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IBM Embracing Innovation Through Cognitive Solutions
Prativa Mohapatra, Vice President, Cognitive Solutions, IBM India/ South Asia speaks about cognitive banking and its impact on banking sector
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IBM is one of the companies which began as a software- hardware technology firm, but with time it has transformed itself into one of the largest leading big data analytics company, generating $18 billion revenue last year.
As we know the hardware segment besets challenges on all sides; hence IBM took to manufacturing cloud/cognitive solutions. Though the leaders in the corporate industry have all acknowledged the threats to their business models, but for once IBM has embraced the data insights and chosen a divergent path for sustainability.
IBM's analytics and cognitive computing programs has bought the enterprise to become a public, private and hybrid. Its expansion is architecture in a big way by 2017 offering multiple entry points to the cloud, including its SoftLayer public cloud services (IaaS), Bluemix private cloud (PaaS) and CMS (SaaS) solutions.
Let's hear from the horse's mouth what it is upto?
BW Businessworld's Soumya Gupta interacted with Prativa Mohapatra, Vice President, Cognitive Solutions, IBM India/ South Asia.
What is a cognitive bank?
A cognitive bank is the bank applies cognitive technology to personalise customer experiences, empower employees and optimize operations. Cognitive-based systems can build knowledge, understand natural language and provide confidence weighted responses. And they can quickly locate the proverbial needle in a haystack, identifying new patterns and insights - something particularly relevant for activities in the banking and financial markets sector.
Such banks understand the value of information and use data/ analytics to develop insights, which makes it easier to provide the right services to help the customers to better manage their financial life. With cognitive computing, banks can gather deeper insights that will help them make smarter, faster, more informed decisions.
Why is there a need for banks to become cognitive?
In current scenario, banks are facing a number of challenges and are striving to overcome these, in order to serve their customers to the best of their efficiency. They are struggling with compressed margins, and are pressed to re-evaluate their operating models amid complex regulatory requirements. In addition, the industry is catering to an increasingly demanding and empowered consumer, while dealing with relentless and increasingly sophisticated security threats, as well as growing competition from non traditional players.
Additionally, banks have to manage massively increasing voluminous data that they get every day from a wider range of sources. This data could potentially redress some of these issues, however, unfortunately, they are unable to unlock the full value of the data at their disposal. As the potential for insight increases with additional data, so, does the challenge in managing and getting valuable insights from this data.
Advancing technology like cognitive computing can help financial institutions manage this increasing volume of data while exploiting it for greater insights.
How will cognitive computing impact banking sector?
Cognitive computing has the potential to radically transform the financial/banking industry. Every day, financial institutions/ banks collect massive volumes of data, but much of it is unstructured, making it invisible to current systems. Banking professionals need technology that not only analyse all of this data, but understand, reason, learn from it to continuously improve, and offer the ability to interact with systems in a natural way. With cognitive computing, banks can unlock the power of unstructured data and can gather deeper insights that will support smarter, faster, more informed decisions.
Cognitive computing takes analytics to the next level by applying machine learning algorithms and natural language processing to make sense of vast quantities of data, much of which is unstructured, to improve data-driven discovery and decision making. While financial institutions can still derive value from analytics solutions, the addition of cognitive capabilities could help them reach new levels of value. Cognitive capabilities can help banks extract meaningful patterns from data about markets, customers, partners and employees and use that information to better anticipate change and even shape the future.
How is IBM helping banks to harness the power of cognitive computing?
IBM is helping banks around the world to define the value of cognitive computing technology and suited to their organization, their existing investments, their market and business goals.
IBM works with clients on the planning and design phase of projects to ensure the greatest return on investment of resources. Based on IBM's experience with clients across many industries, the foundation for a successful cognitive computing solution implementation should encompass the following initiatives:
a) Invest in human talent - Cognitive solutions are "trained," not programmed, as they "learn" with interactions, results and new pieces of information and help organizations scale expertise.
b) Build and help ensure a quality corpus - Cognitive systems are only as good as their data.
c) Consider policy, process requirements and impacts - Assess any potential impact on processes and how people work. Because users interact with cognitive systems inentirely different ways than traditional input/output systems, processes and job roles could be impacted.
d) Manage the change - Compared to traditional programmable systems, cognitive systems are a whole new ball game. As such, change management is more critical than ever.
Can you share some use cases?
Royal Bank of Scotland recently announced the first pilot with customers of 'Luvo' a cognitive chat bot that allows people to interact with an AI-powered platform. Luvo leverages IBM Watson Conversation, a cloud-based cognitive service, to enhance the customer service experience. The bank will begin making Luvo accessible via its webchat service in December, starting with around 10 percent of Royal Bank customers in Scotland that use webchat, helping to answer specific queries on everything from 'How do I authorise my card to be used overseas?' to 'How do I update my home address with the bank'? Luvo will be able to answer these simple questions in just a split second while directing customers to a human to answer more complex questions. Following a successful pilot, Luvo is expected to roll out to the bank's NatWest customers.
Hong Leong Bank Berhad("HLBB"), one of the leading financial services organisations in Malaysia, is leveraging IBM Watson to transform its customer engagement model and internal operations to deliver a next generation customer experience. HLBB is the first Malaysian bank to harness the benefits of cognitive computing through the implementation of Watson, a cognitive learning system, which is geared towards further enhancing customer support for its credit card services. In the initial stage of this multi-year programme, IBM Watson cognitive technology would function as an online customer self-service advisor with 24/7 support for cardholder enquiries, as well as an internal service supporting the Bank's call centre service advisors. IBM Watson will also help HLBB service advisors analyse large volumes of data, including research reports, product information and customer profiles; identify connections between customers'needs and weigh the various financial options available to the customers.
How ready, do you think, is the Indian banking sector for implementation of this technology?
In India also banks are focusing on investing heavily in technology intensive solutions. As, with growing competition in the country, there is a need for the banks to adopt cutting edge technologies. According to a report by KPMG-CII, Indian banking industry holds potential to become the fifth largest banking industry in the world by 2020 and third largest by 2025. Currently it stands at a worth INR 81 trillion (US $ 1.31 trillion). Looking at the size of the industry, we can say that the industry holds huge potential to grow further manifold and technological capabilities like cognitive computing will add more to the growth of the sector.
What are the kind of trends you see in the sector for acceptance of cognitive computing globally?
At global level cognitive computing has witnessed higher acceptance from the banks. We recently conducted a study 'Your cognitive future' with over 2,009 executives across globe. The study indicates that banking leaders are poised to embrace this groundbreaking technology and invest in cognitive capabilities to transform financial services. 79% of banking executives familiar with cognitive computing believe it will play a critical role in the future of their business. 89% of banking executives familiar with cognitive computing believe it will play a disruptive role in the industry. Therefore, at a global level, the banks are prepared to implement cognitive solutions in their businesses. We can envisage growing number of banks using cognitive technologies to improve their customers' experience.