Financial volatility is nothing new. That said, Australian banks and insurance companies will weather the economic storm of 2023 just as they did following the 2007-2008 global financial crisis, the early 1990s recession and previous financial turmoil.
What are the five trends to watch in 2023?
One thing that remains constant is the financial services sector keeps moving forward, particularly as tech advances and consumer behaviours change. Even during this economic environment, there are 5 emerging trends across Australia’s banking and insurance sectors.
Financial Service Organisations in the metaverse
The metaverse is here and has moved beyond the entertainment realm to the business world. Organisations are starting to explore how they can conduct meetings and even conferences in the metaverse. Entire nations are also dabbling in the metaverse.
Recently, Tuvalu uploaded its nation to the metaverse in anticipation of rising sea levels due to climate change and the need for citizens to leave the region. Financial institutions too will have a role to play in the metaverse. While transactions will still be conducted traditionally, it is likely that banks and insurers may create a kiosk environment within the metaverse.
Customer experience will become a major trend, with banks and insurance companies vying to achieve an exceptional customer experience within a digital recreation of the real world.
Data management will be king
Data is the new gold and data management the new competitive advantage. How financial institutions and insurers collect, store, manage and use their data to tailor products and services to meet requirements at the individual customer level will continue to evolve.
For example, there is an increasing use of automated data-driven banking apps that let customers take a photo of a property that is listed for sale, and then align the customer’s own financial data and their ability to borrow against the asking price of the property.
These banking applications can then connect customers to a lending support officer and provide the lending officer with all the information required to prepare a loan application. This ultimately makes purchasing a property and organising finance much more streamlined for the customer as a result of making customer data actionable in real time.
This is why a big focus for banks and insurers will be on using data to anticipate customer needs so they can onboard clients with new products and gain a greater share of wallet. For instance, Australian Unity is reinventing data flows and has automated 42,000 transactions with a 94% success rate, which has reduced manual data entry by about 23,000 hours.
Customer centric innovation
As customer profiles and needs change, banking and insurance products – and the technology that underpins them – must continually evolve. Even the revolutionary generative artificial intelligence such as ChatGPT, which has only recently emerged, is already being superseded by Google’s new Bard offer. As a result of constant technological advancement, more new digital finance products are being tested and prepared for launch, almost on a daily basis.
The world has gone mobile and most products are mobile first. The customer onboarding experience is critical in this landscape because it must be the same across multiple digital channels, which now includes the metaverse. Financial institutions and insurers therefore must ensure an omnichannel customer experience that is the same regardless of how tech advances, and to ensure that digital products are adequately tested so they don’t break.
This must all be achieved in a high-speed competitive market, so banks and insurers will be under more pressure to consistently and continuously bring valuable and reliable new products and services to market fast. For example, digital native organisations such as fintechs want to keep customers self-servicing as much as possible, and even traditional banks and insurers are working to improve their self-service customer experience profile.
This will continue to expand the capabilities that the digital customer service journey can provide. Swiss Re is taking advantage of new AI automated tools to improve efficiencies and speed up internal processes, which enables the reinsurer to focus more on its customers and competitive strategy. Swiss Re has achieved an 80% reduction in its account reconciliation process, taking it from 15 business days to complete down to three business days.
Responding to the fast changing compliance landscape
Banking and insurance fraud is increasing. Cybercriminals are getting smarter, so banks and insurers are laser focused on improving fraud handling at all stages, even before fraud can be committed through to post-fraud recovery. Australia’s finance sector is becoming more meticulous around fraud prevention and management. This will escalate further following the govt’s recently announced cyber reforms and 2023-2030 Australian Cyber Security Strategy.
However, fraud is not the only area where banks and insurers are aiming to improve. Constantly shifting regulatory requirements mean there is now a strong focus on continuous improvement of the organisation’s entire risk profile across every area so that banks and insurers can stay one step ahead in the ever-changing security and compliance landscape.
Need for faster time to market / Accelerators are accelerating
As the speed and velocity of the digital business environment continues to rapidly scale up, financial services organisations across the country are increasingly looking for secure, reliable accelerators that will help them bring new product and service offers to market faster.
Banks and insurers are quickly adopting pre-built digital accelerators that give them a fast start to implementing automated scalable solutions that are cost effective and which will help them increase speed to market, manage compliance and reduce risk over the longer term.
As automated solutions driven by AI and machine learning continually evolve, so too will the operations of banks and insurers, and their interactions with customers. The challenge for financial institutions is taking the leap from legacy infrastructure to more reliable and cost-effective cloud-based tech that can scale and adapt so that banks and insurers will be in a much stronger position to keep pace as the digital financial services industry further evolves.
Mark Fioretto is the Area Vice President and Managing Director for Australia and New Zealand at UiPath. Based in Sydney, Fioretto is responsible for leading the company’s go-to-market and growth initiatives across ANZ, and focusing on accelerating UiPath’s position as the AI-powered platform of choice for C-suite leaders driving digital transformation.