Logo Header Menu

The beginning of the road for AI in finance, the best is yet to come

AI is one of several technologies that are disrupting the finance and banking industry. But, the potential of AI in finance is just beginning The beginning of the road for AI in finance, the best is yet to come image

AI is just one of several technologies that banks and other financial institutions are using to improve internal processes and bring new experiences to their customers. This is borne out of necessity: if traditional industries don’t embrace advanced technologies in the right use cases there is a real chance of disruption. Why would HSBC, for example, let a challenger like Starling Bank out-innovate them?

Both the large and emerging players in the finance industry are opening their arms to AI. AI-based chatbots, for example, are increasingly be used as the first point of contact for customers. This point was reiterated by HSBC’s AI programme manager, Sebastian Wilson, during a recent roundtable hosted by Information Age — big banks are not standing still, because they realise the incredible level of service and personalisation that can be achieved when technology is used in the right way. It’s easier for the disruptors, they don’t have data silos and they’re largely based in the cloud, but the incumbents have resource.

Artificial intelligence: how it’s transforming financial services today

As customers and employees demand better and faster ways to engage, organisations are turning to digital technology to help them transform, remain competitive and grow. Read here

AI targeting

“Banks are also using AI to develop and target specific customer groups with highly personalised rates, offers, and pricing,” according to Jonathan Shawcross, managing director of Banking at Gobeyond Partners.

“Targeting key life events (such as buying a house) is nothing new in financial services. However, AI can improve the simplicity, speed, and precision of this marketing. In turn data generated is then used by the technology to ‘learn’; further improving targeting and consequently deepening customer relationships over time.”

The best is yet to come

There is no doubt that the finance industry is in the midst of a transformation, largely because of advances in technology and the increased competition between the Davids and Goliaths of the world. But, there is a real sense that best is yet to come — “the truly transformational applications of AI is still very much ahead of us,” believes Shawcross. “We should expect to see large financial institutions really beginning to deploy highly intelligent, fast learning systems to reduce friction in both sales and service experiences.”

Kam Dhillon, principal associate at Gowling WLG, agrees that while there is greater innovation in the financial markets, “the use of AI in finance is currently nascent”.

AI in finance is on the map

The CTOs and technology leaders of financial institutions do not have their heads in the sand. They know how important AI will be to their organisation’s business model moving forward. In one way this is represented by the emerging job functions at both the large incumbents and the smaller disruptors. Lloyds Banking Group has a head of robotics, automation and AI operations, and Starling Bank has a head of AI. In every business in the finance sector, no matter the size, there will be growing teams dedicated to AI and related technologies.

“AI has enormous potential to redefine how financial services firms work, how they create products and services and how they transform customer experiences” — Shawcross

AI in finance will grow in importance as it represents a significant opportunity to improve the online customer experience; less effort, more personal and faster resolutions. The technology is also able to leverage the huge amounts of customer data that is stored in the finance sector, which now thanks to PSD2 and Open Banking will be able to shared between third parties, to customise marketing messages and in turn, enhance sales hit rates.

On the other side of profit and loss, Shawcross says that “AI also represents an opportunity to cut costs and reduce risks. Given interest margins show no sign of improving in the short term, CTOs remain under huge pressure to reduce costs. On the cost side, robotics can be used successfully to automate low complexity processes. Whilst, on the risk side, AI can help financial institutions reduce fraud and money laundering risks through pattern detection, voice and image recognition.”

There is certainly a cost and risk benefit to adopting AI, but at the same time there are also risks presented by the technology, “on a practical, ethical, legal and reputational level,” according to Dhillon. “AI is complex and multifaceted and must be managed effectively. Subsequently, it is crucial that firms fully understand the technology used in AI and the governance around it,” she explains.

The AI ethical play is a conversation that needs more visibility as the technology pervades every industry, not just finance. After all, without trust there is no innovation.

Preventing unethical use of AI in corporate finance transactions

Solutions exist to prevent the unethical use of AI in corporate finance transactions, according to Drooms — the secure cloud solutions provider. Read here

Implementing AI

Shawcross advises organisations to invest time into understanding how to seamlessly integrate robotic and human processes. “Firms,” he says, “must be mindful of when robots should hand over to humans, for instance when discretion or decisions are required or during more complex processes.”

The big fear, as robots take over simpler processes and tasks, is that employees will be made redundant. As the technology advances and becomes more capable, organisations — now — need to think about how to upskill their people alongside this acceleration.

“The automotive industry is a great example and one that financial services firms could take inspiration from,” suggests Shawcross. “By using this model they can help their teams become skilled technicians who oversee the work of robots, intervening when issues arise rather than performing the tasks themselves. This human transformation requires CTOs to work closely with their business and HR counterparts early in their planning cycle to enhance chances of success.”


Related articles

The financial services industry is not ready for the AI revolution, new study finds

Global business value of AI in banking forecast to reach $300bn by 2030

Should financial experts fear the rise of artificial intelligence?

Artificial intelligence will enable banks to increase customer loyalty

AI predictions: how AI is transforming five key industries


Latest news

divider
M&A
Global software sector has seen a surge in M&A deals

Global software sector has seen a surge in M&A deals

6 December 2019 / The volume of M&A deals in the global software sector has soared to its highest [...]

divider
Releases & Updates
BP to move data to AWS, closing European data centres

BP to move data to AWS, closing European data centres

5 December 2019 / This move by BP, which involves closure of their two Europe-based mega centres, was made [...]

divider
Cloud & Edge Computing
AWS and Verizon partner to deliver 5G edge solutions

AWS and Verizon partner to deliver 5G edge solutions

4 December 2019 / In what’s been touted as a world-first, the solution is set to be deployed on [...]

divider
Telecoms
More than mobile: how rapidly diversifying telcos can avoid critical overload and downtime

More than mobile: how rapidly diversifying telcos can avoid critical overload and downtime

4 December 2019 / How can telcos avoid downtime? As industry rivals go, telecoms businesses are among the fiercest [...]

divider
Digital Transformation
How are ASEAN countries leading the digital transformation wave

How are ASEAN countries leading the digital transformation wave

4 December 2019 / Association of Southeast Asian Nations (ASEAN) has one of the most robust economies in Asia. [...]

divider
Automation
Top five automation challenges in 2020, according to Forrester analyst

Top five automation challenges in 2020, according to Forrester analyst

4 December 2019 / Every enterprise is automating. That’s not the story. The challenge most CTOs face is that [...]

divider
Cybersecurity
10 ways businesses can protect customer data

10 ways businesses can protect customer data

3 December 2019 / The Information Commissioners Office (ICO) has warned organisations that they should be doing everything they [...]

divider
AI & Machine Learning
AI and the future of design

AI and the future of design

2 December 2019 / The design industry is yet another area where AI is making huge strides. Just recently, [...]

divider
Diversity
Women in IT Awards New York 2020: Nominations Open!

Women in IT Awards New York 2020: Nominations Open!

2 December 2019 / Taking place at the Grand Hyatt, this will be the third annual iteration of New [...]

Do NOT follow this link or you will be banned from the site!

Pin It on Pinterest