If money is the root of all evil, then what does that make machines.
Financial services are increasingly turning to machines to do the job humans have done for decades: handle money.
Artificial intelligence or machine learning has cut deep paths into several industries including the financial services sector. Many financial institutions are looking to AI not only to help improve customer experiences, but also to help reduce operating costs, optimize operational processes, and boost revenue. The journey to digital banking through AI implementation is not easy, but the time has here for organizations to invest in this technology and use it to leverage business growth.
According to Forbes, more than $4 billion has been committed to newly funded ventures focused on AI implementation in financial services. This massive amount of monetary investment is expected to surge as more companies aim to leverage this technology and embark on a digital transformation journey.
Room for Growth in Financial Institutions
Deloitte recently published a whitepaper titled AI and You: Perceptions of Artificial Intelligence from the EMEA Financial Services Industry in which it described artificial intelligence in three domains:
- Cognitive Automation: This domain is comprised of machine learning, robotics, and other natural language processing tools that are used to develop in-depth expertise and automate tasks related to it.
- Cognitive Insights: This domain focuses on extracting concepts and drawing relationships from various data streams to develop relevant answers. The answers are hidden in a huge mass of unstructured data.
- Cognitive Engagement: This domain consists of cognitive agents that have the power to unlock unstructured data and use the technology to engage with people.
According to EFMA, artificial intelligence has tremendous room to grow in retail financial services. Achieving this growth will allow companies to meet regulations more effectively and give them an opportunity to deliver exceptional customer service.
Since the financial services sector has a large volume of data, companies have made a head start in the application of artificial intelligence. This allows them to work with various sets of analytical tools across functions like day-to-day banking operations and payment services. Banking technology empowers institutions to use AI algorithms to enhance more personal customer service. This encourages customers to share personal insights with banks so data can be extracted and the experience customized.
AI Benefits for Financial Institutions
By leveraging artificial intelligence, machine learning, and natural learning processes, banks and other financial institutions can create AI applications that will help in:
- Meeting regulations
- Cutting costs and improve the bottom line
- Detecting fraudulent activities and taking immediate action
- Enhancing customer experience
- Boosting customer engagement
According to a recent report by Accenture, more than 78% of bankers believe artificial intelligence is needed to create simpler user interfaces to help banks create more human-like customer experiences.
Of course, with every change there are challenges nearby. With all the hustle and bustle around implementing the right AI application, there are several challenges in this process. One of the major challenges that organizations face is finding the right skill set to do the job. Another challenge is general acceptance. Some people believe artificial intelligence will take away jobs as it will make human activities obsolete or redundant. However, there is still a majority (around 92% according to a survey done by Efma/Deloitte) that believe this new cognitive technology will increase hiring rather than replace human jobs.
While some organizations are striving to put these technologies in place and build a more cohesive and productive workplace, we are still a long way from fearing for our favorite bank teller’s job. For now, AI will quietly and slowly transform the way we bank so that it becomes natural for us to recognize it and for it to recognize us.