Natalia Francois - 29 September 2020
The use of Artificial Intelligence in Financial Services is no longer just a buzzword, it has become an evident necessity. Recent research conducted by an analytical company the Economist Intelligence Unit, demonstrates that up to 45 percent of banks are looking to shift to a fully digital management model and integrate their own IT systems with third-party solutions. AI-based technologies that will facilitate a swifter information exchange with customers are the driving force of banking into the future and it appears to be beyond dispute.
Real-time tasks outside of a human’s remit
Banks continue to experiment with artificial intelligence-based technologies. However, the use of AI in financial services may usher in benefits from tangential areas identified below.
- Fight against fraud. With cybercrime on the rise, AI algorithms can validate credit card transactions in real time and compare them to historical transactions and their locations. Any potential risks identified can cause the transaction to be blocked from going through.
- Identity check. The algorithms can scan documents and assess the credibility of information provided based on data available online. Any inconsistencies will raise a red flag and trigger a more in-depth analysis.
- Geopolitical events prediction. AI and machine learning tools also enable the determination of geopolitical risk and predict its impact on financial markets. By analyzing real-time data from the news, social media and other sources, algorithms can paint a picture of any country's political risk profile.
The verdict so far
The general assessment of implementations made to date has been positive: lower costs, higher efficiency, fewer errors. But above all, financial institutions recognize the impact that the customer experience they deliver has on their business, and thus focus on how AI is going to affect it in the long run.
It appears that as long as the experience created involves no apparent artificiality, the customer is less likely to be dissatisfied with an algorithm handling their case. The quickest possible improvement to the customer experience is the aim of any given implementation and this is precisely where the real potential of AI lies.
Artificial Intelligence is merely an instrument in a symphony that banking customers want to bask in the sounds of. For instance, thanks to its use, the processing time of certain types of complaints at a large European bank has been reduced from two days to only two hours, bringing a very quantifiable benefit.
Are jobs at risk?
Naturally, financial institutions avoid indicating whether or not a wider use of AI is going to result in workforce reductions. It is no secret that new technologies trigger changes in the demand for work in individual areas. The needs in traditional banking are decreasing, and they are growing in technological areas, thus - the requirement for employees to adapt their qualifications are an outcome to be expected.
Organizational transformations also necessitate recruiting employees with a narrow range of specializations, e.g. data scientists or big data experts. Therefore, being less skilled or productive than a robot is not necessarily going to be the reason for an employee’s job loss. It is the inability to find one's place in the market or to adapt in the era of an increasing share of automatic solutions in financial services that constitute threats.
In order to avoid this, banks as both the users and implementers of these innovations must maintain awareness of the direction technology is headed in, and employees themselves must adapt their skills to changing requirements.
By interpreting human behavior, observing it and often imitating it, digital technologies are a promise of a tremendously fascinating future. However, this is only one of the dimensions of digital transformation. We must not forget about the threats and challenges that banks have to consider if they want to have a say in their own future.
To find out more about the use of AI in finance and to learn about the way Eggplant supports financial organizations in digital transformation, helping them create excellent customer experiences with AI-based technology, click here.