Michael Worledge, Head of Financial Services, Harris Interactive
As another banking giant announces plans to introduce artificial intelligence (AI), questions are being raised about what this means for the future of financial services.
The technology has already been hailed as a solution to money laundering, fraud and even terrorist activity, as well as boosting revenue, and cutting costs. In fact, cost savings created by AI efficiencies are expected to reach $1 trillion by 2030.
But banks aren’t just implementing AI to enhance security and efficacy; some are also trialling the use of AI as “robo-advisers” for direct use with consumers.
So, are we about to enter a new era of autonomous banking?
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Not quite. But there are signs that AI is resulting in changes across the global financial services industry that could improve service quality, with bots making their way into many areas from trading to transfers. As long, that is, as banks ensure experiences exceed human capabilities and earn the vital seal of customer approval. The ultimate test will be: can the consumer tell if they are being served by a bot? Ethically though, it is important that consumers are informed.
Let’s take a look at the top five current use cases and what the future holds for AI in finance.
- AI to improve the customer experience and personalisation
Rather than conversing with a call centre on the other side of the world, customers could soon be talking to chatbots or virtual assistants who automatically engage in conversations while managing their transactions. From fingerprint to voice recognition, AI could build a more interactive and personalised experience. There are obvious security risks with these new types of technologies, but these have been weighed up against the benefits of a seamless customer experience.
Gartner predicts that by 2020, chatbots will be responsible for more than 85% of customer interactions. And there seem to be inroads in this direction, with Bank of America introducing Erica – a chatbot that can send notifications to customers with their bank balance, suggesting ways to save money as well as pay bills.
- AI to help tackle financial crime
HSBC has reported that it plans to introduce bots to spot money laundering, fraud and terrorist activity. It will screen the vast amounts of data it holds on customers and transactions, and compare it against publicly held data to highlight suspicious activity. Banks spend £5 billion a year to combat this type of crime, and it is hoped AI technology will reduce this in real-time.
- Advanced data analytics means improved AI efficiency
Machine learning – computer science that uses statistical techniques to give computers the ability to learn – can easily consume and process large amounts of data at an accelerated rate. Financial services can benefit from this type of AI through improved efficiency, seeing results in increased customer satisfaction, faster process delivery, and more targeted marketing.
JPMorgan Chase, for example, recently introduced a platform to extract data points from legal documents. What once took the bank 360,000 hours to analyse now takes seconds. Similarly, Germanbank, Commerzbank, is exploring ways for AI to write analyst reports.
- AI to make money transfers
For a while now, Barclays Bank has been in the development stage for an AI system where users talk to a device which will give them the information they need for important transactions. Ultimately, users would be able to talk to a robot computer system in order to make money transfers.
- Bots on the trading floor
AI could be moving on to the trading floors of investment banks soon. Last year, UBS announced that AI systems would help traders perform better – this was after the bank worked closely with staff to see which processes they carried out that could be automated.
How will AI become an established part of financial services?
Today’s consumers are no strangers to digitisation or smart assistants, but for consumers to hand over control of their financial assets to a bot is a big leap of faith. Therefore, before bots become established in the industry, financial institutions must put in the groundwork to establish trust and confidence with their consumers.
Providing high-quality experiences that offer real individual value is a step in the right direction. To make sure this type of technological advancement is in the clients’ as well as the banks’ best interests, it is important that financial institutions are transparent when and how AI is being used, and what customers will get in return.
Taking time to garner customer opinions and feelings around the use of AI, co-create optimal propositions and build stronger brand confidence among consumers is the way forward. Banks must therefore ensure that a customer’s experience with a bot is at least on par with a human interaction or surpasses it.
With the banking industry undergoing one of its biggest ever transformations -thanks to new technology and changing consumer attitudes to data and tech – there is little doubt that AI will change the financial services industry. A recent report based on a survey of 400 global banking executives found that 22% believe AI will improve the user experience by increased personalisation. But intelligent tech must be handled with care.
Financial institutions need to ensure they respect customer needs as well as their privacy and data. If they are able to apply AI sensitively they will save money and time, and boost returns, as well as see a rise in customer satisfaction and long-term brand loyalty.