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Automation and AI continue to transform processes and there are more opportunities than ever before, but will they build trust?

“New tech” is the buzzword in financial services right now and asset servicing is no exception. Data is the new commodity and technology based on artificial intelligence (AI) and robotic process automation (RPA) is transforming the industry. The benefits include improved decision-making, enhanced information-sharing, transparency and efficiency and this is but the start.

These technologies are also challenging the current way of working and creating new opportunities. While there is a degree of scaremongering (“will robots replace people?”), it is important to note that technology is not necessarily replacing people, but rather redeploying them to processes that require more cognitive inputs.

What role does automation play in asset servicing?
Although the drive for more automation is still centred around RPA, the recent developments in Open Banking standards have brought a new opportunity to the asset servicing environment. Through the new European Union Payment Services Directive (PSD2) legislation, banking is disrupted with the introduction of Open Banking regulations. Open Banking is the practice of sharing financial information electronically, securely, and only under conditions that customers approve of.

Application programming interfaces (APIs) allow third parties to access financial information efficiently, which promotes the development of new apps and services. Ideally, Open Banking standards should result in a better experience for consumers.

RPA is still the primary focus to bring lower costs and more efficiency. Participants are also implementing open back-end connectivity through APIs which brings more opportunities to automate end-to-end processes. Client onboarding, KYC, and AML do not have to be separate but can be done in a single step by the customer. It is no longer just about front-end automation but the digitisation of the end-to-end process.

Blockchain is “normalising”
Regarding blockchain, it would appear that the hype has returned to normality. It is no longer just about cryptocurrencies but about commercial applications of blockchain and how to actually solve real-life problems like forex and on-market and off-market settlements using it.

Blockchain and AI are not yet replacing legacy platforms but what they are doing is changing how institutions interface with each other and their clients. These changes create the capacity to review/change/upgrade legacy systems.

The coming years
With more and more data processed through AI, we will see an increase in the management of financial data. Risks will be identified sooner and AI used as primary input in decision-making. The challenge we face is where will the AI data be held – banks, institutions, the Cloud, the entity itself? How will this data interface with the entire market and will we have trust in the data? Will entities be allowed to commoditise their data? Regulators will have a key role to play.

Data is the new gold that will service the financial progress and there are more opportunities than ever before. Data scientists will play a major role in financial institutions in the future, setting strategy and controls to ensure the trust is there. This is where the human will manage technology, rather than technology managing the human.

Paul Ferreira, senior ICT architect at Maitland

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