By Kent Mackenzie, Director, Risk Advisory, Deloitte Scotland
Kent Mackenzie, a Director at Deloitte explains the influence that artificial intelligence and robotics are having on financial technology – and how big data and disruptive technology can help create a more financially-inclusive world.
Two of the most exciting areas of the Firm’s work involve creating its own products and services in-house and working with start-up companies to co-develop technology. Examples of the in-house work including using artificial intelligence (AI) and cognitive analytics.
“We’re testing some specific AI initiatives with two of our biggest FS clients at the moment, it’s very exciting -the potential use of artificial intelligence to augment decision-making in financial services is huge. Our work right now is considering customer sentiment and how AI can be used to truly understand the ‘heartbeat’ of customers and configure services, and products that will absolutely work for them, adapting to respond to different challenges or financial ‘rhythm’ of their everyday lives. We are also embarking on AI pilots to look at how lending and affordability can fine-tuned and more appropriate assessed using AI. I am very ‘pro-Musk’ and keen to focus on how we use ‘AI for good’ in financial services – it’s all about the customer.
“The next step is to use AI to make predictions instead of simply modelling past data. Imagine being able to make dynamic predictions about what insurance or investment products a customer might need, hour by hour, day by day, and then offering them to customer in really consumable formats. I think back to his insurance concept and start to now really understand what he is on to.
Another internal project involves creating a regulatory analytics platform, which can automatically look at huge swathes of regulation and automatically consider whether the operations and controls within the business meet the obligation mandated within the finer points of financial regulation. ‘Large Banks are employing thousands of people to do this, if we can solve this challenge for the industry it could save hours of time and effort; So-called “reg-tech” solutions are a fast-growing area.
We are also excited about the collaborations that are taking place with other companies. “We’ve worked with James Varga and The ID Co. to develop bolt-on services that’s helps give users different perspectives on the data gathered as part of creating a digital,” he explains.
“The ID Co helps customers by creating a digital identity based on their banking persona, that can then be used to confirm identity when changing banks accounts, or applying for other services where proof of ID is required. What I love about The ID Co. is the simplicity and applicability of the solution – the whole challenge of ‘identity’ in the FS market is huge. The ID Co. have a great solution, and are a brilliant team to work with.
Working in fintech has meant assembling a team that brings together skills not normally found in an accountancy firm. So, why is one of the “big four” consultancies getting this excited about fintech, which is often seen as the preserve of the banks or tech start-ups?
“In my view you need three things to succeed in fintech – access to market, technology skills and an understanding and experience of the problem you’re trying to solve,” he explains. “There aren’t many tech start-ups that have all three, but as a firm we have all three of those – so why wouldn’t we create technology based on the skills we have in-house? The beauty of all this though is that sometimes it is not quite as easy as that and I love the projects where we work with start-ups and our clients to do something together. We get in a room – share the problem, shake each other’s hand and agree to share the IP, and then get to work on creating something really cool.
One of the areas in which Kent thinks fintech can make a real difference to people’s lives is by making the world of finance more inclusive. “Financial inclusion is often wrongly caricatured as extending capitalism and creating more consumers – but that’s not it at all,” he points out.
In this country an estimated 2m people don’t have a bank account, and therefore often simply can’t get access to the welfare they need to support themselves and their families. The lack of financial inclusion has a huge societal impact. 65% of people in the UK don’t have enough in savings to secure them if they lost their job, or had and accident, or had to take leave from their employment – it has been estimated that by creating even small improvements in financial education people could create more financial security for themselves.
So there is a huge amount to think about in how fintech can help address some of the most existential questions around how we create a more financially inclusive world. When I put my head on the pillow at night and dream about fintech futures, I wonder if Scotland can not only become a Fintech super-power, but also take the lead in looking at how we use Fintech to solve some of societies challenges with Financial services, as well as bring to the forefront shiny new products.