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Below Russell Bennett, Chief Technology Officer at Fraedom, discusses the future prospects for AI in the banking sector, and what 2019 may hold.

AI is incredibly complex and doesn’t represent a single technology. Rather, it’s a multidimensional field encompassing a range of different technologies and methods, each supporting and supported by the others[1]. The technology’s pace of evolution has grown exponentially in recent years and if AI’s benefits and limitations are understood, it’s believed this technology will have a tremendous impact on the banking industry in 2019.

With so much potential ready to be unleashed, where exactly will we see AI’s influence in the banking sector in 2019?

Chatbots and Virtual Assistants

While chatbots have been used by financial institutions for several years, thanks to advances in AI their capabilities have continued to grow. Whereas they were once only used to answer generic FAQs, for example, most chatbots are now capable of initiating and performing tasks on their own. Thanks to these developments, Juniper estimates that the introduction of chatbots and virtual assistants will save companies $8 billion per year by 2022[2]. This is set to be only one of the benefits to banks with Gartner suggesting that by 2020 consumers will manage 85% of their total business interactions with banks through fintech chatbots[3].

Juniper estimates that the introduction of chatbots and virtual assistants will save companies $8 billion per year by 2022

While this could be a source of worry for the banking workforce, in reality, there should be little concern. Rather than acting as a replacement for employees, banks instead seem to be looking at AI as a tool to help release pressure points and empower the workforce with Accenture even predicting that banks that deploy AI wisely will see a 14% increase in jobs[4].

In 2016, Santander became the first UK bank to launch voice banking technology[5]. Of course, since then a large variety of global banks have adopted this technology in one way or another, suggesting that banks are looking at utilising AI beyond chatbots. In fact, with Mariano Belinsky, managing partner of Santander InnoVenture, discussing natural language processing[6], it seems to only be a matter of time before virtual assistants come into use.

Driving Customer Insights

Last year, we saw a clear disconnect between banks and their smaller customers. In these situations, intelligent automation could well be the answer to support businesses and provide a better service as well as working seamlessly with third parties and fintechs, rather than against them.

In our recent study of SMEs in the UK and US, we found that less than 20% of SME owners thought that banks they had dealt with over the past year fully understood their needs as a business, demonstrating a clear lack of engagement. In 2019, using automated data collection on an ongoing basis, behind the scenes, can ultimately ensure bank relationship managers are better equipped with in-depth knowledge about their customers; hence best positioned to support their business and provide a better service.

Less than 20% of SME owners thought that banks they had dealt with over the past year fully understood their needs as a business.

Security and Compliance

One of the key differences between AI applications and other, more traditional technological solutions, lies in AI’s ability to continuously learn from the data it is supplied with, hence refining its decision-making processes over time.

Cybersecurity is a current hot topic for the financial services sector and regulatory compliance is another. AI can add real value in both of these areas. Machine Learning platforms can be coded to identify user patterns and detect anomalous network behaviour, something that’s increasingly essential as cyber-attacks are often disguised with inconspicuous data or code.

In recent years, technology has been a disruptor and an innovator. Technology is increasingly helping shape customers’ wants, needs and expectations. With a raft of new regulation encouraging the use of technology in banking, there’s nowhere left for anyone to hide. The technology revolution is in full swing and for banks, it’s very much adapt or die.

In the very near future, it is likely that AI will completely revolutionise banking. It will redefine how banks operate, what innovative products and services they create and how they evolve the customer relationship. Banks must, therefore, embrace this new technology or risk of falling behind in an extremely competitive environment.


[1] https://www.accenture.com/t00010101T000000Z__w__/gb-en/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Local/en-gb/PDF_3/Accenture-Redefining-Capital-Markets-with-Artificial-Intelligence-UKI.pdf

[2] https://www.juniperresearch.com/press/press-releases/chatbots-a-game-changer-for-banking-healthcare

[3] https://www.gartner.com/imagesrv/summits/docs/na/customer-360/C360_2011_brochure_FINAL.pdf

[4] https://www.accenture.com/gb-en/insights/banking/future-workforce-banking-survey

[5] https://www.santander.co.uk/uk/infodetail?p_p_id=W000_hidden_WAR_W000_hiddenportlet&p_p_lifecycle=1&p_p_state=normal&p_p_mode=view&p_p_col_id=column-2&p_p_col_pos=1&p_p_col_count=3&_W000_hidden_WAR_W000_hiddenportlet_javax.portlet.action=hiddenAction&_W000_hidden_WAR_W000_hiddenportlet_base.portlet.view=ILBDInitialView&_W000_hidden_WAR_W000_hiddenportlet_cid=1324582275873&_W000_hidden_WAR_W000_hiddenportlet_tipo=SANContent

[6] https://www.americanbanker.com/news/what-santanders-latest-bets-say-about-the-future-of-fintech

Almost three in every five (57%) SME business owners say that they do not feel confident about the UK’s economic outlook for 2017, according to the Close Brothers Business Barometer. The quarterly survey questions over 900 UK SME owners and senior management across a range of sectors and regions.

Firms at the smaller end of the scale – under £500k annual turnover – were the least confident, with 64% answering ‘no’ to the question ‘are you confident about the UK’s economic outlook for 2017?’.

“Businesses owners are not taking a negative view, but they are being pragmatic about the UK’s economic prospects over the next 12 months,” said Neil Davies, CEO, Close Brothers Asset Finance. “There are still many unknowns and this uncertainty is reflected in what small business owners are telling us.

“For example, the value of Sterling is seen as a short-term issue and doesn’t create conditions for long-term investment. While activity in a number of sectors is stronger due to the weaker pound, helping to boost orders from overseas, cost pressures remain high with price increases being passed onto consumers, which may contribute to an increase in inflation down the road.”

Regional analysis

Business owners in the North East and Northwest of England were the most positive, with 56% and 54%, respectively, feeling positive about the year ahead, contrasting with the 36% of Scottish respondents.

Full list of regional responses to ‘are you confident about the UK’s economic outlook for 2017?’:

  Yes No
North East England 56% 44%
North West England 54% 46%
West Midlands 49% 51%
East Midlands 49% 51%
Wales 45% 55%
Yorkshire/Humberside 45% 55%
South West England 45% 55%
Greater London 45% 55%
South East England 43% 57%
East Anglia 39% 61%
Scotland 36% 64%

Sector results

The most enthusiastic sector was Manufacturing, which returned a positive response of 61%, followed by Engineering with 52%; Construction 49%; Transport 47%, and Print 37%.

“UK manufacturing in on a high at the moment, with recent rates of growth for production and new orders among the best seen over the past two-and-a-half years, according to the Markit/CIPS purchasing managers' index,” continued Neil.

“And this uplift in the manufacturing sector is reflected in what the survey respondents are telling us, which is that they see 2017 as a time of significant potential opportunity.”

(Source: Close Brothers Asset Finance)

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