The Robots are coming: Artificial Intelligence in the financial industry
The financial sector is going through a period of rapid digital expansion. The use of artificial intelligence has already begun but the possibilities are endless. Martin Häring, chief marketing officer at Finastra spoke to RBI on the future of artificial intelligence in the financial industry.
Ready to fully embrace artificial intelligence?
The financial industry is built on processing data and information, meaning that it is an ideal industry to implement automation and harness AI technologies.
Häring explains that the industry is ready to embrace artificial intelligence in their business models. He says: “Yes definitely. The financial industry has massive amounts of user specific data. If you use it in the right way you can build a much better customer experience.
“Banks have invested heavily in analytics and tools for risk management following the financial crisis in 2008. Now and over the next two to three years the focus will be turning all the information into recommendation and action.
“Transactional data, personal data now merged with social data means you have almost everyone on a social platform. Combining all of those, as well as location based information gives the industry the perfect way to identify personalised services for consumers.
“So the next stage for banking is to turn information into recommendation and action, and that is done through artificial intelligence.”
Using artificial intelligence technologies will fundamentally change the way the financial industry think and operate in the future.
By leveraging AI technology, the financial industry can engage with consumers in a much faster and proactive manner. More institutions will use machine learning and cognitive computing to conduct analysis of trends and patterns in all areas of a consumers’ life.
Talking about the benefits for consumers, Häring states: “If you look at the German market, the opening hours are from 9am to 12noon and then from 2pm to 4pm. This makes it almost impossible for working people to visit a branch.
“The alternative is using the bank’s website. Customers can virtually do everything they would expect to do in a branch online. In the retail space a lot of companies are implementing chatbots and getting great results. Banks need to do the same thing. If the customer is happy they will stay with their bank.”
When harnessed, artificial intelligence enables the consumer to make faster and more cost-efficient decisions improving the overall customer experience. For the industry, it will become much easier to anticipate when consumers might be more receptive to new products, enabling organisations to offer more tailored services when the consumer demands them.
Role for robots
One key discussion that had been brought up at the Finastra event earlier in the week was how robots would be used. How much will they replace in the future?
Häring explains, that: “Robots will augment people – not replace them. They will automate repetitive jobs, for example in call centres,” chatbots and robots can respond to regularly asked questions, leaving humans to continue with the more complex tasks.
Artificial intelligence technology is constantly evolving. Biometric technology such as voice recognition enables robots to recognise what is being said, the tone of voice and can respond accurately.
Artificial intelligence comes with some risks. Implementing it is difficult and time-consuming. It relies heavily on personal data from consumers, so one of the biggest hurdles it has to overcome is getting the public to trust it enough to hand over more of their personal and financial data.
Häring emphasises the importance of trust. He says: “The key word is trust. For example when you visit Amazon, cookies show up that consumers accept. Those cookies mean that it knows you are returning and has learnt information about, providing it with the ability to offer similar services.
“When it comes to PSD2, it requires opening up certain API’s so you can expose new products and services to the outside world. However, only those vetted are allowed to access the data. What you see coming with PSD2 is very secure.
“No system is 100% secure. Similar to mobile banking adoption; in the end the consumer has to trust their bank to be implementing the correct security measures. What banks have to do is use artificial intelligence based on approval mechanism.”
If consumers don’t find value-add in artificial intelligence then the technology fails. To ensure its success, the financial industry must acknowledge that it has a responsibility to identify the risks and mitigate them quickly and securely.
It’s clear that artificial intelligence is sticking around so the question isn’t ‘whether artificial intelligence will transform the financial industry’ but rather ‘how will the financial industry respond to these changes?’ The robots are coming.