As the sophistication of artificial intelligence and intelligent algorithm technologies has increased, they now have the potential to revolutionize traditional banking models and deliver a shift to digital banking which is faster, more agile, and more customer centric.
Artificial intelligence (AI) is one the modern world’s most rapidly advancing technologies. Analysts predict that global investment in AI is set to hit $98 billion by 2023. In the financial services sector, we are seeing the huge impact AI and intelligent algorithms can have on the way we live and work.
First, let’s define what is meant by AI. There are many forms to choose from, but here we consider four main types: voice and facial recognition; natural language processing; machine learning; and deep learning. These can be applied through various iterations, including chatbots, document analyzing, automating processes, or predictive analysis.
Robot process automation (RPA) is becoming commonplace, especially in banking. For automating reasonably simple, repetitive tasks, this technology is ideal. In contrast, AI can automate more complex tasks requiring cognitive or ‘intelligent’ processes.
This kind of intelligent automation is now highly sought after. While RPA is perfect for back office and accounting process, when combined alongside AI, all processes – including those that are customer facing – can be automated.
With this potential in mind, there is a vast scope for AI usage across banking:
Customer services. This is one of the most common usages of AI in banking. Rather than client service professionals dealing with thousands of emails manually, AI can take in the emails, decipher their meaning, and then provide an appropriate answer that the client professional can review and submit with just one click. Intelligent automation is a powerful way of driving efficiencies and improvements across end-to-end processes, taking check cashing processes for example.
Sales and customer intelligence is another fast-growing area. AI is used to gather and analyze data and intelligence from customers, providing business development teams with unique insights, sales pipeline and recommendations for the ‘best next action’ to develop the relationship and push sales.
IT services. AI can showcase where or if an application is likely to fail, increasing usefulness and resilience of IT infrastructures.
Preventing fraud. AI is becoming more and more vital in managing fraud effectively. This can be done by detection and elimination of payments with elements of fraud or claims.
Cyber security. As cyber threats grow and become more complex, AI can be applied for predictive analytics that can detect cyber-attacks, even before they happen.
Although we may be told in the news that AI is due to replace human beings, take your job and take over our lives, this is simply not the case. AI is here to enhance, rather than replace human beings. Human supervision is integral to ensuring AI algorithms provide expected results, yet at the same time AI is still in a learning process and cannot be all things to all people after day one.
Many of the standout benefits of AI focus on customer satisfaction. For example, with AI, when we engage online with a company (usually via their website), we are provided with instantaneous, precise and specific answers to our questions. We understand that this is what the modern customer, particularly millennials, wants.
There are however a multitude of other excellent benefits. Accuracy and quality are improved significantly, because we are able to rule out the potential for human error (which again enhances customer satisfaction and service). And let’s not forget that this all leads to cost savings. If you can increase accuracy and productivity by using AI, you can reallocate your workforce to higher value, more satisfying roles.
Some banks are already fully immersed in their AI journey, demonstrated by many of them building centers of excellence in AI. Meanwhile, others are still exploring the benefits, looking towards how they can accelerate delivery and identify what this tech can do, as well as what it can’t. Whatever the AI maturity, here are three important learnings:
Focus on business pain points. As with any new digital disruptor, it’s important to focus on what you want to achieve rather than just the tech. You can’t just build a team of AI experts, then ask them to deliver value. Instead, we need to begin with an in-depth understanding of the business and its pain points, such as, ‘I have a customer service issue here’. We can then use AI to solve the problem, proving the benefits of applying AI and subsequently helping to gain much more traction.
Manage expectations. We’ve got to be careful when managing internal expectations: AI is not about replacing a human brain
Integrate knowledge. Consolidating all intelligence in the same place within an organization, rather than spreading it across all facets is another crucial way to achieve success. Doing this accelerates the industrialization of AI, as knowledge will be capitalized and scope of use cases that it can be applied to will be expanded. AI is quickly running up the agenda for all banks as it has a simply huge effect on both operation and customer satisfaction, as well as offering a rapid return on investment.
AI technologies are presenting banks with opportunities to fundamentally improve the products and services they offer to customers. Despite this, many banks have only made a tentative progress towards incorporating AI into their operations. The truth is, for many banks these technologies remain experimental. Some banks may blame a lack of investment, fragmented data assets, or outmoded ways of working that obstruct collaboration between operational and technology teams. Despite the slow pace of change, to complete effectively in the future, banks will need to adopt AI technologies as the foundation for new value propositions and distinctive customer offerings.
As established banking providers increasingly find themselves competing with new entrants such as the big-tech firms – a trend that has only accelerated during the COVID-19 pandemic – these financial institutions need to be bold in embracing these new technologies and withstanding short term disruption. This will ensure they secure long term success in a future that is increasingly digital.