How Will the Use of AI in Banking Develop in 2019?
The use of artificial intelligence (AI) in the banking sector is nothing new and we have seen it implemented across a range of areas within financial institutions, such as credit risk management, risk and finance reporting, trading floors, customer relationships and of course, security.
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. 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. 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.
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.
In 2016, Santander became the first UK bank to launch voice banking technology. 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, 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.