ABI Lab Forum: 8 actions banks are taking to innovate with data and AI, and Irion’s resilient approach to Regulatory Reporting

All areas of investment in technology, in the Italian banking sector, are either increasing or stable: this was the starting point for the work of the ABI Lab 2024 Forum – Next Generation Banking, of which Irion is a partner, in Milan. The metaphor chosen this year by the study center on financial innovation is that of (the bank’s) journey toward innovation, guided by a compass with eight cardinal points.

ABI Lab Forum 2024 report: the summary

Here are the key insights presented at the event, for each of the eight areas highlighted in the report:

1. Watch Close – Flanking the customer in the customer journey: this translates into the recent explosion of mobile (+106% active customers from 2018 to 2022) with an average of 3.1 apps per bank and +70% investment in this channel; ditto for the growth of the “digital onboarding” process by which banks accomplish customer identification faster, thanks to the internet and simplified processes; today 38% of bank contact centers use chatbots powered by Artificial Intelligence and 39% have a contact center available even on Sundays
2. Get Faster – banking operations closer to the customer: in 61% of cases they have a proactive role with respect to innovation and in 72% they dialogue with the end customer; 89% of banks have application modernization paths in place and in 94% application architectures help define IT evolutions
3. Explore – the AI frontier: 80% of banks already have active or under study AI-based customer dialogue solutions and 53% have at least one project (already implemented or underway) involving generative AI
4. Focus on Value – very interesting is the impact of consumer behavior analytics on channels: in 83% customer-related KPIs (Key Performance Indicators) influence strategies; in 59% Operations are recognized as Data Owners and 84% of banks plan initiatives to monitor Data Governance, but above all by 2025 79% of institutions have at least one project planned to spread data culture in the company
5. Be sustainable – 70% of banks plan projects to improve the environmental impact of their IT infrastructure
6. Be open – 63% of banks have on their agenda the creation of an in-house innovation center or a “regulatory sandbox”; to better prepare for the fintech ecosystem, two out of three banks have as a 2024 priority to innovate their business model
7. Stay Trustworthy – on the resilience front, the degree of coverage of DORA (Digital Operational Resilience Act) requirements in the sample studied by ABI Lab is above 50 percent; with regard to security, however, more than 73% of telecommunications channels show abuse by attackers for bank fraud, with the worrying combination provided to wrongdoers by spoofing techniques and deepfakes made possible by artificial intelligence: in essence, the ability to maliciously (and increasingly realistic) impersonate the voice of a colleague or manager and convince staff to make fraudulent wire transfers
8. Lead the Change – more than half of banks will strengthen their skills on cloud, sustainability, Green IT and software development; there is now 91% interest in actively promoting internal Data Communities, among other indicators, and 94% of institutions have cross-functional teams to innovate operational processes

Integrated and Resilient Regulatory Reporting: Roberto Fasano’s speech

In the afternoon section of the ABI Lab 2024 Forum, Principal Business & Data Management Consultant, Roberto Fasano, presented Irion’s innovative approach to the old and new challenges posed by regulators to the banking system, in the national and EU context.

In particular, our expert gave an overview of the evolution of reporting requirements, some of which (such as those under DORA) still have implementation aspects being defined. Other regulatory challenges, on the other hand, involve reporting requirements that are published close to deadlines, as in the case of the SRB (Single Resolution Board) on Resolution Planning. Or there are requirements from regulators that are “structurally connoted by emergency timing,” as in the case of Dry Runs i.e., simulative exercises related to the Bail-in tool for resolution, which banks must demonstrate their ability to perform in as little as 48 hours (in preparation for a possible “Resolution Weekend”).

For all these reasons (and much more, according to the increasingly stringent demands of institutions), as Fasano pointed out, “the only possible approach today is modern data management, as is done in the Irion EDM platform that enables capabilities such as connectivity with any technology and format, a Data Quality supported by automation of technical controls and suggestions on business controls, and high scalability by volume and variety of data, thanks to adaptive repositories, as well as a dynamic metamodel to support the representation of information assets and data lineage, advanced workflow management and the ability to map, enrich and transform data in rule-based mode.”