Artificial Intelligence and the Financial Services Industry
From high tech to healthcare to finance, artificial intelligence—the ability for machines to interact and learn to do tasks previously performed by humans—is having a significant impact on the way businesses operate, solve problems, and communicate with customers. The financial services industry, perhaps more than any other sector, is poised to undergo a major transformational shift by adopting intelligent technology.
According to the 2017 Digital Banking Report, 23 percent of financial services firms surveyed expected to use artificial intelligence (AI) functionality within the next 18 months. Similarly, Accenture’s Banking Technology Vision 2017 found that 76 percent of bankers believed that, within three years, banks would deploy AI as their primary customer engagement method; and 79 percent believed that AI would revolutionize the way banks gather information and interact with customers. Currently, these statistics are playing out as predicted.
Taking Customer Service to the Next Level
Intelligent technology used by innovators like Amazon, Apple, Facebook, and Google have led the way, conditioning consumers to expect businesses in all industries to know what their customers want, anticipate what they need, and reward their loyalty through personalized, instantaneous communication. Now, banks and credit unions are also reaping the benefits of AI by implementing customer-friendly features like chatbots and virtual assistants - allowing for instant engagement with consumers. According to TechEmergence research, conversational interfaces like these are inspiring “enthusiasm and excitement in the banking world.”
Indeed, in recent years the largest of domestic megabanks have all debuted virtual assistance or chatbot technology to communicate more effectively with customers or employees. Specifically, Bank of America provides financial guidance via chatbot to its more than 45 million customers; Wells Fargo, which has used social media to communicate with customers since 2009, is piloting a chatbot through Facebook Messenger; and JP Morgan Chase uses a chatbot to more efficiently address nearly two million employee service desk requests each year. With the ability to communicate instantly, it’s no wonder that customers are turning to smartphone and web chat banking apps to ask questions or resolve financial services issues.
Looking Beyond Customer Engagement
While enhanced customer service experiences may be a primary reason why banks and credit unions are turning to AI, the benefits of adopting intelligent technology extend beyond consumer engagement. Other areas where AI has proven impactful include regulation compliance, risk management, and fraud prevention. For example, with artificial technology, banks and credit unions can detect fraudulent behavior as it’s happening, as well as prevent fraud and money- laundering activities by monitoring patterns of suspicious behavior. These technologies, combined with other high-tech capabilities including automated analysis, authentication, biometric technology, and algorithmic trading, are helping financial institutions leap past the competition.
The Pros (and Cons) of AI
Whether the use of AI will ultimately have positive or negative effects remains a controversial subject across industries. While some experts believe it’s the wave of the future, others predict that the advance of automation will decimate
workforces. Likely, the truth lies somewhere in between. It stands to reason, however, that when human and artificial intelligence are used together, businesses will be able to accomplish more.
A primary source of concern around AI has to do with talent. The core fear is that robots or machines will replace people in companies around the world, forcing massive job cuts. While some jobs seem certain to disappear (in banking,
machines would likely replace highly repetitive front office positions such as bank tellers, front-line customer service reps, loan interviewers and clerks), AI adoption also has the potential to increase jobs within industries.
Results of a recent study by Deloitte found that, while 55 percent of respondents said they had an AI leader within their company, in most cases external hires with AI expertise will be required. Additionally, research finds that companies effectively using AI are likely to see a 14 percent increase in jobs as well as a 34 percent increase in revenues by 2022.
Interestingly, Accenture found bank employees to be more positive about the impact of AI on jobs than their counterparts in other industries. In fact, most workers feel confident they’ll be able to work with intelligent technologies, expect AI to create new opportunities for them, and believe AI will improve their work, productivity, and work/life balance.
Financial services executives are also feeling optimistic about using AI and its impact on workforces. Compared to leaders in other industries, Accenture found that bankers have a greater expectation that intelligent technologies will transform their industry, improve productivity, and result in a net gain in jobs.
“AI technology allows us to take an experience that would have required our customers to navigate through several pages on our website, and turn it into a simple conversation in a chat environment. That’s a huge time-saving convenience for busy customers.” Steve Ellis, head of Wells Fargo’s, Innovation Group
What We Offer
In a field where both technology and opinions are moving at the speed of light, it’s understandable that smaller banks and credit unions may hesitate to adopt tools and techniques as complex as AI. Yet, the longer an organization waits to adopt, the faster technology—and a bank’s competitors—will move ahead.
Strategic Resource Management (SRM) has more than 25 years of experience helping banks and credit unions navigate the rapidly changing financial services environment. In the area of AI, SRM helps to implement machine-learning automation options such as Robotic Process Automation and Contract/Vendor Management Automation:
- Robotic Process Automation helps improve customer service by addressing low-priority service requests, expediting card issuance from application to delivery, and reducing the closing process for mortgages.
- Contract/Vendor Management Automation helps banks and credit unions automate contract and vendor management, freeing employees to focus on tasks that need human intervention. Our cloud-based software service, SRM TAB, automates processes such as tracking contracts, auditing invoices, and comparing contract pricing to current benchmarks.
Billions of Ways We Can Help You
As an independent professional services firm, SRM has helped more than 700 financial institutions realize $2.2+ billion in value by providing assistance with critical areas. In addition to machine-learning automation, our decades of expertise covers a wide area of needs including situational assessments, strategy development, gap analysis, implementation roadmaps, vendor evaluation, vendor selection, and contract negotiations.