The ‘human touch’ to remain key to financial industry success — Avaloq

According to Avaloq‘s financial industry report, front office staff such as client advisors and relationship managers will continue to be in high demand, particularly those that can blend digital expertise with strong client understanding.

Technologies such as artificial intelligence (AI) are capable of helping advisors provide a personalised service, and meet business demands around speed and productivity.

Overall, the research from Avaloq shows that AI, along with cloud-based operating models, data analytics and automation will equip and empower them to deliver a far greater, more competitive service proposition.

However, almost two-thirds of end-investors in particular (62%) said they would not be willing to use a fully ‘robotic’ service, despite 73% saying that AI, robotics and automation will be defining sector trends of the future.

Working alongside tech

A strong consensus among financial industry investors and end-clients surveyed by Avaloq was found towards new technologies and the transformation of front-to-back office infrastructures.

According to middle office staff, one key area that’s expected to benefit from new technologies is regulation, with management of time-intensive rules such as anti-money laundering (AML) and know-your-customer likely to be more effective.

Driven in part by Covid-19, middle office professionals have “less time to do more things to a higher standard”, according to the Avaloq study, meaning that a higher skill set and smarter processes are needed to deal with a growing body of regulation.

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Meanwhile, back office professionals report that technology will help to remove human error and free up resources for more specialist tasks.

Additionally, back office staff forecast further implementation of cloud-based processes, given the inherently improved levels of efficiency and flexibility, as well as quicker time-to-market for new products.

“We firmly believe that new technologies based on smart automation, such as robotics and machine learning, will deliver material advantages to financial institutions in the coming years,” said Michael Pahlke, group chief service delivery officer at Avaloq.

“In this new era, market leaders will be defined by their ability to deliver real-time and straight-through processing based on clean and consistent data. RegTech, for instance, remains a major area of innovation and growth and a sector we expect to escalate in importance.

“What has been most interesting from our study, however, is not that technology will replace back, middle or front office staff, but that it will empower them to do more and deliver a superior service. While there will be a need for new specialisms, and some functions will likely need to adapt and change, the fundamental need for the ‘human touch’ right across an institution remains loud and clear.”

Evolving customer behaviour

Reflecting a need to deliver a more tech-led service, the Avaloq research also found that over half (53%) of end-clients would be happy to bank and invest through a non-traditional institution such as Apple or Google.

Additonally, 43% cited catering to emerging and specific groups, such as female and young entrepreneurs, as important, while 44% ranked ESG as the most important factor when considering whether to switch financial provider.

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Martin Greweldinger, group chief product officer at Avaloq, commented: “Our research with investors showed a strong correlation with the views from institutions, particularly with regards to the use – and acceptance – of technology, and a need to cater for new segments and fast-developing market requirements such as ESG.

“We believe that sophisticated technologies and greater analytics will be central to how firms meet these challenges, with the back and middle office functions supporting front office staff in the delivery of a better, more personal and flexible client service in which human advisory will continue to shine.”

Avaloq surveyed 176 members of the Finimize investor community for its study, ‘The Front-to-Back Office Report – How are functions in the financial industry changing?’.

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Aaron Hurst

Aaron Hurst is Information Age's senior reporter, providing news and features around the hottest trends across the tech industry.