Virtual assistants or chatbots, digital personal assistants, robo-advisors, machine learning, and more. These terms may seem new, but the concept of artificial intelligence (AI) has been around for about 60 years. Financial industry leaders understand the impact AI has on their profession and are looking to make the most of it. Will the financial world of tomorrow be driven by AI or do humans still have a part to play?
AI is extremely powerful and useful for reaching certain goals, in very specific situations. For example, it can read lips and put together new recipes. It can win at chess and the game Go. Like so many tools developed over the course of history, AI can help us work more efficiently and be more productive. Tech giants appear eager to find a way to incorporate it into how they organize and run their business. But as with previous industrial transformations, technology can impact jobs, pushing individuals to explore new avenues, adapt to change, and learn new skills.
Companies are showing increased interest in AI due to their limited data processing capabilities and business needs. The explosive growth in structured and unstructured data, the availability of new technology like cloud computing and machine learning algorithms, mounting pressure from new competition, increased regulation, and soaring consumer expectations have created a perfect storm for increased use of AI in the financial services industry.
The advantages IA presents in the banking sector are varied, extending to operations, compliance, client experience, product delivery, risk management, and marketing to name a few. Suddenly, banking institutions are able to work with large volumes of historical data for each decision taken. Indeed, today’s spectacular advances may become tomorrow’s norm.
Making the Most of AI
There are several ways AI can be used in the banking industry. Here are some examples.
To Detect Fraud: IA is capable of detecting fraudulent activity in real time and identifying the next pattern of suspicious behavior.
To Meet Regulatory Requirements: Technology can be used to ensure that regulatory requirements are met and data is maintained with real-time monitoring. This makes it easier to catch any irregularities in advance.
To Improve the Client Experience: AI enables individuals to leverage useful and extensive knowledge as regards client behavior, for example, and thereby make faster, smarter decisions. Some interactions with clients are directly facilitated by new voice technology or virtual assistants (chatbots), while other applications are used behind the scenes to reinforce marketing communications.
To Deepen Client Engagement: AI helps create personalized and intelligent products and services, thanks to new functionalities, more intuitive interactions (using speech recognition, for example), and advisory abilities like personal financial management.
To Execute Investment Strategies: Financial advisors’ work is also evolving. Machines will attend to executing and maintaining investment strategies crafted over time by the advisors to build models. Advisors will then communicate the information obtained with their clients.
To Facilitate Data Processing: Although many strategic leaders draw strength from their keen intuition, hard work and years of industry experience, much of this insight is simply gleaned from a deeper understanding of historically difficult and costly to process data. AI will facilitate and accelerate this process. It will soon be able to help humans push back their processing limitations.
AI will eventually automate repetitive, high-volume tasks, at a lower cost. It will also help banks and credit unions manage their regulatory burden and compliance issues, generate audit trails, and report suspicious behaviors. AI will even be able to predict customer service issues and sales requests. Ultimately, AI technology will enable financial service providers to concentrate on high-value activities and creative client experience