’s overall efforts. By modernising core functions, financial services organisations gain the level of visibility needed across the entire organisation that allows for effective regulatory compliance reporting. Once data is consolidated in the cloud, real-time updates allow the firm to ensure that follows all relevant regulations.  

Cloud risk management requires multiple systems to work together in tandem to remain effective and productive and as more institutions continue completing initiatives in their digital transformations, they’re turning to the cloud for business continuity and disaster recovery (BC/DR). Cloud-based BC/DR adds a layer of agile protection, enabling recovery from data loss with accurate data and preventing costly downtimes and potential increased compliance risk.  

Modernising payments

The financial industry is changing. As digital transformation modernises the way people and businesses manage transactions and make payments, financial service institutions must find ways to offer what their customers want. Consider the recent surge in digital currency and blockchain transactions; institutions have an opportunity to deepen their customer relationships by offering digital services and tools that allow their customers to transact and manage their finances. By accelerating their digital transformation to the cloud, financial services organisations can offer multiple services that enable digital transactions and record keeping at scale. 

A survey conducted by the Cellular Telecommunications Industry Association found that 72 per cent of all banking customer respondents prefer to manage their finances online or through a mobile application. In keeping with shifting customer expectations, financial service institutions have begun digitally transforming their services to modernise payments and redirect focus towards the overall customer experience.  

Customers expect more a personalised and proactive service from their providers, like customised notifications, insights and guidance for managing their finances. In order to provide their customers with these services, organisations are using the flexibility, agility and scalability of the cloud to provide the platform and infrastructure needed to drive innovative new tools and applications.  

Learn more about how digital transformation can drive business growth by creating better customer experiences with the Forging the path to banking modernization webinar series, produced by Microsoft and partners. 

Ryan Blakely is the go-to-market director for the financial services industry in the Americas at Microsoft