This is part two or our three-part fintech series. If you missed the opener, we took a look at innovation in digital banking, fintech as a service, APIs and Io – all technologies that we not only think are cool and becoming more commonplace, but technologies that make up the deep fabric of fintech.
Continuing our exploration, we’re delving a little deeper into databases, the emergence of voice tech in banking, and fintech’s close friend, insurtech.
You don’t need us to tell you that databases have been around pretty much since the dawn of computers. But the term is now so broad, that it’s become a little dated in itself.
As we touched on in our last piece, banking systems are legacy systems, which means they’re slow, clunky and outdated. In fact, this is why it’s so seemingly easy for challenger banks to start up and grow so quickly. They emerge right off the bat with new tools and architecture, whilst the incumbents are still trying to figure out how to migrate decades of data from millions of customers to a new system.
With this in mind, it’s no hyperbole to say that databases and their architecture are seriously hampering digital innovation for legacy banks. The problem isn’t just outdated technology, it’s also the complex maze of systems on top of systems that have been added to and tampered with over the years.
But it’s not all bad news. A bank doesn’t necessarily have to rip it all down and start again. Good dependency management enabled by ‘graph technology’ can bring much needed performance upgrades to even the most dusty of banking databases. Graph databases are one of the only databases that can manage modern day banking thanks to their incredible power. For this reason, many banks old and new are moving away from relational databases and towards graph databases.
Graph database management systems (GDMS) are expected to grow at 100% through to 2022 and beyond.
So what is it? Graph technology is the building of databases using mathematical graph theory to share data and the links between data. These relationships take priority, which differs from a standard system (DBMS). Put simply, connected data is seen as more important than individual data points, and these connections are persistent. Graph technology plays nicely with data mining (on a huge scale) and AI-based tools and services. For this reason, graph database management systems (GDMS) are expected to grow at 100% through to 2022 and beyond.
Something a little more straightforward – voice tech. For now, and in this context, we are talking about banking through smart assistants such as Alexa, Siri and Google Home. I certainly haven’t used voice for banking yet, and I’m in no particular hurry to either. I’ve handed over just about every other aspect of my life to Google, but voice banking… I’m not sure. I don’t think I’m ready yet – I still speak with a hushed voice when I have to give any details over the phone.
The initial uptake of voice banking isn’t expected to be big business transactions or anything of high risk. Instead, the initial engagement has been around microtransactions, such as “Hey, Siri. Transfer £5 to my son.” Personally, I see this as a useful tool. A five second sentence can trigger an action way faster than I could, fumbling around with an app or website. The challenge here will be security and voice recognition.
Where voice is really expected to make a difference in personal banking is customer service. There is a sweet spot to be found with most customer service departments, with Amazon being a great example. Ringing up a human to resolve an issue? Forget it – often more hassle than it’s worth. But is live chat much better? Not really. Once you get past the AI and you’re typing to an actual person, it’s not exactly a speedy experience, and in some cases, takes longer than a phone call.
Smart voice tech takes the human out of the chain and can resolve queries in an instant with no need for human input. A person, no matter how good their CRM, will always need to look up and analyse your transactional data, or refer to pre-agreed prompts on how to best solve your particular issue. A voice experience will be a direct connection to one centralised database that holds all data and outcomes, with no need for your call to be handed around various departments. This database will grow, evolve and learn, becoming smarter over time. It’s a little bit Skynet, isn’t it?
This one’s a little different. Rather than looking at the tech itself, we’re talking about the way that insurance is sold to customers. Insurance is perhaps as ‘legacy’ as it gets. You think about it once a year, renewal processes are outdated and painful, and providers employ dubious tactics to try to keep you on for another year, despite their price being not at all competitive.
Providers are now rethinking how, where and when they deliver insurance – a bold move away from the traditional letter-in-the-post model. It’s predicted that insurance will soon be sold ‘in context’, with buyers being presented with insurance offers at particular points in other buying journeys. For example, being offered house insurance during a mortgage process, rather than relying on them to look for a quote afterwards. Companies (such as banks and insurance providers) will partner and offer a more B2B2C approach. And again, this works better with more data and a better database in place. B2C insurtech companies are beginning to pivot to this model and it’s only a matter of time before legacy providers start (or at least try to start) to shape up their APIs to compete in this strange new market.
Everything we’ve spoken about in part one and two is tangible and within reach for anyone with a smartphone or voice-enabled device. But it’s important that we remember that it isn’t the same all over the world. We’ve spoken extensively in previous blogs about 5G, app development and digital transformation and how these technologies take on a different form when applied to the fourth sector and developing countries.
Fintech is no different. It’s a first world response to a first world problem, but there are some serious and strong examples of technology being used to improve financial accessibility and banking options for those without access to the tools and tech that we maybe take for granted. In part three, we’ll be looking at how fintech is being used to help those in greater need – projects than align with our firm belief (and our focus as an agency) that technology should be used to make the world a better place.