Jennifer Geis, Sr. Strategic Initiatives Analyst Jack Henry & … · 2019. 9. 6. · 1© 2019 Jack...

© 2019 Jack Henry & Associates, Inc.®1 © 2019 Jack Henry & Associates, Inc.®

Data AnalyticsWhat’s With All the Hype?Jennifer Geis, Sr. Strategic Initiatives AnalystJack Henry & Associates

© 2019 Jack Henry & Associates, Inc.®2

Points of Discussion

01. Who is forming modern analytics solutions and how did we arrive where we are today

WHO AND HOW

02.

03.

Which modern financial service technologies rely on data and where are they being utilized

WHICH AND WHERE

Why financial institutions should establish a data strategy and what to do now

WHY AND WHAT


Source: Data Never Sleeps 6.0 Report, Domo, 2018

3,877,140 searches

4,333,560 YouTube videos

$68,493 P2P transactions

3,138,420 GB of internet data

12,986,111 texts

2,083,333 snaps

https://www.domo.com/learn/data-never-sleeps-6


Data Builds Amazon’s Payment Ecosystem

SOURCE: AI for an Improved CX, Digital Banking Report, February 2019


Factory in China has replaced 90% of its human workers with robotsJune 21, 2019

Robots may replace 800 million workers by 2030December 5, 2018

Breaking News


Traditional Data Collection is Insufficient

Manual just-in-time approach:

Consumer-led data harvesting:

Bank-generated sensing/awareness:

Consumer data is added manually

Consumers are passive

Consumer data is harvested from digital footprint

Consumer accepts sharing private data

Harvested data is used to predict what the consumer needs, when they will want it.

Consumer provides prior consent—no formal engagement


Modern Methods of Data Collection Emerge

SOURCE: Swimming in Data: Data Lakes in Banking, Celent, June 2019


SOURCE: The Power of Advanced Analytics, The Financial Brand, December 2018


Innovative Data Collection Needs a Data Lake

a consolidated store of both structured and unstructured data. Provides the flexibility to use the data stored, whatever its format

a common data repository, that breaks down siloes of knowledge throughout any organization

noun


Data Lake Data Warehouse

Storage is relatively easy since the data is not pre-processed, stored in its native format.

Accepts structured and unstructured data. Typically a flat data model, but hierarchical

solutions exist. Offers flexibility until the time of use. Multi-tenant capabilities.

Storage is more difficult. User must define schema.

Data must be structured. Data model is complex to design. Purpose must be fully designed prior to

construction. Single tenant only.




WHO AND HOW

02.

03.


WHICH AND WHERE


WHY AND WHAT


AI: Broad and Often Misused Term in Financial Services


AI Is Increasingly Included in Banking Strategy

SOURCE: AI in Banking, BI Intelligence, June 2019SOURCE: Accenture, Digital Banking Report, September 2018


AI Leads the 2019 Top Ten Retail Banking Trends

Source: Retail Banking Trends and Predictions, The Digital Banking Report, December 2018


Tangible AI Use Cases Are Being Utilized

SOURCE: AI in Banking, BI Intelligence, June 2019

$447B

Estimated U.S. banking industry cost savings, projected 20% reduction in operating expenses by 2030

Source: Capgemini Financial Services Analysis, 2018



Significant Cost Savings Can Be Achieved


Use Cases in Data Analytics

Churn reductionNext best action

Deepening relationships

Marketing and Sales

Credit risk managementLoan optimization

Credit Risk and Underwriting

ChatbotsPersonalized insights

Mobile optimization

Customer Experience

Transaction monitoringIdentity validation

AML/KYC

Fraud Prevention


Fraud Prevention Is the Dominant Use of AI in Payments

Fraud Means: Disruptive customer experience Loss of reputation Incurred fines and loss of revenue

SOURCE: Feedzai Acquirers Playbook, April 2018



Compliance and Anti-Money Laundering Lead as Most Disruptive


RTP Require Real-Time Fraud Prevention

Step one: identity check Step two:

eligibility and fraud risk

Step three: transaction monitoring

SOURCE: Feedzai Acquirer Playbook, 70+ Processes Banks have Already Improved Using AI, Mercator Advisory Group, June 2019

Data prevention/protection

AI in payments fraud: EXAMPLE


Financial Regulations Benefit Greatly from AI

SOURCE: HSBC: Fighting Financial Crime with Big Data Analysis, Celent Model Bank Case Study, April 2019

Initiative:Deploy a platform to deliver improved and contextual intelligence to better informfinancial crime investigations.

Solution:• Detection of

potential illicit activity.

• Reduced investigation time.

• Efficiency gains.

• Higher confidence in risk profile.

Global Social Network Analytics (GSNA) Platform

AI in payments fraud: EXAMPLE

AML and KYC





Marketing and Sales




Mobile optimization

Customer Experience


AML/KYC

Fraud Prevention


Data Insights in UX Are Difficult to See

SOURCE: The Role Of AI In Customer Experience, Pointillist, June 2019


Many Customer Experience Strategies Neglect the End Customer

SOURCE: Digital Banking Transformation Strategies Neglect The Customer Experience, The Financial Brand, May 2019

28%

70%of FI customers say they spend more with banks or credit unions that offer effortless digital experiencesof digital

transformation initiatives start with customer needs as the priority


Customer Experience Is the Root of Digital TransformationChatbots and voice assistants

AI in CX: EXAMPLE


AI Can Generate Insights, Anticipate NeedsPersonalized insights

AI in CX: EXAMPLE


AI Is Used to Enhance Customer ExperiencesMobile optimization

AI in CX: EXAMPLE





Marketing and Sales




Mobile optimization

Customer Experience


AML/KYC

Fraud Prevention


Confirmed Business Value of Real-time Analytics

Reported significant increases in growth and revenue generation.

Realized a deeper understanding of customer journeys.

Reported significant increases in customer retention & loyalty.

55%54%

74%

SOURCE: Harvard Business Review Analytic Services, February 2018


SOURCE: AI for an Improved CX, Digital Banking Report, February 2019

AI in sales and marketing: EXAMPLE

The banking organization of the future will interact in similar ways to Amazon® and Google™, gaining insight and getting smarter with each interaction. ”

”


Churn reduction Channel segmentationAI in sales and marketing: EXAMPLE

• Reasons for churn• Competitive positioning• Anticipate and manage

future risk

• Channel underutilization or overutilization

• Best channel routing• Channel agnostics


Next best action marketing


AI in sales and marketing: EXAMPLE

• Lifestyle habits• Lifecycle changes• Purchases• Deposits

• Product personalization• Reward/loyalty eligibility• Life event prediction• Niche segmentation





Marketing and Sales




Mobile optimization

Customer Experience


AML/KYC

Fraud Prevention


Financial Institutions Manage and Comply with Multiple Types of Risk

SOURCE: Robotic Process Automation in Risk and Compliance, Celent, August 2018


AI Can Significantly Improve Credit Risk

Traditional problems:

• Small amount of data

• Only structured data

• Slow to determine results

Modern solutions:

• Credit model based on 26B data points

• Any data type

• Extremely fastand reliable

Credit risk management

AI in credit risk and underwriting: EXAMPLE


AI Analyzes Commercial Loan Agreements

Contract Intelligence (COiN)

JPMorgan software does in seconds what took lawyers 360,000 hours.

Reduced loan-servicing mistakes often attributable to human error in interpreting 12,000 new contracts/year.

Loan automation

AI in credit risk and underwriting: EXAMPLE




WHO AND HOW

02.

03.


WHICH AND WHERE


WHY AND WHAT


Considerations for financial institutions developing an AI strategy


Building Blocks for Successful Analytics/AI Implementation

SOURCE: AI in the UI: Adoption, Use Cases, and Business Cases, Celent, May 2019


Steps to Establish a Data Strategy

1. Look at what industry leaders are doing with analytics to better understand potential capabilities and opportunities

2. Determine one or two best use cases suited for your FI that match your organization’s business objectives

3. Secure the right talent, build a team with executive support


Steps to Establish a Data Strategy

4. Research FinTech partners that can help leverage and customize analytics for your particular needs

5. Access internal processes and infrastructure to enable easy access to, and utilization of, cross-business raw data

6. Ensure that a well-defined strategy and a clear roadmap are in place

Questions?

[email protected] @JenGeis

https://www.linkedin.com/in/jennifer-geis-5a24a2b/

Read my blogs on JHA’s Strategically Speaking:http://discover.jackhenry.com/strategicallyspeaking/author/jennifer-geis

Jennifer Geis, Sr. Strategic Initiatives Analyst Jack Henry & … · 2019. 9. 6. · 1© 2019 Jack...

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