Matt Tengwall, Global General Manager, Fraud & Security Solutions at Verint offers insights that can help financial institutions to better navigate and capitalize on an ever-changing landscape.

A new environment

The financial services sector is undergoing rapid change, fueled mainly by the dual influences of digital transformation and industry consolidation.

When these two forces come together, they create a promising avenue for shaping a more robust, flexible and customer-focused banking environment.

So, what implications does this have for established banking institutions facing technological disruptions, market challenges and evolving customer expectations?

The imperative for modernization

The term “digital transformation” has become synonymous with the modernization of various industries, including the financial sector.

In banking, digital transformation signifies a paradigm shift toward mobile and online services.

No longer can banks and financial institutions afford to overlook the role of technology in their operational processes and customer relations.

Major players like Chase have reported significant increases in digitally active customers, a trend that has only accelerated in the wake of the COVID-19 pandemic.

Customers are progressively turning toward digital channels for their convenience, efficiency and safety.

This migration is not just a result of technological availability but also a change in customer expectations.

People now demand instant access to a wide range of banking services and prefer digital self-service over traditional in-person or phone interactions. For banks and financial institutions, prioritizing a seamless digital experience has become critical.

Institutions must converge their services across various mediums to allow customers to engage through their preferred communication method without losing the interaction context.

This strategy not only fosters better customer engagement but also enriches engagement, strengthening the financial services provider-customer relationship.

Furthermore, as new security challenges emerge, traditional institutions must adopt layered, more advanced security measures.

This includes the integration of AI-driven and video-centric security systems to protect against sophisticated threats.

The cloud – a game-changing technology

Cloud technology is another cornerstone of digital transformation within the financial sector.

Despite the initial hurdles such as integrating diverse IT landscapes and addressing security concerns, the cloud offers a plethora of advantages.

Lower maintenance and operational costs are among the primary benefits. Banks and financial institutions can adjust resources based on demand, scaling their operations without the need for expensive, cumbersome hardware.

When it comes to security, the cloud significantly enhances video surveillance by offering scalable, cost-effective and secure solutions.

It makes it easier to expand surveillance systems. Cloud storage is both more economical and secure, ensuring sensitive footage is well-protected.

With cloud-based systems, authorized personnel can access video data from anywhere, improving incident response times.

These solutions also help banks stay compliant with regulatory requirements while providing advanced analytics for better decision-making.

However, a cautious approach to cloud adoption is imperative. As financial institutions handle sensitive customer data, stringent security measures must accompany any cloud migration strategy.

A well-defined plan ensures a smooth transition and provides continuous data protection.

The crucial role of customer experience

In a competitive market, customer experience is more than a luxury; it is a necessity. Financial institutions must invest in the right talent and leverage data analytics for continuous product improvement.

A customer-centric approach, achieved through collaboration across various business units, can lead to tailored solutions and enhanced customer experience.

Understanding customer needs and preferences is now a prerequisite for any bank or financial institution aiming for long-term success.

A comprehensive security program that includes strong physical security measures can also significantly boost customer engagement.

Physical security — ranging from video surveillance cameras, video management platforms and access control systems to on-site security personnel — gives customers peace of mind when visiting bank branches.

Knowing that a financial institution takes physical security seriously can encourage more frequent branch visits and a greater willingness to engage in face-to-face financial activities like consultations for loans or investments.

The presence of well-designed physical security measures also enhances the perceived overall integrity of the bank or financial institution. It shows that the institution is willing to invest in all aspects of customer safety, not just online but also in the physical world.

This comprehensive approach to security can differentiate a bank in a crowded market and can be a crucial deciding factor for customers when they choose their primary financial institution.

Consolidation: the answer to market pressures?

While digital transformation addresses many contemporary challenges, market pressures have led banks and financial institutions to explore another avenue: consolidation.

Unlike earlier waves of consolidation driven by different factors, the current trend is fueled by a series of high-profile bank failures and the resulting loss of consumer confidence.

Consolidation now serves not just as an operational strategy but as a means to boost brand recognition and gain market traction.

Consolidation, however, brings its complexities. The process involves the arduous tasks of technology integration, cultural alignment, regulatory compliance and customer retention.

All these elements require meticulous planning, skilled management and a cohesive strategy. Fortunately, digital transformation can alleviate some of the complexities of consolidation.

Technologies that facilitate the seamless integration of different systems, such as networked video surveillance, can help in creating a unified operational and security protocol.

The regulatory puzzle and its impact

An additional layer of complexity in the rapidly evolving banking landscape is regulation.

Regulatory bodies across the globe have increasingly been focusing on data protection, cyber-risk management and operational resiliency, given the prevalence of digital channels in banking services.

Understanding and complying with these standards amid consolidation is no small task and yet, it’s an essential aspect of both digital transformation and consolidation efforts.

For instance, when two institutions merge, they must reconcile two often disparate sets of compliance protocols.

The process of harmonizing these policies often reveals gaps or redundancies that require immediate attention.

The incorporation of cloud technology in a bank’s operations also invites scrutiny from regulators who are concerned about data sovereignty and customer privacy.

As banks and financial institutions continue to expand their digital footprint, they must also invest in compliance management systems that can adapt to ever-changing regulatory landscapes.

Fraud and risk mitigation: a constant focus

One often overlooked aspect when banks combine strengths is the role of physical security and video surveillance.

As banks merge or acquire other institutions, the challenges of integrating disparate security measures and surveillance systems come to the forefront.

It’s not just about aligning financial products or customer service protocols; it’s also about creating a unified, robust security posture.

Digital transformation can play a key role here by facilitating the seamless integration of varied surveillance technologies and physical security measures.

Advanced, networked video surveillance can easily be integrated with other digital systems such as access controls and video analytics software, allowing banks and financial institutions to centrally manage comprehensive security solutions.

This is particularly crucial in an era where the risks related to breaches, fraud and other physical security incidents are escalating.

As banks continue to evolve through digital transformation and consolidation, a well-planned and integrated approach to physical security becomes not just an operational necessity but a strategic imperative.

Cybersecurity

As if regulatory challenges weren’t enough, there’s a burgeoning need for enhanced cybersecurity measures, particularly during mergers and acquisitions.

In a digitally transformed world, cyber-risk extends well beyond the boundaries of individual organizations.

When two banks merge, they integrate their digital systems, multiplying the potential vectors of cyber-attacks.

A proper cyber-risk assessment becomes critical. This includes evaluating cybersecurity posture and understanding how it will integrate with existing protocols.

The integration phase itself can expose banks and credit unions to vulnerabilities as systems are aligned and data is migrated.

This stage requires careful planning and continuous monitoring to ensure that the integrity of digital assets remains uncompromised.

It also necessitates increased awareness and a robust incident response plan that can adapt to the expanded architecture.

Convergence is now

The imperative for banks to integrate physical and cybersecurity has never been more urgent. This is not just about protecting vaults and servers but about creating a unified security landscape that can adapt in real time to both physical and cyber-threats.

Financial institutions face a unique set of challenges that include safeguarding sensitive data, ensuring operational continuity and fulfilling complex regulatory requirements — all while maintaining customer trust.

An integrated security approach streamlines these processes. It enables real-time fraud detection, optimizes resource allocation, enhances compliance and builds a more robust, cost-effective and agile security infrastructure.

In an era marked by rapidly evolving threats and technological innovations, the convergence of physical and cybersecurity measures offers banks and financial institutions a comprehensive strategy for safeguarding their assets, data and reputation.

AI and machine learning

The role of AI and machine learning in shaping the future of banking cannot be overstated. From chatbots that handle customer inquiries to algorithms that predict market trends or identify fraudulent activities, AI technologies are set to revolutionize banking as we know it.

However, the true promise of AI lies in personalization. Machine learning algorithms can analyze vast amounts of transactional data to understand individual customer behavior, thereby enabling banks to offer highly personalized services.

Additionally, the integration of AI with video surveillance systems heralds a new era of proactive security. AI algorithms analyze video feeds in real-time to detect unusual activities that may signify a threat — be it loitering near an ATM or unauthorized entry into secure zones.

This capability not only enhances fraud reduction efforts but also aids in immediate decision-making, transforming traditional surveillance systems from mere observational tools to dynamic security assets.

By combining AI’s analytical power with video surveillance, banks and financial institutions can significantly bolster both their physical and cybersecurity frameworks.

Wrapping it up

In today’s rapidly evolving banking arena, digital transformation and market consolidation stand out not as individual initiatives but as intertwined tactics that financial institutions must adopt simultaneously to stay competitive and relevant.

While various challenges — ranging from tech integration and regulatory hurdles to emerging security threats and shifting customer preferences — emerge, the prospects for advancement remain substantial.

As banks and financial institutions steer through this complex environment, they must remain vigilant in balancing these catalysts of change.

Doing so will enable them to build a stronger, more agile banking infrastructure that is well-equipped to not only navigate present-day challenges but also capitalize on future opportunities.

This article was originally published in the November edition of Security Journal Americas. To read your FREE digital edition, click here.