Will automated decision-making turn banking upside down? - Banking blog


Only a few years ago, human beings were needed to understand text and recognise images. It is now becoming increasingly possible to automate these functions using cognitive technologies, such as machine learning. In fact, one of the first practical deployments of machine learning, the automated processing of handwritten cheques, began in banking in the early 1990s.

We have come a long way since then. The past few years have seen significant disruption in the area of automated decision-making, mostly led by young, innovative tech companies. Business leaders are using cognitive technologies to create an enhanced customer experience and expand beyond their traditional industry borders. These technologies offer substantial improvements and are developing on a rapid scale.

The next frontier of automated decision-making is the recommendation engine – an intelligent deployment of machine learning technology to augment or fully automate a decision making process. Making insightful recommendations, such as recommending products to customers that they are likely to want to buy, has long been the holy grail of any commercial company. We also see a fundamental change in the way that customers respond to insightful recommendations.

Banks that chose to harness the potential for using recommendation engines are creating a competitive advantage by providing a more personal experience to their customers, as well as augmenting capabilities of their employees.

Recommendation engines are here to stay

Recommendation engines work because they leverage insights gained from past customer behaviour to predict future customer wants – a few ubiquitous examples:

Transforming the way banks operate

So what does this mean for the banking world? The main uses and benefits of recommendation engines for banks include:

  1. Personalisation at scale
    Insight-driven banks extract knowledge from the data they have collected about their clients to shape a tailored customer experience. Examples include the interface that customers see when entering the online banking platform, and the product suggestions that appear whilst the consumer is using a mobile app.

    A typical banking customer has two objectives; to spend smarter and to invest smarter. Unfortunately, the driving forces behind each of these objectives are often different for each customer, which is why customisation enabled by recommendation systems can be so effective.

    Recommendation systems are able to analyse transaction data and make customised suggestions to clients about how to save money. They can also analyse the behaviour of other customers with similar characteristics, and recommend products that have worked for them.

  2. Workforce augmentation
    Recommendation engines enable employees to make better decisions and invest their time in a smarter way. Better decisions increase the productivity and value-add of employees, and this in turn improves the performance of a business as a whole.

    Fraudulent activities are very costly for banks. Traditionally, fraud detection used a rule-based pattern-matching approach, which was both time-consuming to maintain, and often ineffective due to ever-evolving fraud techniques. Using machine learning, banks are able to detect anomalies with much greater accuracy and flag suspicious activity sooner. This leads to an increase in fraud detection as well as a reduction in false alarms.

  3. Automation orchestration
    Reaping the full benefit of automated decision-making requires linking different parts of an organisation and creating end-to-end journeys. Once automated decision-making is applied in one part of the business, it can create opportunities that go well beyond automating an isolated process or transaction.

    Banks process a large number of transactions every day. Imagine a bank that categorises each customer transaction in real-time by type of purchase, such as expenditure on entertainment, travel, food, or rent. This is possible with recommendation engines that allocate each purchase to the appropriate expenditure category based on patterns discovered in similar historical transactions.

    In fact, some banks already use real-time classification of customer spend. A bank can use this information to provide a spend analysis to customers. Spend analysis, in turn, can be used as input to a recommendation engine that advises customers on how to save money, or what products to invest in.

The way forward

Automated decision-making is already rapidly transforming how banks deliver services across the entire value chain. Their deployment is enabling personalisation at scale and workforce augmentation, and this in turn is creating further automation opportunities. To reap the full benefits of recommendation engines, banks need to take an even more holistic view of their customer journey as they already do. Read more about cognitive technologies on the Deloitte website.


Sven Probst - Financial Services and Banking Lead, Zurich

Sven leads the Financial Services and Banking practice in Switzerland. Having started his career as a banker he has been providing external advice and assurance services to the industry for over 20 years. Sven has a broad range of experience and expertise covering governance and control, regulatory challenges, investigations, payments and sanctions, project management, IT and Cyber risk. In his previous life he has also been the CEO of an IT services provider.


Antonio Russo

Antonio Russo - Partner, Service Delivery Transformation, Zurich

Antonio heads Deloitte’s Service Delivery Transformation in Switzerland. He has over 15 years of experience advising companies across various industries in Shared Services, Business Process Outsourcing, and Global Business Services and has delivered various large transformation projects.


Fabien Lopez

Fabien Lopez - Senior Manager, Leader Cognitive and AI Transformation, Zurich

Fabien leads the Cognitive and AI transformation offering at Deloitte Switzerland. He addresses digital enablement business cases across key industries such as Banking, Life Sciences, Products, Utilities and Industry. Fabien drives innovation for multicultural and complex organisations to unlock business benefits by combining intelligent automation and data insights.



Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.


Post a comment

Comments are moderated, and will not appear until the author has approved them.