Innovations and Challenges Facing the Banking Sector

Chad Schmookler, Senior Director, International Operations, InComm

Chad Schmookler, Senior Director, International Operations, InComm

In an interview, Chad Schmookler, senior director international operations at InComm discusses about his insights on the challenges and innovations facing the banking sector presently.

What are some of the major challenges and trends that have been impacting the banking sector lately?

Ever-evolving consumer expectations continue to be a major challenge in the banking sector. In just the last decade alone, consumer behaviour has dramatically shifted to a ‘mobile first’ model thanks to the proliferation of smart devices and the Internet of Things. Consequently, in addition to the traditional methodologies, financial institutions must now provide interaction landscapes that include mobile, social, open APIs, cross-platform integrations, and the like. Advances in technology have made today's consumers more financially literate than at any other time in history. Thus, expectations are more difficult to meet than ever.

The rise of non-traditional banking institutions presents competitive challenges. As stated, massive advances in technology like artificial intelligence (AI) have led to unprecedented innovation activity in the banking sector. Essentially, traditional barriers to entry have been razed, allowing challenger banks and other pseudo-financial entities to gain headway in the market. New and appealing product offerings abound. The ongoing response from the traditional players will be interesting to watch.

Security breaches and fraud pose significant risks to organizational success, customer retention, brand power, and corporate reputation. While ensuring customer security and data privacy is paramount, it has also become more costly and more difficult. The future of ‘secure banking’ may look very different as bad actors and industry professionals go head-to-head. Oh, and you can bet both sides will be incorporating AI into the equation.

Finally, as the world struggles to pull itself out of the economic crater left by COVID-19, fiscal free spending and inflationary central banking policy have led to a bleak short-term socio-economic outlook. Accordingly, central banks have been forced to fight inflation with interest rate hikes. This means banks must be nimble when it comes to strategy and diversification. The economic landscape has been both unpredictable and unkind as of late. We can all learn a lesson from the Silicon Valley bank debacle.

What keeps you up at night when it comes to some of the major predicaments in the banking sector?

For me, security, data privacy, fraud, and macroeconomic/political instability give me the most heartburn. I have personally noticed an uptick in security breaches and fraud cases across the industry. And thanks to many conversations with colleagues, friends, and family, I can confidently say we are all feeling attacked right now. Additionally, it is nearly impossible to go more than 24 hours without hearing about or reading about data privacy. As consumers become more and more sensitive to privacy, so should the banks.

"To compete in today’s banking environment, it is vital for financial institutions to remove all friction from customer interaction and to embrace flexibility"

Unprecedented macroeconomic conditions also give me a reason to toss and turn. Both banks and ordinary people are desperate for returns. Technological innovation has made investment banking easier than ever, which has run the gamut from ‘meme stocks’ to cryptocurrency horror stories. Hence, institutional induced cryptocurrency quagmires like those of Silvergate Bank and Signature Bank weigh heavily. To boot, growing wealth inequality has led to an increase in political demagoguery and the power struggle between the right and left. At any rate, the current macroeconomic/political environment is cause for great concern. It would appear troubled waters lie ahead.

Can you tell us about the latest project that you have been working on, and what are some of the technological and process elements that you leveraged to make the project successful?

My team and I have whole-heartedly embraced robotic process automation (RPA). This innovative technology allows for the ultimate control over process, which leads to improved efficiency and speed of information. With just a few simple business rules, an entire process can be automated, tracked, and reported on. Through a reduction in manual task tracking and oversight, we can now focus our attention on value-add activities. Examples include building relationships, servicing the customer, and resource development.

As such, my team and I have been working to completely migrate our intake, management, and delivery procedures to an RPA powered solution. In fact, we have built an entire ecosystem within the Microsoft (MS) 365 environment to do just that. MS has been investing heavily in AI and automation, which has delivered several powerful tools. Moreover, nearly any employee with an MS 365 license already has the necessary access. In our case, the need to sponsor an enhancement project where development resources must be fought over, and efforts must be prioritized is no longer necessary. Basically, RPA has allowed my team not only to self-empower but also to transcend traditional workflow.

What are some of the technological trends which excite you for the future of the banking sector?

For me, the most exciting trend in banking right now is open banking. Today’s consumers are pressed for time and attention. This means there is great benefit in consolidating information onto a single screen that can be actioned quickly. Innovative third-party APIs and apps are making this reality possible. I anticipate more partnerships and collaboration within the industry as organizations begin to realize the benefit of such an ecosystem. Surprisingly, the forum by which consumers view and manage their consolidated financial data is not all that vital. However, to compete in today’s banking environment, it is vital for financial institutions to remove all friction from customer interaction and embrace flexibility.

Financial

Fraud

Microsoft

Artificial Intelligence

Robotic Process Automation

Process Automation