By James Hobbs, Head of Development, Great State

Digital transformation is accelerating in many areas of business, but with people forced to stay at home and social distancing likely to become a long-term feature of daily life, it is the interaction between services and people that is accelerating fastest.

In the first few months of the pandemic, use of online and mobile banking channels skyrocketed and this level is expected to continue far after it subsides. In fact, up to 45% of consumers are expecting to cut back on branch visits following the end of the crisis.

As consumers use digital banking services more, they also expect more. In many ways, digitisation is creating an expectation economy – brands who meet or pass expectations in the delivery of digital services will perform well.  The benchmark for service delivery and communication expectations is rising – pushed up by digital native brands free to innovate fast. It is entirely natural that people will expect more, better, and faster interactions and will compare performance and delivery across different sectors.

We’ve seen this already in the financial services space. Digital challenger banks such as Monzo and Starling have disrupted the landscape, bringing these services to market quickly.

Deploying technology that uses artificial intelligence to enhance performance and innovation is an increasingly important aspect of service delivery. It is already an important ingredient in digital transformation – optimising the performance of people, processes, and data.

But the AI space is complex and often misunderstood. AI technology is not close to delivering a unified intelligence capable of thinking or solving multiple challenges, rather it is fragmented and focussed on learning how to improve performance in specific areas. Broadly speaking we can think about the evolution of AI in three overlapping phases.

We are in the first one now which is the use of off-the shelf technologies that can be used across business to optimise simple processes. We are also plunging into the second phase which is investment in bespoke AI to tackle specific challenges within a business to enhance performance and gain competitive advantage.

Beyond this, we might look to a third phase which could deliver game-changing innovation. A hint of what this might mean can be seen in the OpenAI project work to explore and create intelligences that can out-perform humans for example in the creation and understanding of written content. The implications are not yet clear – but they could have profound socio-economic consequences.

In the meantime, what will AI change in the financial services space?

AI means Human + Machine

A challenge for institutions is how to consistently offer high-quality advice at scale. That means providing personalised recommendations to clients that are relevant, suitable, timely and actionable. Achieving this in an impactful way requires an understanding of each consumer’s individual needs to offer an experience that supports both digital and integrated human interactions.

With AI, banks can automatically extract previously unknown insights from structured and unstructured data based on predictive patterns and connections. For example, it could give the workforce critical insight into the social styles and preferences of the consumer using natural language processing and tone analysis before they’re even introduced

This enables banks to identify and act on recommended actions for improved competitive advantage.  As such, AI is providing valuable resources as well as intelligence throughout to improve the entire customer journey.

Process(ing) efficiency

One of the more valuable applications of AI is its ability to remove inefficiency. Historically, banks have been hindered by poor data quality, evolving regulations and legacy IT structures which contribute to making many processes more complex and time-consuming.

As a result, institutions are redesigning the workplace environment for employees and customers by automating the simplest tasks. Using AI to eradicate repetitive, monotonous work opens opportunities for skilled and experienced staff to focus on higher-value, creative pursuits. In the long-term, this means more personalised services for customers.

Broadly speaking, AI will create a more seamless customer experience. Through dynamic analytics, banks can ensure more processes are revolutionised by intelligent automation. For instance, voice recognition can assess if a customer is becoming frustrated with a robot and connect them with a human to guarantee frictionless interaction across products and applications.

Insightful Data

Banking providers harbour huge amounts of data. While ethically, they have a responsibility not to abuse this information or their customer trust, customer sentiment is leaning towards a willingness to let banks use their data. If it means a better service and experience.

It provides a unique advantage. It can offer insights into the more individual aspects of customers lives such as their wants, needs and desires. Most importantly, this data can feed the analytics which guide the development of ever more bespoke services for customers.

Take credit applications, for example. With Open Banking and cloud data storage, machine learning algorithms could instantly draw on multiple sources such as utility companies and electoral registers to decide based on a customer’s real time data. It could then direct the customer towards the appropriate product for their requirements.

Breaking down data siloes and accessing data in a more dynamic and creative way will help make banks the standout financial services providers in an increasingly fragmented industry.

For many banks, ensuring adoption of AI technologies is no longer a choice, but a strategic imperative. If they don’t keep pace with technology, they risk being left behind in this competitive landscape.

AI provides an opportunity for financial services to transform the way they organise, run, and grow the business. Using AI to push digital transformation will enable a more agile proposition that provides improved experiences for customers and employees alike.