For the financial services sector, AI is proving to be a significant enabler of change. It’s enabling companies to get closer again to customers, but in new ways. With consumers demanding a more personalised service that addresses their specific needs, the ability of AI to trawl vast amounts of data and identify behaviour patterns could help the service provider and customer move towards greater alignment.
The impact of AI in finance is well recognised as part of what is termed the ‘fintech’ revolution. That is the application of state-of-the-art technologies in the financial services industry. In the first fintech wave, the focus was on the use of smartphones to make transactions with ease and the creation of sophisticated digital trading platforms. The second wave is being led by AI.
Digitisation has created a huge mountain of data from which AI tools can learn. These AI powered systems apply advanced analytical techniques and machine learning models, improving as they process more information. IBM is at the forefront of supporting the adoption of AI into the sector:
“We’re using AI to help our financial services clients become more efficient and responsive. And we’re looking at how to offer different experiences for their customers and colleagues,” explains Michael Conway, Senior Partner, UK Banking and Fintech Industry Leader, IBM.
Michael makes a comparison to today’s customer experience to a time when a local butcher, or bank branch manager, would have known your name as you walked through the door. The butcher might have been aware you were having friends round that weekend and prepared your order already. Such was the pre-digital retail experience for many people. While it’s not possible to exactly replicate those bygone days, consenting customers can experience digitally enhanced personalisation through the smart use of AI. In today’s fast-moving world, where consumers have many claims on their time, this will be very welcome.
For any financial company positioning themselves as a credible fintech player, they need to be embracing and understanding emerging technologies like AI, says Sebastian Weir, AI, Analytics and Automation Services Leader at IBM. But at the same time, Weir adds, AI needs to be deployed in a way that respects the heritage of a high street banking brand, as well as the privacy of consumers, while complying with governance and oversight regulations.
“There’s a really nice correlation between the ambition of the organisation in terms of how we consider and treat AI as a capability, but equally how we’re using it to disrupt and challenge the ways a bank operates,” Weir adds. AI could be key to both future proofing financial services companies and seeing off competitors, while retaining customer loyalty and staying on the right side of regulations.
That loyalty could dictate the success of any company in the sector. Customers are demanding seamless digital banking experiences, apps that anticipate their needs, and the ability to interact rapidly with real people or virtual assistants, depending on the complexity of the issue. Those companies addressing these issues will ride the next wave of financial innovation.
Michael emphasises this personalisation aspect that is making services more individualised. “So, if a customer is having twins soon, AI can help advise on how to save up for that significant life event.” As well as aiding the human staff giving the advice, this also makes the financial services company more useful to customers who, in turn, display more loyalty. Sebastian makes the point that this technology can also break down barriers to financial literacy, explaining more complex products in easy-to-understand terms, in areas like pensions and investments.
An AI agent can also assist in decision-making: helping to guide a client through a loan application process before submitting it for review, for instance, or supporting human financial service providers to verify documents, run credit checks, and flag up any compliance issues. The new generation of AI can adapt to the data it’s absorbing and, in accordance with regulations and human oversight, make decisions in real time.
Internally, AI is changing the way in which financial services companies operate. Human call centres are increasingly supported by virtual call assistants. Michael says that while IBM enabled this, the human experience was surveyed to inform the future application of AI. “We talked to call centre staff about what exactly clients want when they get in touch.”
For banking staff, there is a potentially rewarding shift from routine tasks and repeatedly asking mundane questions, to becoming AI builders. This opens the opportunity for people to think more strategically and get a more rewarding experience from work. The application of AI is also helping staff to identify customers who are bad actors or simply fraudulent. By processing huge stores of data, it can home in on and highlight irregular activity for review, potentially saving the bank money, and its customers from distress.
Working with IBM, the sector can develop a strategic approach to the use of AI that will drive operational efficiency, reduce risk, improve internal education, and give consenting customers a more personalised experience. Those embracing AI to the fullest will be best positioned to thrive.
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