Data is New Black Gold in Banking - Experts Talk

Alexander Stanev, CTO of Finance at Sirma Group, will present Sirma Group on the upcoming Banking Today forum, organized by Investor Media Pro. In an interview with InvestorBG, he shares his vision regarding data monetization and the numerous opportunities data management brings to the banking industry.

What is the primary driver of the financial industry’s digitalization, and what are the main reasons why most companies in Bulgaria still have a low level of digitalization?

I’ll start with this: I think the degree of digitalization in the financial industry is high. Perhaps other sectors of the economy have not yet realised and adopted digitalisation as their strategy, but this will inevitably change. After all, we already live in a world where businesses and/or customers interact through digital channels.

Coming back to the financial industry, digitization is a two-way process - on the one hand, it provides customers with quick and easy access to financial services, but much more importantly, it maximizes work processes within institutions. You must have noticed how fast the speed of processing a loan application, for example, has changed in recent years despite increasing regulatory requirements.

As an observer of our client’s projects and processes, I can say that every financial institution is focused on increasing the speed of digitization on both fronts. What has not yet been realized, however, is that digital service and process execution brings with it new and untapped opportunities hidden in seemingly trivial information - logs, database entries, documents, and so on. And therein lies the next tectonic shift - data. Data is becoming the new black gold for financial institutions. Organizations can unlock new business opportunities, increase customer satisfaction, and improve financial performance by learning how to use it intelligently.

It is now trendy to talk about data monetization. This process can be done in several ways - using it in combination with smart algorithms to personalize offers, rates, etc., to improve service for a 360 view of the customer based on all points of interaction with the bank. The fastest way to decide to change or update certain features is to analyse how often a user has received an error or what type of error it is in their mobile banking app. It’s a real extension of the ability to provide relevant analytics to enterprise customers and an opportunity to create a marketplace for anonymized data. The EU has strict regulations on the handling and managing of personal data, and banks in Bulgaria strictly enforce compliance requirements, so any fears of data “misuse” are completely unfounded.

Which new technologies are adopted by the financial industry? What is the role of artificial intelligence?

New technologies should not be seen as an end in themselves. The real innovation lies in finding ways to create value for the customer. “Embedded finance” is a very promising technology that I believe will experience significant growth. It is an evolution of open banking, and banks are already familiar with the underlying technology. The key to unlocking revenue sources will be the innovative application of this technology to get closer to customers when they need funding, payment, or other financial instruments.

The good thing is that there are already institutions in the Bulgarian market that are actively moving in this direction, and I hope we will see significant progress soon. One segment that is also underestimated is the implementation of open banking for tighter integration with corporate clients (b2B). A whole palette of fully automated value-added services is waiting to be discovered and offered to digitally advanced companies.

As an example, I can point out that embedded lending, in the B2B context, greatly supports the development of distribution networks, partner ecosystems, and the establishment of win-win business relationships in a huge number of sectors—retail—white and black goods, shopping malls, chains, IT distributors, telecoms, FMCG. This is a huge market to be developed with these innovative technological solutions.

The emerging trend of applying artificial intelligence should also be mentioned here. One mistake that has been noticed recently is that this term often implies the use of generative models. But for professionals in the field, it’s clear that AI technology extends far beyond ChatGPT and is the way to use the data we’ve already discussed to achieve a real business outcome.

Sirma is undertaking a major corporate restructuring; how will it affect its international expansion?

International expansion is critical for Sirma as we strengthen our presence in key markets, build strong partnerships, and strive to be the leader in access to talent. Our current restructuring is designed to support these ambitions by creating a lean structure that enables us to operate more efficiently and grow our business verticals. These verticals will allow us to focus our deep expertise in each business area, increasing the value of our clients.

Why do you support the Banking Today forum?

Banking Today is a leading event that brings together experts from the banking and finance sector to discuss the industry’s most pressing topics and challenges. We support this forum because it provides a unique opportunity to share knowledge and experience and build professional contacts. The event highlights innovative practices in banking, including the development of fintech solutions that are essential for the future of financial services. In addition, Banking Today stimulates discussion on important technology and business trend changes and their impact on the banking industry, which is critical to making informed business decisions. Our support demonstrates our commitment to innovation and progress in the banking industry.

The full interview is in Bulgarian. Read here

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