Eyal Efrat.

Technology-driven human banking

Technology is at the forefront of banking in 2024, explains Bank Leumi CIO Eyal Efrat, while warning that the human element must not be neglected

If you asked most people to name ten leading technology corporations, it’s very likely not a single bank or financial institution would appear on their lists. But to be honest, they should.
According to a recent study by JP Morgan, the largest bank in the U.S., the rate of investment in technological innovation in the banking sector is similar to that of the largest technology companies in the world. In the largest banks in the U.S., for example, the average expenditure on technology is 17% of the total operating costs, compared to only 12% in Amazon. In 2024, when we talk about financial institutions - we’re talking about advanced technology.
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Eyal Efrat
Eyal Efrat
Eyal Efrat.
(Rami Zerenger)
The data should not surprise anyone. Today, at quite a few financial entities, a significant part of the organization consists of technological units with advanced and diverse capabilities. You will find there software, hardware and system engineers, development and product people, experts in customer experience and digital customer journeys, and of course cyber experts who work 24/7 to prevent fraud attempts - certainly in a cyber-threatened country like Israel.
The big push for digital, for touch banking, came during the pandemic period. Today, over 85% of operations at Bank Leumi (private and business customers) are carried out remotely in end-to-end digital processes - without physically coming to the bank branch. Now, as Israel finds itself in the midst of a protracted war, it becomes clear how necessary this is, not only for private customers and business customers - but also in view of the economy and national resilience. For example, already in the first weeks of the war, at Leumi we approved mortgages for reservists through a Zoom call that enabled the process of closing a mortgage in a time frame of only 15 minutes. We enabled in an efficient and convenient way the freezing of loans in accordance with the Bank of Israel framework and more. None of this would have happened without a strong technological infrastructure, which is at our disposal at all times and is able to help us solve complex challenges and provide real value to customers in real time.
This kind of integration of advanced technology within the business process is an integral part of the new banking - and not only in extreme situations. In fact, the simpler and more intuitive the operations become, the more complex they become behind the scenes. This requires advanced AI and machine learning models, autonomous controls and complex interfaces between systems. Let's take for example the open banking reform, in which the Israeli regulator - which is even ahead of its American counterpart - allows Israelis to share their financial information with third parties (fintech companies for example). This sharing, which Leumi was the first bank to implement in a complete way, allows the customer to perform actions that were not possible in the past for technological reasons, or alternatively to enrich the range of products and services to which they can be exposed.
Another challenge is personalization. No more generic solutions, but customized solutions for different types of customers. For example, Leumi was the first bank in Israel to launch a business application and website in English, out of a real need that we identified among our customers. What do they expect to get from us? How can we understand the need ahead of time and submit a value proposition for them in minimum time and maximum efficiency? How do we know how to alert them at the right time about their account situation? The basis for proactive banking of this type is extensive and intelligent use of data. This is true for private clients and even more so in business, where, naturally, the transformation is stronger and faster. It must be remembered that the financial sector serves both huge corporations and small businesses, with completely different needs.
Aside from all this technological wealth, and to a large extent due to it, emphasis should also be placed on the personal-human touch at meeting points between the customer and the bank. For example, in the process of taking out a mortgage, in consulting for an investment portfolio or pension. We witness this in all the surveys and focus groups we conduct: at the critical junctures in life, even ultra-technological young people want to sit down with a real banker, not a bot, and receive from them a professional, detailed and eye-level explanation of financial conduct and its consequences for everyday life. In fact, this is also the X factor that differentiates traditional banks from digital banks - the level and scope of knowledge, the personal experience with countless situations with customers, the level of security, the depth of the products and more.
Therefore, we at Leumi define our banking as "technology-driven human banking" and believe that this is the future of the financial world.
Eyal Efrat is CIO of Bank Leumi.