Enter
the fintech innovator
issue 1
The rise of AI and machine learning
AI
contents
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Melanie Milazzo Senior Director, Content Marketing, FIS
If you’d like to contribute to any of our columns, have feedback or want to connect, please contact:
Laura Osburnsen VP, Marketing Executive, FIS
Letter From the Editor: How to Overcome Barriers to Innovation
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The Latest AI Use Cases for Financial Services
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From Personalization to Efficiency: How AI Is Transforming the Customer Journey
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How Can AI Help Address Risk?
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How you can take advantage of Web3 technologies
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The Global Innovation Report: Creating Advantage in Uncertainty
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How AI Will Change Organizational Design for the 21st Century
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Innovation. It’s the lifeblood of our industry. It keeps us ahead of the curve, setting the pace for others to follow. But innovating and being first isn’t always a smooth ride. In the quest to push boundaries, we encounter hurdles that can slow us down. So, let’s dive into the nitty-gritty of overcoming these barriers and keeping that innovation engine running.
How to Overcome Barriers to Innovation
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FIS Marketing
Internal Use Only
Editor's Letter
Mickey Lynch VP, Product Management Executive – Lending, FIS
Welcome to the first issue of the Fintech Innovator magazine. Each quarter, we’ll bring you news and articles with insights from FIS and industry leaders to help you navigate the latest innovations and what they mean for you, your business and your clients.
First things first, there are the external barriers. You know the ones: funding, costs and regulations. Innovation takes a back seat when new ideas or processes cost money that you don’t have, or legal red tape keeps you from trying new things. But these obstacles can’t hold you back. Yes, you need to be cautious, but you must also not be afraid of something new. It’s a delicate dance of finding the sweet spot between innovation and compliance.
One of the biggest topics in the corporate world post-COVID has been remote work vs. back to office policies. Not many employees want to return to the office five days a week, and leaders aren’t happy having everyone working from home every day. While being in an office breeds camaraderie and fosters communication, remote work leads to happier employees who can be more productive with more freedom. Embrace the quirks of each working environment, learn from them and watch how they spark new ideas.
Breaking Down the Walls: External Barriers
Location, Location, Location: Navigating Corporate Environments
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The industry is aware of all that’s going on but still trying to separate the hype from the reality. Our clients are increasingly asking us for Web3 solutions that we’re building. They also expect FIS to remain a trusted partner and provider in helping them navigate this new world. So, whether it’s financial use cases such as tokenized real world assets or non-financial use cases like loyalty, Web3-based solutions are exciting new innovations.
A major part of innovation is embracing emerging trends. Placing your bets on the right trends could pay off big time for your company. To start, low-code or no-code solutions are leveling the playing field, enabling quicker iterations and testing. Of course, there’s also AI, the latest go-to answer to everything. We all have jokes about AI, and it feels like it’s the trendiest trend of all trends, but AI is truly revolutionizing how we work. With more training and content guardrails put in place, AI will bring innovative ideas, processes and change to companies big and small.
Should innovation always be the first card we play? The short answer is yes. Look at Kodak and Blockbuster. They didn’t innovate, and well, we know how those stories ended. Some companies can get away without innovating by acquiring the latest tech (or not, like Blockbuster declining an opportunity to buy Netflix. Sorry, Blockbuster), but that’s a risky game to play. To stay ahead, to thrive, we must innovate.
Riding the Wave: Emerging Trends
Let’s talk about the power players – leadership and organizational culture. They hold the keys to the kingdom when it comes to innovation. It starts with painting a vivid picture of the future, one where the status quo is constantly questioned. Leaders at every level need to roll up their sleeves and get their hands dirty in evaluation tech and collaboration tools. And don’t forget about bringing in fresh voices and ideas. Bring in talent from big tech and startups. Infuse fresh perspectives. Watch the magic happen. Remember, innovation is more than a department; it’s a mindset.
Leadership and Culture: Lighting the Innovation Fire
Balancing risk and innovation isn’t an easy feat. We’ve all been there, pouring resources into a project only to realize we could’ve taken a different approach. It could be a major setback, depending on how much you’re invested. When innovating, it’s important to set smaller goals and to test and learn from your experiences. Be nimble and adaptable. It’s ok to pivot when needed. Trust the process and you’ll find the sweet spot between managing risk and fostering innovation.
Risk Management: Walking the Tightrope
Innovate or Stagnate: The Bottom Line
So, let’s keep our eyes on the horizon, break down barriers and keep the innovation fire burning bright. Here’s to a future filled with breakthroughs and boundless possibilities.
Harry Stahl, Sr. Director, Enterprise Strategy, FIS
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Customer expectations are skyrocketing and companies across all industries are putting personalization at the center of their business strategies. Investment in customer experience management tools is forecast to exceed a whopping $27 billion by 2026. Many businesses have optimistically adopted artificial intelligence (AI) in the hope that it can increase personalization and boost efficiency. But how exactly can AI advance the customer journey, delight customers and reduce operating costs?
From Personalization to Efficiency: How AI Is transforming the customer journey
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The evolution of the customer experience
Melissa Cullen, SVP, Division Executive, Banking and Decision Solutions, FIS
The idea of the customer journey predates the digital age. But digitalization means that companies can engage with customers much earlier in their journey. In fact, they must because customers are always shopping – and almost every digital interaction can be the start of a customer journey. Since more than 63% of all shopping journeys begin online, all companies – whether they’re selling custom sneakers or high-interest savings accounts – must constantly engage with potential buyers and create a compelling value proposition from the start. And as people do more digitally, AI offers a unique opportunity for providers to gain a deeper understanding of exactly what their customers want. As a result, they can become more responsive, agile and customer-centric and change the customer experience for the better.
Several recent AI applications are having a transformational impact on the customer journey and have become mainstream ways for businesses to bring the consumer along a particular path.
View Melissa Cullen's LinkedIn
How does AI aid the customer journey?
Chatbots and virtual assistants
These are powered by AI and have been around for a while. But generative AI and apps such as ChatGPT bring new considerations for deploying chatbots and virtual assistants and will likely lead to a step change improvement in capabilities. However, there are some differences between chatbots and virtual assistants which need to be considered in every deployment. A chatbot is a smart program that offers 24/7 customer support. Many chatbots provide a highly personalized, sophisticated service and can offer multilingual support in a language of the customer’s choosing. With these tools international companies can meet customer expectations in their native language to increase convenience and overall satisfaction. A virtual assistant is a personal software-based agent that performs – or assists with – simple tasks, often using voice recognition and natural language processing. Virtual assistants are multichannel and don’t usually require a separate user interface. They improve the customer experience by reducing the turnaround time for routine tasks and can boost an organization’s responsiveness.
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AI algorithms power recommendation engines that suggest relevant products or services to customers based on their browsing or purchase history, as well as the behavior of similar customers. These systems continuously improve accuracy, leading to shorter conversion cycles and more satisfied buyers. For customers, recommendation systems reduce journey time, improve choice and increase convenience. More importantly, recommendations build emotional attachment and loyalty to a brand. Research found that 72% of people say they are more likely to purchase from a brand if it consistently provides them with a more personalized experience. Amazon pioneered the idea of a personalized shopping experience based on customer behavior, such as onsite browsing and making a purchase. According to McKinsey, Amazon’s recommendation engine generates 35% of Amazon.com’s revenue. Although e-commerce is an obvious example, it’s not the only one. For instance, healthcare providers are adopting recommendation engines to help patients make informed choices on a range of issues such as food and diet, exercise and lifestyle, and increasingly, drugs and treatments. Within financial services, AI empowers institutions to make personal recommendations based on a range of disparate data. For example, retirement plan administrators can now link longevity planning to personal investing to drive better outcomes for individuals. Without the ability to apply AI, this exercise is either prohibitively costly or defaulted to actuarial tables that don’t consider lifestyle or other life expectance factors.
By analyzing vast amounts of data, AI algorithms can understand customer preferences, behavior and purchase history, allowing businesses to tailor their offerings, recommendations and marketing messages to individual customers. AI signals a new era of broad personalization, where customers are offered only the services that are relevant to them.
Personalization at scale
Recommendation systems
Although much of the discussion has focused on digital channels, AI can also improve the customer journey on assisted channels. By harnessing AI, companies can provide their first- and second-line support agents with tools that can help them rapidly query and respond to customers’ questions, no matter how complex. An internal application of AI can help staff respond more quickly and helpfully to requests, and also streamline staff training requirements and reduce operating costs.
Better, faster responses on assisted channels
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All these AI applications are in operation across many sectors. With this type of data, businesses can provide a better overall experience – no matter the channel – and tackle the challenge of multiple data silos and data formats. For example, financial institutions can leverage data to provide a hyper-personalized service. Based on multichannel customer interactions, including web, mobile, text and voice recognition, institutions can deliver this experience as a direct offering to new and existing customers through other channels. This approach also gives firms an opportunity to shorten conversion cycles. Those depending on traditional cookies are beginning to look outmoded and seem likely to be left behind. AI is progressing at a blistering pace and will do much more in the future. What’s on the horizon? Here are two ways that AI will help businesses better understand their buyers:
Sentiment analysis
AI-powered sentiment analysis tools can collate and analyze customer feedback, social media posts, reviews and other forms of unstructured data to assess customer sentiment and opinions. This information helps businesses understand customer satisfaction levels, identify potential issues and respond promptly.
Discover how AI can help you evolve your customers’ experience. Talk to one of our experts today.
Customer journey mapping
AI can analyze customer interactions across multiple brand touchpoints and channels to create detailed customer journey maps. These maps help businesses understand the customer's end-to-end experience, identify customer frustrations and optimize interactions at each stage of the journey. Although no two customer journeys are identical, AI is rapidly becoming mainstream as the new way to enhance the customer journey and convert visitors into loyal customers.
The latest AI Use Cases for Financial Services
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Operational Efficiency
Customer experience and operations
Business performance and financial outcomes
Risk management and mitigation
Download the infographic
Brett King, Author and podcast/radio show host
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In 1855, the New York and Erie Railroad Company had an organization problem. Railroads were the biggest and most complex organizations on the planet at the time. While new technologies were changing businesses broadly, the size and scale of the railroads meant they needed breakthroughs in organization design and strategy.
In the 1840s Daniel McCallum, a Scottish-born American civil and railroad engineer developed and patented a new type of bridge that could withstand much greater loads than those of the time. He embarked on a multi-year program of restructuring to make the railroad more efficient and safer. He pioneered a range of new management techniques, particularly around communication strategies using a brand-new technology known as the “telegraph.” By February 2, 1857, McCallum had introduced the first modern-day organizational chart to help understand the structure and workings of the railroad, along with introducing new management techniques and leadership that became a benchmark for American corporations at the time.
Since that time, we’ve essentially maintained a hierarchical view of management structures and the organization chart itself hasn’t really changed all that. With the advent of better computing, communication and reporting mechanisms, some alternative structural approaches have emerged. As corporations became multi-national and required different geographical approaches, perhaps even different brands and products at a local level, this has also resulted in attempts at networked organizations, matrix management styles and most recently decentralized organizations.
View Brett King's LinkedIn
From Blue Chip to Silicon Chips
Today, seven out of the 10 largest companies in the world are technology companies (Including Tesla). This has required a very different level of management competency when it comes to technology itself, and is starting to have a significant impact on organizational structure. These tech-based firms operate much more efficiently with comparatively greater productivity, better ROE and lower staff numbers than traditional 20th century corporate leaders.
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Company
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Apple Microsoft Saudi Aramco Alphabet (Google) Amazon Nvidia Berkshire Hathaway Meta Platforms Tesla Eli Lilly
Technology Technology Oil & Gas Technology E-commerce Technology Diversified Investments Social Media Automotive Pharmaceuticals
sector
$2.744 trillion $2.353 trillion $2.224 trillion $1.624 trillion $1.336 trillion $1.069 trillion $770.43 billion $725.89 billion $682.99 billion $518.71 billion
Market Cap (in USD)
The largest companies in the world by Market Cap (Aug 2023)
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The organizational charts of modern financial services players like Alipay, WeBank, NuBank and others generally look nothing like those of traditional banks who have led the world in financial services over the last five decades. These new companies boast executive leadership teams with deep technology capabilities. Rather than having legacy product teams around mortgages, credit cards and so forth, their organizational charts tend to be more execution-focused on partnerships, savings, lending, payments or insurance. With the exception of corporate finance and compliance competencies, the vast majority of executives at these companies have extensive technology experience.
NuBank Structure (Source: NuBank, SeekingAlpha)
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Emerging Drivers of 21st Century Organizations
From "Building the AI-powered Organization," Fountaine, McCarthy and Saleh (Aug 2019)
As AI pervades our markets and industries, we’re going to have to come up with organizational structures that cater to large-scale autonomous operation. This will force us to abandon many of the corporate structures that still occupy the boardroom today and create very different organizational metrics. Harvard Business Review (HBR) looked at emerging organizational structures required in the age of AI-powered organizations and found that there were four key arenas of these future-proof plays.
1. 2. 3. 4.
Hub – Central executive function that aligns strategy with analytics and execution Spoke – The Strategic Business Unit, function or geography where the AI functionally operates, managed by a human team Gray area – Work that is shared between various units Execution teams – Typically project teams that work to collect the data, train models and work to launch an AI-powered capability at the spoke level.
In future, a bank will likely be a Decentralized Autonomous Organization, with a very similar structure to what HBR proposes.
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There are two other areas that are also going to impact organizational design and mission in the 2030s and beyond. The first is sustainability – how to reduce the impact of the corporation on the environment and planet. The second is community – how corporations will contribute to the broader social good. We most likely will develop broad metrics beyond the share price where we measure the effectiveness of corporations in new ways, such as net new resources used in production, carbon output, human vs. AI labor patterns and so forth. Profitability, while remaining important, won’t be a sustainable strategy without addressing broader concerns over the mission and policies of corporations. It may not be possible to be a highly profitable company without a broader community mission and alignment. In an AI-based organization, execution around the technology is the everyday operational function of the business, regardless of what product or service is being offered. The mission of the algorithms, smart contracts, digital assets and people in these types of businesses gets aligned with policy or strategy that defines the parameters of the AI operation. The AI runs the business day to day, with people supporting and cross-checking its accuracy and efficiency. AI is like the operations team in the current business in many respects – the difference being that once in place, human operators are minimal. In the transition to highly autonomous corporations and societies, we will increasingly be leveraging technology for greater productivity, improved access and growth.
The internal risk, compliance and governance functions will no doubt also be greatly impacted by AI-powered business platforms and architecture. We’ll require humans to train and manage these models and algorithms, but the further we seek to leverage the benefit of AI operationally, the less humans will be involved in the day-to-day business operations. The message is simple. If you want to thrive in the next 10 years as we transition to smart companies, contracts and economies, the ability to understand where technology is transforming your industry and how to integrate it in delivery, is about the only thing that will keep you relevant.
Brett King is an author, world-renowned futurist and media personality. He hosts the world’s number one fintech radio show and podcast, Breaking Banks, which has 6.5 million listeners, and is the founder of the mobile start-up, Moven.
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The business environment is becoming increasingly challenging, with a fast-changing macro-economic environment, growing pressure around climate change and sustainability, market volatility and supply chain disruptions – to name just a few issues. No matter the sector, companies have to mitigate these macro risks while still investing in their businesses to compete and grow. The new FIS Global Innovation Report: Creating Advantage in Uncertainty explores this landscape. Based on a survey of more than 2,000 business leaders at securities and investment firms, insurers, financial institutions, fintechs, retailers, healthcare companies, energy and utilities companies and technology providers, it reveals executives’ attitudes about today’s macro risks and their strategies for managing them. The report also explains how leaders are turning to innovation and new technologies to protect their business and create a competitive edge. Here are some highlights:
Risk
Increasing interest rates, access to credit, a shortage of talent, the need to digitalize, climate risk, cybersecurity… nearly half of executives believe they face more risk now than in the past. Retail and fintech executives are more likely to believe this.
Almost all respondents agree that innovation – the conception, development and delivery of new products, services, processes and business models – plays an important role in managing the risks currently faced by their organization. Insurance firms and technology providers are especially enthusiastic. Only 2% believe that it has no role at all. We asked about respondents’ adoption, spending and goals for seven types of innovation strategies. The top choice varied by sector, but there were some clear goals, including the use of innovation to compete more effectively.
When we analyze the impact by industry, financial risk is at the top for most industries. However, insurers are most likely to have been affected by environmental and transition risk (63% vs. 49% across all industries). (Read the report to discover the other outliers.) Executives are not resting on their laurels when it comes to taking action on their most concerning risks. Most sectors are taking the same approach: assigning existing staff to take responsibility. But some industries are making other choices.
Innovation
Creating Advantage in Uncertainty
the global innovation report
Creating advantage in uncertainty
the global innovation report 2023
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Download the report
In addition, companies are becoming increasingly aware of the risk posed by climate change and shifting consumer sentiment around ESG strategies. And it’s influencing innovation strategies; executives say their decision to invest in these strategies is driven by internal sustainability goals and pressure from stakeholders to address ESG principles. Meanwhile, a number of barriers stand in the way of implementing innovation to mitigate risk, including budget limitations and internal resistance to change.
New technologies
Firms are embracing familiar technologies like cloud computing and digital technologies for the customer experience, such as open APIs. But they are also eager to explore more leading-edge developments. For instance, 37% expect to be using generative AI in the next 12 months, and a further 12% plan to adopt it within 1-3 years. Financial services firms – including fintechs – have higher rates of adoption of all of the technologies we asked about, with the exception of cloud. While the vast majority of respondents agree that these technologies help them mitigate macro risks, they also cite numerous other benefits, from competitiveness to profitability and revenue growth.
That’s just the tip of the iceberg. Download your copy of the report to learn more about the impact of macro risks on today’s business environment, as well as the innovation strategies and new technologies that are helping executives like you address them.
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The world’s connected, digitized marketplaces are maturing, unlocking more seamless, omnichannel-user experiences, a proliferation of marketing innovations and a deeper integration of services. But how are these impacting businesses in everyday industries like retail, restaurants, travel, digital, entertainment, gaming and technology? And how do those businesses ensure that they can harness these innovations for growth? We surveyed 1,125 senior executives to provide insights into some of the most important innovations impacting businesses today.
©2023 FIS FIS and the FIS logo are trademarks or registered trademarks of FIS or its subsidiaries in the U.S. and/or other countries. Other parties’ marks are the property of their respective owners. 2657466
FIS is a leading provider of technology solutions for financial institutions and businesses of all sizes and across any industry globally. We enable the movement of commerce by unlocking the financial technology that powers the world’s economy. Our employees are dedicated to advancing the way the world pays, banks and invests through our trusted innovation, absolute performance and flexible architecture. We help our clients use technology in innovative ways to solve business-critical challenges and deliver superior experiences for their customers. Headquartered in Jacksonville, Florida, FIS ranks #241 on the 2021 Fortune 500 and is a member of Standard & Poor’s 500® Index.
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