Here are my reflections on Artificial Intelligence in financial services based on a panel discussion at the Innovate Finance Global Summit 2019, a leading FinTech conference.
AI is powerful and disruptive
Artificial intelligence (AI) is disrupting many industries. To give you an idea of the scale of disruption taking place, on Facebook alone, a total of 17 million new business cases have been created to-date using AI with around 35,000 new business cases generated every single day!
But FS firms have been slow to adopt AI
FS organisations across the globe are facing unprecedented challenges with many European banks not making their cost of capital. For this reason, it is imperative that banks and FS providers should more fully exploit the benefits of AI. However, although FS institutions have generally been leaders in implementing new technologies, when it comes to adopting artificial intelligence they have been a touch slow.
What should FS firms do?
Given this context, it is important to understand the implications of AI in the FS industry? How are big incumbent FS firms handling it?
Most importantly, as one panellist said, “AI can help organisations find the right customers at scale.” However, it’s broader than that: AI can be used everywhere in the organisation be it back-office, front-office, middle-office, and even in risk and compliance.
To focus their efforts, FS institutions should look to unlock the real value of AI across five core dimensions:
- Higher growth
- Increased customer numbers
- Increased profits
- Reduced costs
- Better understanding of customers
This is beginning to happen
To-date the industry has seen some powerful uses cases of AI that point to its future direction:
- JPMorgan is using robots to execute trades and trials have shown that AI is can be more efficient than traditional methods of buying and selling
- UBS has teamed up with Amazon to let its customers ask Alexa financial questions, the service, known as “Ask Alexa”, is literally turning Alexa into a financial adviser
- Chatbots for personalised customer experience are emerging, for instance, UK-based car insurer First Car Quote uses messenger bots to generate quotes and this has increased quotes by 30% on traditional methods
- Allianz has created a frictionless service for customer acquisition – this uses AI to have basic conversations with customers, generating new quotes in 30 seconds
And the potential pitfalls?
Although there are benefits of using AI, the technology also has underlying challenges and uncertainties associated with data privacy, ethics and job losses. These are the source of debate. One complicating factor is that attitudes towards the issue of AI ethics vary greatly by country. Some argue that self-regulation is the way forward. Furthermore, when it comes to job losses, opinion is divided. Will it be just mundane tasks that are eliminated, leaving people with more time for high-value critical tasks, as the panel believed, or more sweeping change?
In a nutshell, AI helps build fast, convenient and personal experiences for customers and the FS industry should not shy away from adopting this powerful technology.