Digital banks one step ahead in user experience -- ADVANCE.AI

By Sharifah Pirdaus Syed Ali

KUALA LUMPUR, Sept 4 (Bernama) -- Digital banks are still one step ahead in terms of user experience, speed and convenience compared to traditional banks.

This is despite traditional banks rolling out new and improved mobile apps, products and services, as well as refreshed marketing approaches to appeal to the younger, digitally-savvy generation, said ADVANCE.AI regional head of Customer Value Proposition, Mohammed Fouladi.

He said that unlike traditional banks that have to modify their existing user interface and legacy systems, digital banks can create their customer journeys right from scratch based on the ideal user experience. 

“Hence, to compete effectively with digital banks, traditional banks need to adopt data and artificial intelligence (AI) into their systems.

“This will allow them to expand their operational scope and customer reach significantly, including to new markets like the financially underserved, with alternative credit scoring data.

“More importantly, data and AI will improve their risk management capabilities, from compliance to underwriting loans,” he told Bernama.

He also noted that collaborating with financial technology companies (fintechs) and startups that already have innovative solutions to meet their needs is one way that traditional banks can quickly adopt and integrate AI-powered technologies into their systems.

As consumers demand smarter, speedier and more seamless banking experiences, banks need to prioritise proper risk management and regulatory compliance to appease the consumers and gain their trust.

Mohammed Fouladi said this also extends to the vendors that banks work with, and this is especially crucial in the face of increasingly sophisticated cyber attacks, including synthetic identities, impersonations and social engineering fraud.

There are three fundamentals in mitigating fraud risks, namely, detecting as many illicit transactions as possible, automating manual operating processes and reducing falsification, he said.

Banks should also conduct due diligence in ensuring that the partners they work with are ISO-certified.

The partners should also be regulated entities with good track records, equipped with proper data consent/privacy provisions and data hosting capabilities as well as transfer and security measures, including anti-money laundering (AML) capabilities and service-level agreements, he said.

Mohammed Fouladi also highlighted that despite the high internet penetration in Malaysia, as much as 55 per cent of the adult population in the country remains underbanked and unbanked.

“This includes gig economy workers or low-income families that lack the credit history to gain access to a wider variety of financial services, including basic bank accounts, credit cards and long-term savings products.

“Traditional banks were previously unwilling to serve them as their risk management capabilities, unfortunately, leave them out of the picture,” he said.

He noted that small and medium businesses (SMBs) -- which account for 98.5 per cent of all Malaysian businesses -- are also limited by the traditional banking system due to their need for more flexibility around their business demands and the fact that they often miss the banks’ requirements to obtain funding. 

“AI and machine learning would enable banks to boost their risk management capabilities by providing alternative ways to determine credit worthiness beyond the typical data.

“This would also help to speed up loan approvals and disbursements, which will give the financially underserved and SMBs access to the financing they require,” said Mohammed Fouladi.

He added that technology and AI capabilities can be applied across the entire value chain to optimise resource efficiency and cost, while combating and preventing rising online fraud, thereby lowering reputational and financial risks.

Headquartered in Singapore, ADVANCE.AI is a leading AI company in Asia, helping digital transformation, fraud prevention and process automation for enterprise clients.

-- BERNAMA