Digital

Banking
Playbook
2021
Transformation Strategies For
A Connected Marketplace

In Collaboration With
Introducing the
Digital Banking
Frontier
The financial sector is in the midst of major disruption
as a variety of macro forces - accelerated digitization,
global economic upheaval and increased competition
from both emerging startups and Big Tech incumbents
- begin to converge. The emergence of 5G technologies
and growth of cloud computing promise a global
customer and workforce who are increasingly mobile
and always connected with heightened expectations for
personalization, security and immediacy. In the midst of
these rapid changes, the companies that had already done
the work to establish modern infrastructure are now able
to maintain normal operations while being agile enough to
take advantage of new opportunities.
As firms prioritize customer-facing digitization, the
challenges of outdated systems and processes and the
ability to ingest data will need to be mitigated through
cloud migration and integrated platforms to support
collaboration and shared insights, while managing risk
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across the enterprise. Employees will be empowered by
intelligent automation to outsource mundane tasks, freeing
up their time to drive strategic relationships and growth.
Entire organizations will have the ability to work from
anywhere in secure environments.
The rise of new technology and digitization continues to
drive change across the financial services industry from
lending to investing to payments. A digital transformation
mindset will be critical to navigate this uncertainty while
ensuring the needs of the customer always remain front
and center. Successful organizations will embrace key
technologies, like artificial intelligence, machine learning
software and blockchain to deliver more relevant services
and generate new revenue streams.
Actualizing a successful
digital business
transformation revolves
around six key pillars
The influence of technological, cultural and regulatory
requirements necessitate accelerated change across
financial services. Likewise, the opportunities presented
with digital transformation extend to all banking verticals—
from retail banking to capital markets. Because these shifts
have decentralized banking operations, an agile, digital
ecosystem is necessary for institutions to have greater, data-
driven intelligence on their customers, markets and internal
business processes.
In the Digital Banking Playbook, PSFK highlights how digital
systems and processes can augment a financial institution’s
ability to optimize operations and reinvigorate the customer
experience. Backed by marketplace trends and strategies
for successful implementation, we present three scenarios
that ground this digital acceleration within the contextual
framework of today’s financial services landscape. This
digital-first vision presents a new opportunity to deliver
unprecedented innovation to the customer, as well as the
internal, overarching enterprise.
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1 Engage clients with differentiated experiences
that tailor to their personal financial needs and
goals
2 Empower employees with tools that can
provide accessible, holistic information at
their fingertips about individual clients, while
meeting critical security and compliance needs
Optimize internal operations with synchronized
3 processes and democratized data-sharing
Transform products with open and connected
4 systems and real-time predictive digital
processes
Engage clients in transparent dialogues that
5 bring visibility to decision-making processes
and education around financial health, while
strengthening the bank’s role as trusted advisor
and gatekeeper of data
Partner with third-party digital entities where
6 aligned to meet and serve clients at various
touchpoints in their digital ecosystem and
support their financial needs wherever and
whenever they arise
About This
Report
The Digital Banking Playbook is a report by business
intelligence platform PSFK in partnership with Microsoft that
presents opportunities for driving financial institutions
forward with an intelligent cloud. Three scenarios highlight
how cloud-based solutions can help the industry minimize
risk, ensure optimal service at scale and think differently
about security, privacy and regulatory compliance. Backed by
industry insights and key analyses of global trends, the Digital
Banking Playbook will guide financial institutions of all sizes as
they aim to service a broader range of global clientele.

For copies:
psfk.com/report/digital-banking-playbook

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Table of
Contents
Financial Services Industry Disruptors…....................................6 Scenario 2: Managing Investments Against
Unexpected Market Events...............................................................28
Understanding The Digital Disruption:
Retail Banking.....................................................................................8 Understanding The Digital Disruption:
Retail Banking Overview..........................................................................9 Wealth Management.......................................................................31
Key Challenges.............................................................................................11 Wealth Management Overview...........................................................32
Innovation Strategies for Retail Banking.........................................12 Key Challenges............................................................................................34
Quick Win Initiatives..................................................................................14 Innovation Strategies for Wealth Management..........................35
Microsoft Innovation in Action…..........................................................16 Quick Win Initiatives.................................................................................36
Scenario 1: Fluid Consumer Banking...............................................17 Microsoft Innovation in Action............................................................37
Scenario 3: Catalyzing Wealth Management at Scale............38
Understanding The Digital Disruption:
Final Takeaways................................................................................41
Investment Banking........................................................................20
Investment Banking Overview.............................................................21 About PSFK.......................................................................................45
Key Challenges............................................................................................23 About Microsoft...............................................................................46
Innovation Strategies for Investment Banking............................24
Quick Win Initiatives.................................................................................26
Microsoft Innovation in Action............................................................27

5 In Collaboration With
Financial
Services Industry
Disruptors
Personalization Expectation
The growth of Big Tech and widespread use of digital
services and platforms has created an expectation for
products, services and experiences tailored to a market
size of one. As the exchange of personal data has
become accepted as the cost of doing business in today’s
marketplace, consumers are even less willing to engage
with businesses that don’t deliver on the promise of
personalization. Organizations must strive to remain one
step ahead of their customers’ needs and meet them with
offerings that are hyper-relevant and add meaningful value.
Speed of the Marketplace
Accelerated market speeds are placing increased pressure
on financial institutions to rapidly respond to marketplace
changes. The ability to analyze data in real-time and
accurately forecast outcomes, alongside having the right
internal structures in place to quickly act, is becoming
imperative for organizations to remain competitive.
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Data Risk & Privacy Concerns
As growth in the number of digital transactions continues
and banking infrastructures migrate to a broader range of
platforms, financial institutions, their employees and clients
face increased exposure to data breaches. At the same
time, consumers are more aware of how their data is being
tracked and used, which has increased concerns around
privacy and identity theft. Banks must continue to adopt
strict measures to protect their clients and adhere to
regulations, while raising the bar on the delivery of better
security, transparency and value-add services.
Digital-First Integration
As tech innovations continue to meet customer demands
for seamless integration into their day-to-day lifestyles,
financial institutions must keep pace. Payments, banking,
investing and other transactions are no longer confined to a
physical branch or owned digital experience. Instead these
financial capabilities must follow customers across digital
channels and applications through strategic partnerships
and application programming interfaces (APIs).
Financial
Services Industry
Disruptors
Rise of Alternative Banking Solutions Ethical & Transparent Business Practices
Slow innovation by traditional financial players has created Consumer expectations of the organizations with which
opportunities for nimble startups and tech incumbents they engage remain high, with open and sustainable
like Amazon, Google and Facebook to capture a share of business practices trending strongly on the list. Most
the marketplace. By taking a digital-first approach, these favored are the financial organizations that provide visibility
new players offer a compelling mix of personalization, to their fee schedules, operating models and privacy
transparency and flexibility, while democratizing access to measures, and that are committed to social responsibility
key financial services for a broader customer base. What’s from climate change and human rights standpoints. Banks
more, these organizations offer the education and support must treat their employees well and protect their clients
their customers need in the ways they want them. This to foster the relationships that will grow their business.
inclusivity is creating more opportunities to touch a larger The rising interest in ESG (Environmental, Social and
audience, more often. Governance) considerations among investors is further
evidence of this shift.
Balancing Innovation & Regulation
Heavy compliance issues and regulations imposed on
financial institutions are obstacles to the pace of
technology innovation enjoyed by other industries. Because
banks have too high cost-income-ratios, they need to
optimize cost in order to drive innovation. Organizations
must learn to navigate these complexities and position
themselves as category leaders to drive meaningful change.

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Understanding the
Digital Disruption:
Retail Banking

8 In Collaboration With
Retail
Banking
Overview
An accelerated shift to digital-first services has highlighted
the need for banks to take an omnichannel approach to
customer experience that delivers seamless flexibility and
convenience. With digital as the entry point, banks are
developing an ecosystem of complementary financial
products and services designed to meet a broader range of
customer needs and cultivate trust.
“69% of consumers already prefer banking online some
or all of the time and 64% agree that technology will
completely change banking as they know it. Similarly,
71% of business leaders perform at least some banking
activities online and 85% agree that technology will
completely change banking as they know it.”
Banking Experience Survey, Citizen Bank, 2020

“84% of consumers expect brands to find ways to

This approach captures richer customer data, which in turn
maximize digital interaction to keep them safe. 58% report
can be leveraged to deliver sophisticated personalization to
digital journeys are still broken and require physical or off-
help customers achieve their financial goals and objectives,
line efforts to complete banking interactions.”
while pointing to untapped opportunities for innovation. In Customer Survey: Impact of COVID-19 on Consumer
line with this digital-first mindset, banks are rethinking their Banking, Lightico, 2020
stance on fintechs, with many choosing to partner rather
than compete to expand their offerings, gain access to a
wider audience and uncover new revenue streams for their
organizations.

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 “Consumers expect a seamless digital experience from

Retail their financial providers, as they’ve grown accustomed to

Big Tech in other parts of their lives. Traditional banks are
being challenged to meet these expectations given that

Banking digitally native new entrants focus on customer experience

from day one. Banks that invest now in modernizing their
core technology and evolve it to a platform-based

Overview experience will simultaneously delight customers and

grow profitably.”
Anirban Bose, CEO, Financial Services and Group
Executive Board Member, Capgemini

“I think about where our customers are growing and the

need to meet them on their individual journeys, with
personal experiences built on the data and what we know
about them. Everybody’s journey is unique, and those
journeys are no longer linear.”
Beth Johnson, CXO, Citizens Bank

“83% of respondents believe that platformization of

banking and other services through a single entry point
will steer the market, while 45% are committed to
transforming their existing business models into true
digital ecosystems.”
Global Banking Survey, The Economist Intelligence Unit,
2020

“80% of bank executives cited cybersecurity and privacy

concerns, outdated data management (68%) and
identifying the right partners (73%) as primary barriers to
moving to a platform system.”
World Retail Banking Report, Capgemini, 2020

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Key
Challenges
Synchronizing customer experience Managing costs associated with
1 across multiple channels - online,
mobile and physical branches
7 customer acquisition and new product
development

Reversing the decline in customer Extracting additional value through

2 loyalty and engagement 8 personalized products and services

Ensuring secure and seamless digital Adapting to regulation and

3 transactions and protecting customers
from fraudulent activity
9 compliance costs which inhibit agility

Evolving traditional legacy systems,

4 Developing innovation and cross-

channel efficiency at scale within a
10 company culture and processes

legacy system environment Striking the right balance between

Building trust with customers who

11 human service and process

5 demand transparency and enabling

two-way conversation channels
automation

Creating platforms and services

6 that cater to customer expectation
for personalization, security and
convenience

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Innovation
Strategies for
Retail Banking
Develop Conversational Interfaces
Financial institutions can deploy digital assistants to convey
crucial financial information in natural, conversational language
to consumers who need quick resolutions to common
problems or requests. These services, often integrated into
existing digital platforms, help customers make financial
decisions in less time and are able to adapt to their real-time
contextual needs. Conversational tools can also solve menial
customer requests and liberate human counterparts to take
on a more personalized, active role within customer service.
Offer Holistic Credit Evaluation
AI-enabled tools and services can help banks provide a
more behavioral-based assessment of the creditworthiness
of potential customers. By augmenting traditional credit
evaluation methodologies with additional indicators of
reliability, financial advisors can grow the list of customers
they are able to serve. While AI-assistants can forge
predictive and preventative solutions for instant credit
scoring services, clients can receive tailored service and
recommended products from human banking associates.

Enable Omnichannel Payment Experiences

Customers are seeking cross-channel access to their
finances based on their unique preferences or circumstantial
conditions. To empower customers to choose their preferred
channel, banks can use APIs to integrate financial tools
into partnering platforms, which allow users to complete a
payment experience without leaving a provider or losing
data. Untethered and unrestricted engagement allows
increased customer satisfaction and positions the bank as a
lifestyle partner.

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Innovation
Strategies for
Retail Banking
Provide Biometric Authentication Deliver Progressive Transparency
With today’s uninhibited, always-accessible digitization, a Financial services can build trust and gain consumer
complex password or security code doesn’t always ensure loyalty by inviting consumers to take a look at their
optimal security. To better protect investments and internal operational structures and fee litigation. By using
financial portfolios, banking institutions are employing clearer messaging, visible fee structures and even allowing
security features that leverage personal biometric customer input into product and service development,
characteristics to authenticate access to financial customers will feel more comfortable relying on a bank to
information. Financial systems are verifying customer handle all their financial needs.
identity through voice activation, fingerprints and other
visual cues to provide better security measures, with an
added convenience for the consumer.

Create an Operational Ecosystem

As consumers grow more comfortable with ambient
technologies within their homes, automobiles and daily
routines, banks must partner with third-parties to integrate
financial processes, services, content and data into the
consumer ecosystem in a secure and reliable way. By
assuming a role in a user’s connected routine, a financial
institution can securely communicate and learn from
consumers in their most natural environments.

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Quick Win
Initiatives
Customer Experience
• Gain actionable customer insights to enable higher- • Invest in explainability, ensuring a human approach
value client relationships and personalized banking to walking customers through their digital experiences
experiences. Deepen your understanding of each as needed, especially when it comes to automated
customer by tracking the details of every interaction assessments of their data that can lead to negative
- whether in person or via phone, web, mobile, email decisions like the denial of a loan application.
or social media - to deliver contextual, connected
• Collaborate with fintech partners to meet the expanding
experiences.
needs of customers by offering a wider array of services
• Customize experiences with personalized financial through a single platform.
guidance, service, and offers. Increase customer
satisfaction and improve upsell and cross-sell
performance by engaging customers with personalized
financial guidance and next best offers.

• Democratize artificial intelligence and make it valuable

to everyone. Benefit from built-in intelligence, based on
deep learning technology, with solutions that see, hear,
speak, and understand customer needs and emotions
using natural methods of communication.

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Quick Win
Initiatives
Risk Management
• Develop tools and content that help customers
understand the components that determine their risk
profile; build client trust by offering transparent risk
assessments and recommendations to improve
creditworthiness.
• Leverage AI to explore alternate indicators of credit
worthiness like purchase behavior, social media activity,
job history and other components of personal data
to support a more holistic risk assessment.
• Use cloud technologies to reduce the time needed to
gather approval for loans and reduce processing time,
reducing total cost and enabling banks to reach a
broader range of potential consumers.
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Security
• Determine what points of the retail banking process,
from cash withdrawal to transaction authentication, are
the most vulnerable for security flaws and fortify them
with enterprise-grade encryption and biometrics.
• Leverage AI assistants to detect, compile and aggregate
patterns of suspicious behavior that could indicate
financial fraud.
• Build consumer trust by proactively educating clients
in best practices to protect themselves from security
breaches, while communicating your security initiatives.
• Lean into the role of gatekeeper and guardian of clients’
digital ID and data; banks can grow their value by
becoming “Data Trusts.”
In Collaboration With
Microsoft
Innovation
in Action
To empower employees and in turn strengthen client relationships,
Netherlands-based international cooperative bank Rabobank chose Microsoft
365 as the platform to implement its vision of a digital-first workplace. By
moving its entire organization into the cloud and providing employees with
access to Teams, OneDrive and Yammer, real-time collaboration across
files, documents and data is now possible from any location. To enable secure
encrypted connections for each of its 40,000 employees, whether they are
at a bank branch, corporate office, home or at a customer site, Rabobank has
also enabled Microsoft Azure Multi-Factor Authentication and Conditional
Access through Azure Active Directory, creating a truly mobile and secure
workforce. Creating a more connected workplace, Microsoft 365 has
facilitated a seamless manner for employees to connect with colleagues,
access corporate information, and gain insight into similar challenges
departments and their clients are facing, allowing not only for easier sharing
of ideas but a cohesive implementation of best practices and solutions across
each of their departments and branches, improving customers’ experiences
while ensuring business continuity.

https://customers.microsoft.com

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 Scenario 1:
Fluid
Consumer
Banking
17 In Collaboration With
 Scenario: Fluid Consumer Banking

INSIGHT
Mobile-first, global lifestyles and uncertainty towards
financial institutions are causing consumers to seek

Retail Banking
alternatives to traditional banks. To change the relationship
they have with their costumers banks are evolving to
deliver greater transparency and offer services that align
with current consumer behaviors and needs.

Mary currently uses a larger bank but wants to switch

to a digital only bank to have greater access to her
financial assets. This new bank would allow Mary to
access financial services through a range of platforms,
partners with frequently used commercial services and
prioritizes transparent communication at every step.

Mary submits an application to the digital only bank. She

1 is approved based on her employment history, patterns of
transactions and social media activity.
While shopping, Mary decides on a dress to purchase and is
2 presented with a bill. Because Mary’s bank analyzes her purchase
patterns, they recognize that this transaction is atypical for her
and alert her via a mobile app.
Mary is able to authorize the transaction through her bank by
3 scanning her fingerprint

18 In Collaboration With
 Afterwards, Mary goes out to dinner. She
4 realizes that she forgot to transfer money to
her daughter Patricia, who is doing a semester
abroad in the UK.

She uses Facebook Messenger to ask her bank

5 to initiate the transfer.

The bank’s AI chatbot responds and asks Mary

6 to authenticate her identity by sending a selfie.

Retail Banking
Once Mary sends a selfie, the AI chatbot
7 approves the transaction.

Mary asks for a check when she finishes dinner. The waiter sends
8 the check to her phone and she approves the charge by scanning
her fingerprint. The waiter receives a notification that the bill has
been paid.

9 While driving home, Mary’s AI assistant, which is integrated into the

car system, reminds her of upcoming bill payments; she requests
to pay them from her car. The in-vehicle AI assistant verifies her
identity via her voice and the bank verifies her payment.

10 At the end of the day, Mary is able to access a summary of the

day’s transactions on her desktop, mobile devices and at home
voice assistants.

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Understanding the
Digital Disruption:
Investment Banking

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Investment
Banking
Overview
Already challenged by high operating costs, increased
regulation and competition from emerging fintech
companies, investment banks must now navigate
unprecedented complexity and uncertainty in the
marketplace. The industry also continues to face margin
pressures, while requirements for larger capital reserves
and liquidity to take advantage of new market opportunities
necessitates innovative approaches to funding.
In order to maintain relevance and grow their value, firms
must channel their efforts to areas of service that are most
meaningful to each individual client, while digitizing and
streamlining operations to enable secure, remote work-
from-anywhere operations. Many are shifting their mindset
towards delivering more personal and specialized solutions.
“40% of financial services firms report that they’re
currently undergoing digital transformation while 19%
report they’re investigating how to execute digital
transformation but have not begun yet. 26% report that
they’re always in a state of digital transformation.”
The State Of Digital Transformation In Financial Services,
Forrester, 2020
“66% of banking executives say new technologies will
continue to drive the global banking sphere for the
next five years while regulatory concerns around these
technologies remain top of mind (42%).”
Global Banking Survey, The Economist Intelligence Unit,
2020

As investment banks transform their businesses, AI and

data-driven insights will power real-time responses to
market conditions to better manage risk exposure, while
predictive analytics will improve long-term planning to
deliver enhanced levels of client service.

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Investment
Banking “The top two technologies financial service firms are
investing in as part of their digital transformation efforts
are: Software-as-a-service (68%) and AI, machine

Overview learning, and cognitive computing (53%).”

The State Of Digital Transformation In Financial Services,
Forrester, 2020

“Across global markets we continue to invest in

technology platforms to enhance user experience and
straight through processing.”
Steven Scherr, CFO, Goldman Sachs

“As investment algorithms get more advanced, they will

be used more widely in portfolio management. Not to
use the over-hyped AI term, but advanced algorithms for
investment strategies will gain strength.”
Nic Dreckmann, COO and Head of Intermediaries,
Julius Bär

“By mastering new data sources and analytical

technologies, banks can build up a deeper understanding
of customers’ needs—and how they can help them—as
well as unlocking new revenue streams.”
Josh Bottomley, Global Head of Digital, Data and
Development, HSBC

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Key
Challenges
Addressing structural cost by creating Improving the efficiency and speed of
1 an agile infrastructure that can respond
to evolving market trends and
5 collaboration between bankers across
departments to employ the expertise of
regulatory requirements colleagues

Optimizing compute capacity based on Increasing bankers’ mobility resources

2 real-time needs and usage to ensure 6 for remote, secure, private and compliant
access to their working platforms
proficiency of risk models

Upgrading legacy systems to more Deploying new, innovative products

3 effectively gather, analyze and 7 and services to deliver more value to
contextualize a wide range of data clients

Scaling computing resources to Strengthening resilience across

4 optimize risk management and meet
a continued evolution of regulatory
8 departments, teams and organizations by
designing, agile, secure and remote work
requirements environments that facilitate streamlined
communication and collaboration

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Innovation
Strategies for
Investment Banking
Create Personalized Experiences at Speed
With ever-increasing market speeds, the ability to predict
the efficacy of an investment becomes more difficult. By
leveraging artificial intelligence and data farming tools,
financial institutions can more quickly identify risks
associated with trades or investment opportunities. These
systems analyze patterns in local contexts, global policies
and other market fluctuations to provide a thorough
analysis of the risks associated with investment decisions,
assess trade values or make the trades on their own, all at
the speed of the market.
24
Optimizing Risk Management & Compliance
To expedite compliance preparation and regulatory
requirements when underwriting mergers, acquisitions and
trading portfolios, regulatory teams can incorporate
cloud-enabled tools into their existing systems to run risk
models, complete stress testing and ensure compliance.
Technology such as blockchain provides a secure way to
exchange information between multiple participants that
need to approve deals and transactions, saving time and
streamlining processes to reduce operational costs.
In Collaboration With
Innovation
Strategies for
Investment Banking
Enable a Modern Workplace
By providing a modern workplace, firms can ensure that
staff are always able to access secure information and
contribute to in-the-moment analyses. Internally,
employees are able to collaborate and make better-
informed decisions that are based on real-time data,
increasing accuracy and expediting processes. Intelligent
virtual assistants can automate tedious and time-
consuming tasks, allowing bankers to concentrate on
servicing client relationships.
25
Embrace the API Economy
In order to survive in today’s rapidly changing financial
markets, bankers need to focus on product and service
innovation—at a macro, enterprise-wide scale. Although
traditional financial institutions have been siloed and
self-sufficient, bankers must collaborate with third-party
technology developers to compete and expand service
offerings. By embracing an open financial ecosystem, they
can unlock new investment opportunities for their clients
and drive growth.
In Collaboration With
Quick Win
Initiatives
Client Centricity
• Provide personalized experiences by transforming
customer data into next-best actions, ensuring long-term
client relationships.
• Put the client at the heart of everything with a 360-
degree view of their needs.
Banker Productivity
• Offload preliminary research and modeling responsibilities
to machine learning technologies to reduce computational
times and better use staff time.
• Build a mobile workforce by offering employees secure
access to real-time information from any device.
• Encourage inter-departmental collaboration via cloud-
based workstream platforms, which share up-to-the-
minute information and updates to expedite document
preparation, compliance review and regulatory approval.
26
Advanced Risk Analytics
• Invest in cloud-based risk compute capacity to improve
modeling accuracy and evaluate risk more efficiently.
• Create omnipresent, simplified dashboards that help
teams monitor risk exposure in real time and incorporate
risk analytics as part of their everyday activities.
Regulatory Compliance
• Migrate computational systems to the cloud to protect
client, transaction and institutional data.
• Analyze current internal data-sharing systems and
determine which steps are most vulnerable to threats;
compartmentalize these areas to create an infrastructure
that responds more quickly without compromising the
entire operation.
• Reduce the compliance burden by analyzing internal and
market data on an ongoing basis, in order to identify fraud
patterns and offer enhanced security through real-time
fraud analytics.
In Collaboration With
Microsoft
Innovation
in Action
To accelerate collaboration and increase value within its client relationships,
investment management firm Franklin Templeton is driving efficiencies
and connectivity across its 9,400 employees who work in more than 60
offices in 34 countries via Microsoft 365. Facing the pressure of increased
competition, the global firm is doubling down on its ability to offer
specialized investment decisions for its clients based on regional insights
from on-the-ground investment professionals and user-friendly dashboards
of real-time data analysis powered by Power BI. By also providing each
of its employees access to Teams, the central hub for meetings, chat, and
content that’s part of Office 365, this information can then be shared
seamlessly and securely throughout the organization and across desktops,
laptops, mobile devices and even smartwatches via the Microsoft Enterprise
Mobility + Security feature. This real-time collaboration allows for faster,
more informed decisions, while digitizing and streamlining operations to
enable remote, secure work-from-anywhere a reality.

https://customers.microsoft.com

27 In Collaboration With
 Scenario 2:
Managing Investments
Against Unexpected
Market Events
28 In Collaboration With
 Scenario: Managing Investments
Against Unexpected Market events

Investment Banking
INSIGHT
By leveraging deep data insights and AI-powered advisory tools, banks
can provide faster, more intelligent advice and execution capabilities
to their clients. These intelligent digital tools can improve accessibility
for sophisticated investment management to allow users to deal with
unexpected and volatile market events swiftly and effectively.

Karen is an ultra high net worth client

traveling from London to New York
Karen, who holds investments in Japan’s energy sector
1 receives an alert on her mobile device from her bank’s AI-
powered investment bot that Japan has issued a tsunami
warning after detecting offshore seismic activity.
2 The bot sends Karen a detailed summary of the situation and
risk, loss and effect imposed.
3 The virtual bot automates a risk simulation of possible
strategies that Karen should pursue based on her personal
finance profiles—financial history, investment behavior and
wealth goalst

29 In Collaboration With
 The bot also forecasts how each Karen decides to follow through The transactions are assured with
4 strategy could evolve over time by 5 on one of the bot-recommended 6 blockchain to optimize secure
conducting an analysis of contextual investment strategies and executes legibility for audit purposes.
market data. her trades.

Investment Banking
7 The bot automatically generates the
required compliance documentation.
8 The AI-powered investment bot also
coordinates a follow-up appointment
9 The bot augments the meeting
preparation undertaken by the
for Karen with her relationship Relationship Manager providing
manager to discuss the long therm contextual and personalized guidance.
effects of the market event.

30 In Collaboration With
Understanding the
Digital Disruption:
Wealth Management

31 In Collaboration With
Wealth
Management
Overview
Digital platforms have created unprecedented choice and
flexibility for customers looking to invest, making the process
more accessible regardless of personal wealth or experience.
New services are forgoing traditional financial advisor
relationships in favor of self-service and automated platforms
that deliver familiar UX and charge smaller fees for placing
trades and managing funds.
At the same time, the industry is preparing for the greatest
transfer of capital in generations, as younger consumers
inherit their parents’ accumulated wealth. (Coldwell Banker,
2019) They bring a new set of beliefs and expectations that
will require firms to rethink their offerings with development
of new products and tools such as impact investing,
subscription-based pricing models, and educational classes.
“31% of millennials say digital sources have played the
biggest role in shaping their attitudes toward money,
compared with 15% for Gen Xers and 5% for Baby
Boomers. 22% of Millennials say they have used
mobile and online money managers like Betterment or
Wealthfront, compared with just 4% of Baby Boomers
and less than 3% of Gen Xers.”
Millennials and Money, Wall Street Journal, 2020
“There’s a chasm between generations in how they
want to deal with wealth managers. If firms are slow to
embrace the digital transformation of the business, more
people will change advisors.”
Gauthier Vincent, Lead Wealth Management Partner,
Deloitte Consulting

To remain competitive, wealth managers must focus on

clientexperience, productivity and operational efficiency.
The ability to provide real-time, tailored advice will be a
key competitive differentiator. Many firms will adopt hybrid
models across their digital channel, pairing AI support with
human expertise to offer an enhanced level of personalized
customer experience.

32 In Collaboration With
Wealth “46% of wealth managers are only partially satisfied or

Management not satisfied at all with their current digital offerings. Over
the next 12-18 months, 86% consider servicing clients as
a highly important digital capability to acquire while 61%

Overview view analytics and creating insights as very important for

their firm.”
The Transformation of Wealth Management: Five trends
for 2020 and beyond, Refinitiv, 2020

“Customer experience tops asset and wealth management

CEOs’ list of investment priorities at 54% followed by
cybersecurity at 42%.”
Asset and Wealth Management Trends, PWC, 2020

“Wealth managers are digitally transforming all aspects

of their business and require scalable, open and flexible
solutions in a digital-first environment. As the wealth
management industry continues its digital transformation,
firms need solutions that provide the data, technology
and insight to empower better decisions and user
engagement.”
Christopher Sparke, Global Head of Front Office and
Digital, Wealth Management, Refinitiv

“We are looking at developing a hybrid engagement

model where technology will handle all of the
administrative touchpoints for our clients.”
Anil Venuturupalli, COO, HSBC Private Bank

33 In Collaboration With
Key
Challenges
Integrating with emerging Reorganizing internal processes and
1 technological and digital channels
to deliver new client value and
6 appropriating spending to areas of the
business that drive future growth
differentiate from competing services

Providing personalized financial Develop differentiated deep-client services

2 management at scale based on different 7 for both ultra-high net worth individuals and
clients and mass affluent demographics
customer needs

Improving service agility and speed Adapting services to a younger

3 to respond to real-time requests or
market factors
8 demographic with a different set of beliefs
who stand to benefit from the impending
‘Great Wealth Transfer’
Enhancing customer profitability and
4 turning customers into loyal advocates

Optimizing fee structure to remain

5 competitive with emerging platforms
while providing a high-quality,
differentiated offering

34 In Collaboration With
Innovation
Strategies for
Wealth Management
Offer Machine-Augmented Management
Using machine learning systems to support advisory
services enables a higher quality of advice at a significantly
lower cost to the firm. Wealth and asset managers who
offload routine tasks such as preliminary data collection,
research and compliance adherence to robo-advisors can
focus on preparing more premium strategies and packages
for each high net worth client. AI services also allow firms
to offer a broader range of financial services for audiences
in different income brackets.
Automate Portfolio Optimization
Traditionally, the pace of portfolio optimization has relied
on human effort; now, digital and algorithmic programs
allow firms to respond more quickly to economic, global
and market trends and optimize returns for clients.
Intelligent money management systems that track contextual
indicators and automatically adjust portfolios offer a more
responsive level of service to clients without straining staff.
35
Promote Progressive Transparency
In order to retain top clients and gain new customer
loyalty, wealth managers must reevaluate their internal
operations and messaging to give customers more insight
and control over their financial management. Firms should
consider incorporating clearer messaging, preemptive
communication, transparent fee structures and even
channels for customer feedback on product development.
By addressing client concerns and incorporating their
ideas, firms can efficiently appropriate spending toward
products and services that meet client needs.
Implement Predictive Analytics
Although a portfolio’s performance is subject to a variety
of market factors, AI services, together with predictive
analytics, can track multiple macro- and micro-economic
indicators, regulatory trends and social sentiments to
produce insights and timely advice. Managers can then
leverage these insights to make portfolio recommendations
or help customers build the right financial management
solutions for their lifestyle.
In Collaboration With
Quick Win
Initiatives
Client Experience
• Facilitate an anywhere, anytime client relationship by
building secure wealth management tools into
consumers’ preferred social and digital channels.
• Identify how contextual factors, like a change of career
or a death in the family, might affect clients’ wealth
management decisions; partner with services that
can predict and communicate these touchpoints with
clients.
• Consider how sharing aggregated portfolio updates
directly with consumers, such as a daily mobile update
or digital debrief, can help them feel in control of their
investments.
• Stratify investment tools by level of automation in
order to offer a wider range of solutions to a greater
audience.
36
Risk Management
• Mitigate risk by running investment simulation models
that use real-time global market data to more accurately
predict portfolio performance and adjust as needed.
• Create a flagging compliance system that uses data
insights from previous trades and investments to
automatically mark potential irregularities to reduce the
risk of non-compliance.
Security
• Enable software-supported portfolio management tools
to offload day-to-day tracking, compliance and risk
management from analysts.
• Reduce compliance burden and associated costs by
ensuring that customers’ devices and digital
management channels are secure.
In Collaboration With
Microsoft
Innovation
in Action
Recognizing AI-powered bot technology as a next-gen market disruptor
in global financial services, South Africa-based bank Nedbank utilized
Microsoft’s Bot Framework to develop its Electronic Virtual Assistant
(EVA), an artificially intelligent, cloud-based bot that allows the bank to
deliver enhanced customer service. Through the Microsoft Azure Language
Understanding Intelligent Service, Nedbank’s EVA can meet their clients’
specific needs and respond aptly to context-dependent situations. With
EVA able to respond to 80 percent of client inquiries at 10 percent of the
traditional cost, human agents are free to handle more nuanced calls.
Beyond its initial purpose, Nedbank is seeing benefits from EVA that it
never anticipated, as the virtual agent now acts as a support tool for live
agents to quickly access marketing content and other information for their
clients. Looking ahead, as the shift to serving individual investors becomes
a priority for the bank, Nedbank hopes to replicate the convenience of its
call center interactions across additional channels including WhatsApp,
Facebook Messenger, Slack, and other texting apps. While currently only
accessible through the Nedgroup Investments website, Nedbank’s future
plans involve making EVA available to individual clients through messaging
apps, as well as assisting them with end-to-end transactions.

https://customers.microsoft.com

37 In Collaboration With
 Scenario 3:
Catalyzing Wealth
Management at Scale

38 In Collaboration With
 Scenario: Catalyzing Wealth
Management At Scale

Wealth Management
INSIGHT
In order to grow their customer base, financial services
firms must develop a range of differentiated packages
to complement their clients’ budgets and levels of
assumed risk. By matching offerings to a client’s needs
and parameters, financial institutions can prevent
customer attrition and optimize their return on each
client relationship.

Peter, a relationship manager for a wealth

management firm, wants to offer his services to
a broader scope of customers by promoting an
artificial intelligence platform that includes tailored
investment portfolios, on-demand services and
intelligent forecasting models, personalized for
each customer.

Peter begins his day by reading the latest client investment

1 reports generated by the platform. They provide an analysis
of the week’s investment performance, a combination
of trades that had gains and losses, and the analytical
predictions based on collected contextual data.

2 Peter makes adjustments to his client portfolios based on the

platform’s predictive suggestions, which Peter approves. The
system then generates updated investment reports and sends
them to portfolio-holding clients.

3 While checking in whit his clients, Peter’s personal dashboard

notifies him of a new client assignment from his manager,
displaying aggregate information about the client’s personal
information, past investments and investment preferences.

39 In Collaboration With
 In tandem, Peter receives an alert that the Japanese yields are
4 rallying (dropping/decreasing). His dashboard compiles a list of

Wealth Management
eligible clients who are seeking leveraged carry trades funded in
JPY for a power reversal note.

Peter sends the client list to his manager for approval and
5 compliance documentation.

While Peter awaits approval, he returns an analysis on the new

6 client through the AI-based system and generates a report of
various investment portfolio options that display a combination
of the investments based on the client’s data.

Peter sends three possible investment combinations to the

7 client. All three reports are personalized for the client and
use straightforward language and visuals to demonstrate the
investments and their predictive performance.

The client receives these reports and, after studying them,

8 approves a portfolio that provides the most return on her
investment. Peter receives a notification on her approval.

Once the client approval is received, the system populates

9 compliance documentation and delivers these notices to various
departments for approvals.

Meanwhile, the manager approves Peter’s suggested client list

10 for the new derivative product, Peter is automatically notified
through the system and forwards the portfolio option to the
client list.

While the new client’s

11 approvals are going through
the system, Peter sets up her
investment parameters on
the platform. The trades are
automatically executed after
other departments approve
the document.

The client receives a

12 confirmation that her
investment portfolio has been
set up and gains access to
a suite of tools to manage
it. Peter is able to set up a
tax plan during a face-to-
face interaction on Skype for
Business.

40 In Collaboration With
Final Takeaways
Exploring Technology’s Expanding
Role In The Financial Industry
Artificial Intelligence
Artificial intelligence enables financial institutions to
drive a new era of agility and innovation, with built-in
intelligence based on deep learning technology and
solutions that see, hear, speak and understand
customer needs and emotions using natural methods of
communication.
• Provide personalized financial management based on
different customer needs at scale across products,
services and experiences
• Ensure consistent, personalized and accurate support
by synchronizing customer experience across multiple
channels - online, mobile and physical branches
• Create a hybrid service model that leverages AI to
support and enhance the abilities of banking
professionals, particularly when providing customer-
facing services
• Automate mundane and complex tasks to ensure speed
and accuracy, while freeing up human staff for more
value-add tasks
41
Big Data Analytics
Sophisticated algorithms are capable of analyzing vast
troves of data to make novel connections and extract
insights, which can be leveraged to make unbiased
decisions on a customer’s creditworthiness, develop
new financial products and respond to and even predict
changes in the marketplace.
• Layer the ability to analyze data in real time and
accurately forecast outcomes alongside having the right
internal structures in place to quickly act
• Optimize customer profitability and turn customers into
loyal advocates by upgrading legacy systems to more
effectively gather, analyze and contextualize a wide
range of data
• Analyze customer behaviors on both an individual level
and in aggregate to identify unmet needs and innovate
new products and services to meet them
In Collaboration With
Final Takeaways
Exploring Technology’s Expanding
Role In The Financial Industry
Cloud-Based Infrastructure
The identity, analytic, compute, database, mobile,
networking, storage and web services provided in the
cloud creates a unique platform of technologies that allow
organizations to focus on the swift creation of customer
value. A cloud services model negates the need for large
capital expense that stands up the infrastructure and
minimizes operational overhead and ongoing costs.
• Evolve traditional legacy systems, company culture
and processes by unifying data from across legacy
applications to respond faster and more accurately when
markets change
• Develop innovation and cross-channel efficiency at scale
within a legacy system environment to improve service
agility and speed to respond to real-time requests or
market factors
• Design secure remote work environments, streamline
communication and speed of collaboration and increase
associates’ access to mobility resources for remote,
secure, private and compliant access to their working
platforms
42
Blockchain
Blockchain provides a rapid, low-cost platform to enable
financial institutions to collaborate with new business
processes. It offers an open, transparent and publicly
verifiable system that will fundamentally change the
way financial institutions think about exchanging value
and assets, enforcing contracts and sharing data across
industries.
• Reduce lengthy processes into seconds-long transactions.
Underwriting innovations now include lending against
cryptocurrency, as the trend toward increased use of
digital currencies are speculated to have a growing
impact on the financial marketplace moving forward
• Streamline processes and reduce operational costs
by providing a secure way to exchange information
between multiple participants that need to approve
deals and transactions quickly and securely
• Introduce greater transparency into each transaction to
build trust and loyalty within both client and consumer
groups
In Collaboration With
Final Takeaways
Exploring Technology’s Expanding
Role In The Financial Industry
API Economy
Application programming interfaces (APIs) enable
organizations to deliver more connected experiences to
customers, enabling faster product and service innovation
with low cost and low risk. Financial institutions can
quickly extend processes, services, content and data to
partners, mobile experiences and third-party developers
in a reliable and highly secure way.
• Partner with fintechs, technology platforms, retailers,
etc. to seamlessly integrate existing financial
services into a larger ecosystem, providing ease and
convenience to consumers, while capturing great value
• Create an agile infrastructure capable of both deploying
new, innovative and value-driven products and services
to clients and responding to evolving market trends and
regulatory requirements
• Treat data as a new asset class by offering a secure,
trusted environment for two-way value exchange that
can create benefits for customers and partners
43
Responsive Security Systems
As financial institutions move their operations to the
cloud, systems become more vulnerable to security
breaches. To protect consumer and institutional data,
investing into flexible and agile security solutions is a
must in order to respond rapidly to security threats.
• Protect customers from fraudulent activity by ensuring
secure and seamless digital transactions
• Enable software-supported portfolio management
tools to offload day-to-day tracking, compliance and
risk management from analysts, freeing associates
to provide clients and customers greater value-add
services
• Reduce the burden and associated costs of compliance
by ensuring that customers’ devices and digital
management channels are secure
In Collaboration With
Final Takeaways
Exploring Technology’s Expanding
Role In The Financial Industry

5G
From wearable payments to IoT, the future of financial
services is mobile. Through 5G, banks and financial
institutions will be able to meet consumers virtually
wherever they are, while the ability to gather and transfer
data in real-time will facilitate context-aware,
personalized and accurate financial recommendations
from banking services. The unprecedented speed of
information promises uninterrupted experience and
untethered mobility that will enable new banking
experiences and work from anywhere opportunities.

• Meet and serve clients at various touchpoints in their

digital ecosystem to support their financial needs
wherever and whenever they arise

• Provide customers with tailored and relevant

recommendations based on real-time insights

• Provide added account protection and seamless access

capabilities through real-time, multi-layered biometric
authentication

44 In Collaboration With
About PSFK
We’ve been inspiring leading brands, retailers and their PSFK
partners on trends and innovation since 2004. PSFK’s 228 Park Avenue South, PMB 52786
integrated approach to research, content, events and our New York, New York 10003-1502 USA
network provides a unique level of immersion and +1 646.520.4672
actionable recommendations for market leaders working at
the forefront of change. Piers Fawkes
President & Founder
PSFK IQ piers.fawkes@psfk.com
Our membership-based platform provides 24/7
personalized trends intelligence & research to retail, strategy Scott Lachut
and innovation teams, helping them leverage the latest President of Research & Strategy
insights to stay ahead of the curve. scott.lachut@psfk.com

PSFK Labs Project Lead

Our research and strategy consulting arm has been advising Lauren Lyons
leading brands, retailers and their partners on innovation in
retail and consumer experience since 2004. Design
Doménica Cevallos
Events & Immersion
PSFK creates immersive experiences that help creative Illustrations
professionals understand the new developments in retail at Romualdo Faura
a deeper level.

psfk.com | @psfk

45 In Collaboration With
 About
Microsoft
Global digitization combined with unprecedented changes
to the financial services business model is mandating
transformation. Microsoft empowers financial institutions to
drive digital transformation with solutions to reimagine the
client experience for a digital world, empower employees
with modern productivity suites and digital workstyles,
optimize operations through improved insight into risk and
operational models and transform products with open
and connected systems and real-time predictive digital
processes. Through a combination of Microsoft and partner
solutions, you can turn data into insight, transform ideas into
action and turn change into opportunity.

https://www.microsoft.com/en-us/industry/financial-
services/banking

https://www.microsoft.com/en-us/industry/financial-
services/capital-markets

46 In Collaboration With