“Enjoy your meal: banks appropriately manage risk appetite.”

DXC Technology is a client of Business Reporter.

The banking industry involves a high level of risk. Financial establishments rely on trust, which can be challenging to gain and even more difficult to regain once it has been lost. For instance, a well-known bank on the West Coast is still struggling to rebuild trust after a scandal involving fraudulent accounts occurred several years ago.

Banks incorporate risk appetite, the level and nature of risk they are willing to accept in pursuit of their strategic goals, into their data management approach to avoid damage to their reputation, unexpected consequences, and potential consequences for executives responsible for any wrongdoing. To ensure ethical results in a regulated environment, they must have a strong, thoroughly tested data strategy that is subject to rigorous technical and architectural reviews. These reviews are not a one-time event, but rather occur throughout the entire process, from idea conception to implementation and beyond, in order to demonstrate the benefits of pursuing objectives such as personalized initiatives, end-to-end automation, and cross-selling services.

A notable concern is that banks are hesitant to embrace cutting-edge technologies, primarily due to their cautious risk tolerance driven by advanced data strategies and procedures. This is evident in their sluggish adoption of technologies such as cloud computing, open banking, and blockchain.

In our advancing digital era, traditional banks face competition not only from fintechs, but also from other non-bank financial institutions. To stay ahead, it would be advantageous for these banks to seek assistance in integrating and utilizing new technology to its fullest potential, all while adhering to industry standards and regulations. Failing to do so can result in severe consequences, as seen when 11 financial institutions were penalized over $2.5 billion for disregarding recordkeeping laws and neglecting to preserve electronic communications exchanged through apps like WhatsApp and iMessage.

A vendor specializing in IT services for the banking sector can play a crucial role in building trust and minimizing risk for financial institutions. DXC Technology is one such vendor with extensive expertise in leveraging technology for enhancing business outcomes in this field.

Consider a scenario where a bank is unsure about how to handle its data warehouse. On one hand, they could simply update their existing on-site warehouse, but this would mean missing out on opportunities to integrate new technologies. On the other hand, they could do a lift-and-shift to the cloud, which offers a more efficient consumption model, but would still retain the clunky database. Another option is to do a complete technology overhaul in conjunction with moving to the cloud. To support this, DXC has established partnerships with reliable companies such as Snowflake, which offers a scalable and flexible data warehouse solution designed for the cloud, and Databricks, which provides a cloud-compatible analytics platform. With these partnerships, DXC is equipped to deploy proven frameworks for a comprehensive technology update in the cloud. This would include assessing the risks and costs involved in transitioning to a new technology platform, taking responsibility for the design and implementation process, and providing necessary support and training for bank administrators. DXC would also offer warranty and maintenance services as needed.

It is essential for a service provider to assist a financial institution by evaluating the potential risks and benefits of implementing new technology, conducting a comprehensive, data-driven evaluation to determine if there will be a beneficial outcome, and effectively incorporating any new program processes into the bank’s operating structure.

Think about how DXC can assist a bank in making informed decisions about utilizing advancing Generative AI technology. We have now reached a point where advanced analytics skills, specific hardware platforms, neural networks, and novel algorithms can work together to execute millions of GenAI processes quickly. This has caused banks to question where this technology can be integrated into their business to have a meaningful impact. This is where a reliable partner can bring important questions to the table regarding risk tolerance, including the cost of developing data models and the potential risks associated with using foundational models in the cloud and potentially relocating customer data. Finding the answers to these questions promptly can help determine which use cases, if any, are suitable for the bank’s risk tolerance.

Alternatively, a seasoned partner in the service industry can assist a bank in crafting an effective and validated argument for utilizing AI in a regulated setting. This can be particularly useful in tasks such as generating code, where it has been shown to increase productivity by up to 40%. These types of opportunities build upon existing instances of AI implementation in banks, such as pattern recognition for detecting suspicious transactions or payments.

Financial institutions should not underestimate the advantages of collaborating with partners who have experience working with various companies in the industry. DXC is capable of showing its ability to offer all the necessary tools for financial institutions to create efficient platforms and increase adaptability, all on a large scale that aligns with the organization’s risk preference.

Source: independent.co.uk