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APAC Banks Need to Prepare for a Digital-First Future
May 11, 2022 Blog

Authored by: CK Tan, Senior Director – Qlik


The term bank originated from the Old Norse/Germanic word bakki, which means “to set things in a row.” The banking, financial services and insurance (BFSI) sector has transformed into a multifaceted, multidimensional entity that powers almost every aspect of life in the 21st century. Its presence can be felt in digital payments apps and payment gateways used to process payments at e-tailers and offline merchants alike, in the digital platforms enabling users to buy and sell stocks at the touch of a button.

And, as the last year has shown, it is due another evolution—this time powered by Active Intelligence.

The Digital Wave, Millennial Consumers, and Online Threats: Why the Evolution of the BFSI Sector Can Wait No Longer

As the COVID-19 outbreak brought the physical world to a grinding halt, the digital ecosystem kicked into another gear—a shift that reflected in the growth of non-physical modes of transactions. Since 2020, real-time digital payments across the globe have increased by 41%, year-on-year, with the total transaction volume exceeding 70 billion. Developing economies such as India and Malaysia, previously dominated by cash, were amongst the leading contributors to this growth, driven by the rise of mobile banking and the need to remotely accept payments even for physical transactions.

As people increasingly took to transacting digitally during the pandemic, the number of frauds and cyberattacks also rose exponentially. So, 78% of banks in the APAC region agreed that the introduction of real-time payments has been a factor in increased fraud losses. It is predicted that the global cost of fraud by 2027 will be USD $40.62 billion dollars, 25% higher than the fraud losses in 2020.

Companies in BFSI are vast storehouses of critical personal and financial information that cybercriminals want to get their hands on. Experts have warned of how accelerated digital migration can provide an opportunity to compromise existing and emerging gaps within the banking infrastructure, its processes and end-consumer knowledge. And yet, the sector was caught underprepared to deal with the growth in the quantum of threats and frauds during the pandemic.

The second development has also been in the making for some time. Today’s consumer ecosystem is increasingly populated by digital natives who demand better, more seamless services. So far, the BFSI industry has managed to cater to their requirements with successful DX initiatives—but barely.

The truth of this was recently laid bare in the “stonks” rally and the stunning rise of Dogecoin. Inspired by memes, reddit discussion threads, social media and new-age retail investors who had a bone to pick with the Establishment. The stonks trend saw hedge funds holding short positions in select stocks lose almost USD $13 billion within a month. On the other hand there is Dogecoin, a meme-based cryptocurrency that started out as a joke in 2013. As we enter 2022, cryptocurrencies and NFTs are picking up steam as the newest financial trend, and it is clear that social media is driving major trends by levelling the playing field for new-age consumers. The BFSI sector can no longer ignore it.

Active Intelligence: The Great Equaliser for BFSI Companies in the Digital Age

As BFSI players already collect and process massive quantities of data every day, Active Intelligence has a part to play. Leveraging an Active Intelligence-led framework can help them embed analytics into their processes to trigger automated actions and more contextual, real-time decision making.

For instance, banks can use Active Intelligence to automate certain processes such as underwriting, customer onboarding, branch operations, customer interactions and customer intelligence. This integration of advanced analytics at a process level constantly evaluates contextual data such as transaction status, stakeholder details, transaction type, payments processing, compliance, documentation and more to flag anomalous behaviour. This flagged data acts as the trigger for the first level of intervention by the system itself while also compiling in-depth insights for high-level, human-led response to the alert.

“Companies in BFSI are vast storehouses of critical personal and financial information that cybercriminals want to get their hands on. Experts have warned of how accelerated digital migration can provide an opportunity to compromise existing and emerging gaps within the banking infrastructure, its processes and end-consumer knowledge. And yet, the sector was caught underprepared to deal with the growth in the quantum of threats and frauds during the pandemic.”

HDFC Life is already doing something similar by using Active Intelligence to weed out insurance fraud. It uses an Active Intelligence framework to create a 360-degree view of its customers, queries and policies that allows it to identify suspicious behaviour, such as frequent changes in nominees or even a sudden spike of interest in a particular policy from different geographies. Branch managers handling such policies are then alerted to intervene. Doing so has helped the company strengthen its fraud analysis for a more secure and seamless claims process.

Another example is Indonesia’s Bank BTPN creating an Enterprise Data Hub to streamline processes. Rather than having to wait until the end of each business day to access data, Qlik Replicate enables real-time ingestion of data from their AS/400 environment and allows them to gain instant visibility to all the data in one dashboard for real-time action. The creation of the Enterprise Data Hub ensures data is being processed in real-time and it relieves strain on the core banking system, leaving it free to focus on serving transactions. This reduces the risk of business downtime, protecting corporate reputation.

BFSI companies can also use Active Intelligence-based processes to improve the depth, quality, and range of insights they generate from data, enabling them to predict future market trends. Embedded analytics enabled by Active Intelligence, for instance, can help them improve their social listening capabilities to predict major market developments ahead of the curve, such as stonks and ‘Doge to the moon.’ More importantly, it can help them understand stated and unstated consumer requirements to devise more personalised products and offerings that might not be available in the market—giving them a first-mover advantage and strengthening their revenues, profitability and consumer operations.

Change is always chaotic, but as the world we live in becomes more digitally-driven with each passing day, BFSI companies must learn to embrace this chaos by adopting Active Intelligence. For it is only with data that they can turn challenges and disruptions in a rapidly changing business ecosystem into exciting new opportunities.