Financial and Monetary Systems

How digital innovations helped banks adapt during COVID-19

A customer uses his credit card at a terminal as he shops in a Casino supermarket in Nice, France, January 16, 2017. REUTERS/Eric Gaillard - LR1ED1G1C977P

Artificial intelligence can be used in fraud prevention for credit card transactions. Image: REUTERS/Eric Gaillard

Karin Oertli
Chief Operating Officer, Personal and Corporate Banking and Switzerland, UBS
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The Digital Transformation of Business

  • Organizations can apply successful fraud prevention for credit card transactions using artificial intelligence.
  • Swiss banks have invested heavily to add value for clients by applying advanced analysis to their portfolios.

During the COVID-19 pandemic, financial services are rapidly evolving and transforming their digital business models, with new circumstances. This has, at times, required some leapfrogging through banks' digital transformation agendas. This posed challenges as well as opportunities in the Swiss financial services sector, where banks, in close alignment with the Swiss government, had to: execute the provision of a large amount of credit facilities; adapt offerings in support of clients’ needs and changed behaviour; and introduce fast, flexible and effective measures to keep operations and services stable.

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During the crisis, banks' clients changed their behaviour overnight and often by brute force, reflecting adaptions to restrictions and health and safety requirements. Rapid increases occurred in digital opening of new relationships (up over 70%), registration and usage of mobile pay applications (up over 80%), and usage of contactless payments (up over 30%). These increases corresponded with the reduction of physical client meetings.

At the same time, the setup of organizations themselves had to be digitally amended to reflect remote working, communication and client service. Rapidly increasing the amount of remote working arrangements with the majority of employees in Switzerland working from home, while also keeping the level of client service consistent, represented a significant operational challenge for the financial services industry.

This experience helped organizations identify the transformational potential of digital channels and digital operational setups, as well as the importance of new value creation from data and analytics. The following are concrete examples from a Swiss perspective of how digital solutions, data and analytics can be used to create value in financial service organizations:

Protect clients by identifying conspicuous or fraudulent transactions

Organizations can apply successful fraud prevention for credit card transactions using artificial intelligence (AI) with real-time data analytics as an early warning system. A digital solution analyzing a variety of variables evaluates the fraud probability of credit card transactions and, upon suspicion, initiates an immediate request for client feedback to clarify legitimacy. Adaptive analytics through machine learning can be applied by continuously reintroducing client feedback into the data model. This significantly reduces losses through fraud cases. The sound application and scale of the preventative AI was particularly important during COVID-19, with relative fraud prevention activity levels up by more than 40% compared to pre COVID-19 levels.

Meet regulatory and legal requirements

Data analysis helps organizations meet legal and regulatory requirements more efficiently. Machine learning is used to detect deviations in client and transaction profiles. Clients with large and complex needs bear an increased level of operational risk such as Anti-Money Laundering (AML)/Know Your Customer (KYC) checks, which can be managed with holistic client and transaction review tools. These tools apply smart analytics to identify issues and enhanced interactivity/visualization to translate data into insights. This allows organizations to identify risks with increased speed and quality, and helps make complex data patterns available to larger audiences through enhanced visualization.

Boost operational efficiency

In combination with automation, data analysis can be used to improve the efficiency of providing financial services to clients. A large number of documentation packages for client meetings are prepared every year across the Swiss financial centre. Through the combination of a distinct data element with robotics process automation, it is possible to generate client documentation from management tools and archives at a high frequency. Due to its scalability, high volumes can be managed more efficiently.

Under fierce conditions, the full power of robotics has been revealed at its best. In order to support Swiss small and medium-sized companies (SMEs) tackling the challenges posed by the pandemic, Swiss banks, in collaboration with the Swiss government, established a lending programme to affected companies in Switzerland quickly. In order to provide the SMEs with much-needed liquidity without undue delay. At UBS, for example, we delivered six credit robots, which supported our task force in processing credit facility requests. With this support, over 24,000 applications were processed in 24-hour operating mode, at times representing up to 100 virtual workers.

Another measure to improve operational efficiency is data screening and usage from physical incoming mail. Incoming mail is opened, scanned and treated with Optical Character Recognition (OCR) allowing for intelligent classification along embedded meta-data and delivery to a digital mailbox. Users responded well to the introduction of this service, with a high acceptance rate and a very high digitization rate of documents (up to 90%). This made physical distancing requirements even more effective, by digitizing physical mail and thus enabling mail processing under remote working conditions for over 13,000 Swiss UBS employees working from home. So far, around 350,000 documents have been processed, the equivalent of 1 million pages or 5 tonnes of paper since September 2019.

Serve clients better through data and analytics

Swiss banks invested heavily over the past years to add value for clients by applying advanced analysis to their portfolios and offering related tailored products, investments and advisory services. They can improve products further by evaluating client feedback to improve the overall experience with better quality interactions. Digital solutions and data and analytics can also be used to increase the relevance and efficiency of client communications and tailor financial services better to clients' needs.

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Follow sound data principles

The rising importance and application of data and analytics in financial services means ethical principles for the use of data beyond existing laws, rules and regulations are pivotal. In 2019, leading financial services firms, including UBS, endorsed the principles for use of data developed by the World Economic Forum. The launch of the Swiss Digital Initiative (SDI) to safeguard ethical standards in the digital age was celebrated with broad support by Swiss financial firms. For global and diverse institutions it is essential to demonstrate the importance of sound data governance and ethical principles by spearheading the comprehensive integration into their DNA. At the same time, we encourage other firms to serve as ambassadors for these principles within the financial services industry and beyond.

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Financial and Monetary SystemsHealth and Healthcare Systems
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