How Artificial Intelligence is revolutionizing the financial services industry

Photo by Chris Li on Unsplash

The vast potential of Artificial Intelligence (AI) is currently rippling across almost every business sector.

AI is not a new technology, but recent advancements in the industry have allowed it to be deployed to greater effect than ever before, working its way into mainstream usage and homes around the world. From shopping, to banking, to turning on the lights in your house, it’s already powering even the most day-to-day operations for millions of people.

Take AI-powered voice assistants, for example. When you consider that Amazon sold 3.3 million Echo devices as part of their Prime day promotion in July, you can see why some of the world’s biggest companies are keen to get a piece of the pie. With the likes of Facebook, Google, Microsoft and Baidu investing billions in AI applications, the technology is set to have an impact on nearly every industry sector and niche.

One area where AI is already making big waves is in financial services. In an industry where delivering great service is all about speed, flexibility and accuracy, AI is able to help companies do all three better than ever.

For customers, it’s all about simplicity

Both businesses and customers want AI to happen. While, for companies, it’s all about delivering better services more efficiently to their customers, enabling financial firms to stand out in a competitive marketplace; for customers, it’s all being ease and simplicity. They want to be able to access the products and services they need – the moment they need them, wherever they are, in whatever way best suits their circumstances at that particular moment.

In other words, they want it to be easy – and AI offers the potential to make it easier than possible. AI can power a simple interface that lets customers cut through all the data and choice to find what they want quickly. Whether that’s personal banking, retirement planning, investments or securing the best loan, AI is able to take what it knows about the customer, collect data from various sources and deliver simple answers. Up until now, that needed human advisors, which, in turn, meant human error and indecisiveness.

The good news is, unlike other technologies or its ‘rise of the machines’ style Hollywood representations , AI is not something customers fear. A study by Accenture shows that most customers want to embrace AI. That said, the report favored a ‘hybrid’ approach – one that also included some form of human contact, certainly in this early era of AI development.

For business, it’s all about service

Financial Service Providers (FSPs) have been quick to realize the advantages to be gained from AI too. Many are already forecasting that AI will become the primary point of interaction with customers in the near future.

But it’s those who understand the importance of customizing the technology to work most effectively for their business model that will reap the biggest benefits. This will give the most forward-thinking companies a real weapon when it comes to beating their rivals and winning business in a competitive marketplace. Essentially, that all comes down to using AI to deliver a superior customer experience.

In practice, AI can be used to:

  • Personalize and enhance the quality of customer service
  • Improve the delivery of service
  • Introduce new flexibilities
  • Accelerate the sales process
  • Promote faster decision making at both business and user-end
  • Reduce costs
  • Innovate and create new products and services
  • Win new customers

Of course, where there’s money, there’s also theft and fraud. Here, AI has enormous potential in preventing both through learning the mechanisms by which financial crimes occur and how to prevent them.

Turning words into actions

Securing these competitive advantages hinges on how companies use AI to improve their offerings. The low lying fruit is already being harvested by leading financial firms. Capital One, for example, is servicing customers via Amazon’s Alexa, Wells Fargo is planning on testing an AI-driven chatbot through Facebook Messenger, and Bank of America is planning to use a virtual assistant, known as Erica, in its mobile app.

Clearly, there’s a lot AI can do, but finding out what works best is more problematic. Fortunately, AI can help there too. For example, Sentient Ascend uses evolutionary algorithms to test which business ideas work best. The software learns, adapts and reacts to reveal the best performing concepts, scenarios and parameters.

AI – Made for finance

FSPs are already at an advantage when it comes to AI applications. Due to the nature of the business, these firms already hold large amounts of data on their customers and possess a wealth of experience in using analytical tools to leverage that data for insights. Indeed, the data departments of many of those firms probably contain the basis of a decent AI development team.

But it’s getting those teams up and running to embrace and innovate all AI has to offer that’s the biggest challenge. Those who are first will reap the rewards setting the standards that other companies will have to copy to keep up. The next five years will be critical. This will be when the big developments are made – ones that help FSPs strengthen their partnerships with existing customers and forge relationships with new ones. That will determine who the big players will be in future.