Imagine a world where financial services anticipate your needs before you even articulate them. Where invisible helpers guide customers towards better financial health, making every interaction with banks and insurers not just a transaction, but a step toward a brighter financial future. This isn’t a distant dream but a rapidly approaching reality, thanks to the power of cloud-based, interactive algorithms.

BETTER OUTCOMES BY ANTICIPATING NEEDS BEFORE THEY’RE EXPRESSED

The role of algorithms is becoming increasingly central to developing products and experiences that are more proactive, personal, and beneficial to customers. Financial services customers are starting to see their satisfaction and outcomes enhanced daily by the insightful, personalised care they receive, thanks to the integration of these algorithms into everyday financial applications. These algorithms create better financial services and experiences that are not only more accessible and affordable, but deliberately designed to improve the financial wellbeing of customers with each interaction.

DESIGN SERVICES TO BE MORE ENGAGING

The opportunity lies not merely in integrating algorithms into existing propositions but in fundamentally rethinking how services are designed, delivered, and experienced. The result? Entirely new, anticipatory services and experiences that grow more relevant over time. These services continually adapt through interaction, personalisation, and real-time feedback, transforming the way value is created for customers and intermediaries.

For ourselves as end customers, this means banking and insurance that feels like having a financial advisor in our pocket. Services align with our individual life goals – whether it’s buying a house, saving for retirement, or insuring against unforeseen circumstances. For intermediaries, the benefits are equally transformative. They gain tools to better understand their customers’ needs, facilitate smoother transactions, and offer more nuanced advice at a much lower risk.

ALWAYS RELEVANT: FROM REAL-TIME TO AHEAD OF TIME

The future of finance isn’t solely about embracing new technology; it’s about reimagining the role of financial institutions in people’s lives. Realising this potential requires more than just technological investment; it involves reimagining the roles of employees and customers in designing and delivering these experiences.

We must bring together a set of competencies that are as much about being human as they are about the technology powering them. We need to ensure that we place ethical practices, regulatory compliance, and a relentless focus on delivering value to customers at the forefront of technological innovation, agility, and how we scale adoption. These competencies include:

Adaptable product and system design: First and foremost is the ability to make outcomes adaptable and personalised. This requires a deep understanding of user actions and leveraging the new data generated from each interaction. It's about creating a system that learns, evolves, and becomes more intuitive over time.

Observable and explainable AI: Transparency is crucial. Outcomes need to be explainable, observable, and auditable. Customers and regulators must understand how decisions are made. Algorithms should act as benevolent guides, not opaque decision-makers.

Trusted data foundations: Trusted AI runs on trusted data. One of the most compelling aspects of these algorithm-driven applications is their ability to harness vast amounts of data to generate insights, predict trends, and personalise services at an unprecedented scale. To enable consistent results from this, investments in operational data foundations, data sharing and governance may be required. These investments not only improve the quality of the outcomes but also fortify the trust between financial institutions and their customers. Without this bedrock, even the most sophisticated algorithms will falter.

High-performing, real-time models: Behind the seamless and frictionless experiences that customers enjoy lies a complex web of algorithms. These algorithms incorporate new data, analyse past behaviour, stress-test input parameters, consider marginal benefits, override anomalous variables, and safeguard outcomes – all in real-time. What appears seamless and frictionless to customers generally requires high-powered simulation and optimisation from models engineered for efficiency and speed. However, it’s not enough for these models to be merely robust and scalable; they must also be responsible – ensuring that decisions are made ethically and without bias.

Unified customer data identity: Understanding customers holistically involves unifying data across multiple touchpoints and platforms. Identity resolution tools play a pivotal role in this process. They enable financial institutions to stitch together disparate data fragments into a cohesive customer profile. This unified view is essential for delivering truly personalised and anticipatory financial services. We also require mechanisms to obtain customers’ consent to collect and use their data, as well as to obtain permission to serve them.

Customer sense-making and digital feedback loops: Turning customer data into actionable insights is as much a science as it is an art. Financial institutions must master content creation, selection, and delivery to serve customers during their moments of truth. Systematically making sense of customer behaviours, preferences, and feedback allows for real-time responses within constraints. This also involves establishing digital feedback loops, continuously learning from interactions and results, refining and enhancing the customer experience and effectiveness of services to create more meaningful impact, and guiding where services and capabilities can be improved.

HOW TO START: DELIVER A FLAGSHIP PROJECT

As we stand on the precipice of this new era in financial services, the question isn’t whether banks and insurers should embrace algorithm-driven services – it’s how quickly they can adapt to this new paradigm.  Here are some practical steps that can be taken:

Select a project your customers and CFO will love: As with most journeys, it is important to start where you are. Develop and deliver a flagship project that cuts across a thin slice of the competencies mentioned above. This project serves as a north star for broader strategic imperatives. It demonstrates execution disciplines and establishes new technical patterns. Aim to solve a significant customer pain point or capture a substantial market opportunity.

Pro tip: A sufficiently strong and well-defined business case can help carry the cost and unforeseen requirements of establishing new ways of work and technical patterns.

Think wide, act specifically – Build foundational capabilities incrementally:

Remember this is a journey, build your foundational capabilities incrementally through valuable execution. Success in your flagship project involves developing some of the first technical patterns of your foundational cloud, data, and digital capabilities. Here’s how to approach it:

Think big, start small: Begin by thinking big – envision the broader strategic direction. Then start small, ensuring that each step is scalable and aligned with this direction. This approach allows you to learn and adapt, developing new patterns and essential roles that could be re-used and decrease your time to market in future.

Practical testing in the real world: Your goal is to practically test each new design or way of working in the real world. High-touch interactions allow you to adjust and refine as needed before applying these innovations more broadly to other opportunities. Eventually, you’ll industrialise these capabilities across your organisation.

Launch purposefully with value measurement:

The journey may be complex, but the potential rewards – for both customers and institutions – are transformative. Here’s how to navigate the next steps:

Measurement techniques from design phase: Building measurement techniques into the design phase ensures that your team remains focused on delivering results for customers. Plan how you’ll learn and course-correct based on real market feedback.

Purposeful launch and quality adoption: Before launching, digitally instrument value measurement into every touchpoint. Know what you expect and how you will monitor success at executive and operational levels to influence results and deliver quality adoption outcomes. Clearly demonstrating the value delivered through your flagship project will build momentum and secure buy-in for further investment and reinvestment of results in capabilities.

TO CONCLUDE

By offering services that are genuinely anticipatory, engaging, and tailored to individual financial journeys, banks and insurers can transform the narrative around finance – from one of necessity to one of empowerment – deepening relationships with customers.

It's a future where finance is not just something you do, but a journey you're guided through, with every step bringing you closer to your goals. This is the promise of algorithm-driven financial services – a promise that, if fulfilled, can lead to a world where financial wellbeing is not just a privilege for the few, but a reality for all.