Category: Technology

Why financial services organisations must be ready for increased AI-based customer service and resulting regulations

By Amy Chesson, Legal Counsel for IP Integration.

Automation and AI-based technology is playing an ever-increasing role at each stage of a customer service journey, from chatbots to customer data analysis. Spurred on by the effects of the pandemic, integrating AI and automated technology has become a crucial aspect of the customer service that financial services organisations have to offer, helping them improve efficiency and streamline the customer journey.

Yet delivering optimum customer service through the likes of AI comes with new and expanding security regulations. Next year the EU is set to introduce widely negotiated new regulations on AI and data privacy. While the specific impact outside of the EU currently remains uncertain, it wouldn’t be out of place to assume that similar obligations and regulations could be implemented in the UK next year too. For the finance sector, which is already awash with rules and compliance regulations surrounding the sharing and storage of sensitive customer information, being aware that the customer service landscape could dramatically shift, with privacy and security playing a central place as technology becomes ever more sophisticated, is crucial.

The rise of AI in customer service

Many financial organisations have been using AI tools for years. The personal financial management provider Intuit Mint, for example, created its  “Robo-Advisor” in 2006, offering AI-supported investment advice, while ZestFinance has found AI to be effective at working out credit scores for customers with little to no credit history using “thin file borrowers”.

But hybrid and remote working was an unexpected catalyst for the expanded use of AI. The large-scale migration to remote working put pressure on organisations to reinvent operations, particularly when it came to customer service, with many moving their contact centre and customer relationship teams entirely onto the cloud to combat increased customer enquiries and staff shortages. Even the Bank of England realised that the pressures of hybrid-working were mitigated by moving to the cloud and officially migrated last year. What’s more, the move to the cloud resulted in organisations being able to take advantage of newer technology, including AI.

AI and the cloud have always had a mutually beneficial relationship – the cloud makes AI solutions accessible to a wider market whereas AI streamlines processes hosted on the cloud. As such, when the time came to migrate onto the cloud, many businesses found the choice of AI-enhanced capabilities significantly widen, especially in the customer service space.

Indeed, the likes of online chatbots empowered through automated or AI-based Q&As, have become the tool of choice for many financial organisations. Firstly, because they help customers find answers to their queries whilst removing some of the pressure from customer service agents who don’t necessarily need to speak to the customer on the phone. In addition, automated chatbots, voice channels and more can be invaluable in helping financial services improve their customer service whilst also giving customers an omnichannel offering – enabling them to find their answers 24/7, 365, through a platform that suits the digital-savvy customer of today. Finally, automation can help organisations better collect customer information and analyse it to provide information on how they can improve their customer service.

While AI and automation might be the key to unlocking a streamlined customer journey that is beneficial for customers and service agents alike, and will undoubtedly continue to increase in popularity over the next year, accountability and responsibility for compliance must be front of mind.

2022’s rules and regulations

The backbone of the new EU policy on AI stipulates different levels of risk ranging from unacceptable risk to minimal risk. While we can’t predict what will happen in the UK, it wouldn’t be completely ludicrous to assume that similar criterion could be the basis of any UK AI policy in 2022.

According to the current definitions for each level of risk, none of the AI customer service features currently on the cloud such as chatbots, automated Interactive Voice Response technology or Caller Line Identification tools, qualify as unacceptable risks, meaning that all cloud contact centre operations can continue as normal. However, the finance sector in particular should note the data on an individual’s credit scores and candidacy for loans falls under the high risk category, as the data is highly sensitive and could be personally damaging to an individual if mis-managed. In this instance, financial services should be clear on all platforms, including AI-powered chatbots, where this information is used, how the data is being used and stored and why.

Most other contact centre interactions fall under limited risk. This means that, while sensitive data may be extracted, the customer is made aware of the process when they are providing personal data to a human or a machine. For example, Caller Line Identification tools, which can use AI-powered voice channels to collect customer details in anticipation of connection with a human agent, make it clear when the customer is communicating with an automated machine. Because the customer is aware that their data is being collected by a machine, they can choose not to continue at any point.

Other areas of AI integration that stand to face greater regulation are online dashboards. Examining how the now ubiquitous online banking platforms are set up before UK regulations are finalised would be advantageous to banks wanting to hit the ground running without disrupting important service to its customers. AI uses data from these dashboards to personalise the online experience – it can analyse the most popular functions of online banking and take users directly to frequently used tabs. For example, TSB fully migrated to the cloud during the pandemic, and now uses AI to operate its “Smart Agent” directly through its online banking app.

AI customer service is well and truly here, and is more than likely to stay.

Using AI to open doors

As hybrid work and the effects of the pandemic continue, financial organisations will undoubtedly continue to look to the cloud and AI for newer customer service applications that will improve the customer journey and ease its agent workload. As of November 2021, Gartner predicts over half of all current cloud data centres will deploy technology with AI capabilities by 2025. Investment in this area is only growing and the proposed new EU regulations solidify how influential AI will be to every sector, across every business operation.

For financial services, the proposed changes will likely impact how the sector operates, particularly in how organisations can maintain trust with customers. But this shouldn’t be a deterrent to embracing all the possibilities a successfully integrated AI and cloud solution can bring. For organisations willing to embrace change and future-proof business models, AI opens a door to a world of a limitless possibilities.