Key takeaways from the blog
Banking, Financial Services, and Insurance (BFSI) sector has multiple regulators that make the space administration driven. The scenario makes the executive more compliance-focused rather than customer service-focused. The customer is always inspired by quick service with minimum clicks and low to no in-person interactions. However, the existing scenario makes the BFSI sector unsettling in most respects, with their major customers staying back only for loans, thus generating only the related cash flow. There is a lack of revenue streams that bring in deposits due to excessive rules, KYC, and compliance-related documentation and tying down of funds for major periods with no scope for early withdrawal without a penalty. Increasing amount of data generated in the process and related data management makes it a chicken-n-egg scenario. Connected Data assisted with AI-powered Customer Experience and Good Governance enables the BFSI executive to address the data conundrum and improve stability and resilience thus reducing the unsettling customer churn.
Connected Data, unified data, or single-source-of-truth is the master data that is curated and connected with unique customer ids and serves as the source of reference throughout the customer's lifetime journey. This data forms the basis for all real-time analysis as well as financial, operational, and organizational resilience. However, the data quality needs to be ascertained right at inception or during data creation as Value-in is Value-out and so also Garbage-in is Garbage-out. Artificial Intelligence (AI) helps institutionalize good governance by weaving together organizational datasets and bringing harmony in the multi-faceted regulatory and supervisory rigor (which is otherwise tangential to each other along the compliance landscape). Connected Data is the harbinger of proactive 24x7 offsite surveillance to assess risk and vulnerabilities and also setting up of risk mitigation and management mechanisms. Institutionalizing exclusive AI-driven GPT-4 LLM may be cost-prohibitive for SMEs; however, building AI-driven Connected Data frameworks proves cost-efficient in the long run for them.
Connected Data aims at proactive and preventive surveillance through data-driven inferences and decision-making. BFSI is a sensitive area that deals with and manages public monies. Especially sensitive are special purpose vehicles (SPVs) that fund joint ventures through joint funds of a consortium consisting of 20 to 30 of entities. Connected Data enables seamless management of such SPV-backed joint ventures, where the program can be easily monitored right from inception to launch and across its lifetime. Data-driven interventions, inferences, and monitoring supports good underwriting standards and post-launch monitoring. AI is a great leveler. It helps detect patterns, mitigate risk, and regularize operations for the long run while fulfilling compliances at all levels. It reduces human-dependent monitoring related to funding of ventures thus making financial operations resilient and allows the human/executive to focus more on customer service. Having said that AI-driven data frameworks should comply with local laws when operating in cross-geography scenarios.
BFSI sector is highly sensitive and monitored by multiple regulations often tangential to each other. It thus occupies the human executive in administration and compliance with no time for a human approach to the real customer issues redressal, which results in blocking out new revenue streams. Connected Data and AI-driven good governance practices enable BFSI organizations to improve financial and operational resilience. Connected Data enables BFSI to introduce new investment opportunities and SPVs that can be seamlessly monitored over their lifetime. It helps automate administration and compliance to reduce human involvement, create a healthy balance between risk and reward and leverage the human effort for customer service. However, complying with local data laws while institutionalizing AI-driven innovations is absolutely paramount.