Change in banking and finance due to AI and Bots
Disruption in Banking and Finance
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AI and bots disrupting banking and finance industries
Artificial Intelligence is expected to permanently change the banking industry in profound ways during the coming months and years. Companies want to seek a competitive edge by implementing more technology to achieve improvements in speed, cost, accuracy and efficiency.
Autonomous Next reports that there are three primary ways in which artificial intelligence will trans form the banking industry:
- AI technology companies, such as Google and Amazon, will add financial services skills to their smart home assistants then leverage this data and interface relationships with traditional banking providers.
- Technology and finance firms will merge and collaborate to build full psychographic profiles of consumers across social, commercial personal and financial data.
- Lastly, the crypto community will build decentralized, autonomous organizations using open-source components with the goal of shifting the power back to consumers.
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Although all of those are valuable points, we focused more on the ins and outs of those statement s as well as how it will disrupt and trans form the office and not only the consumers.
Chatbots
"WE WANT TO BE THERE FOR CUSTOMERS IN THE MOMENTS THAT MATTER MOST", Thong Nguyen, President of Retail Banking, Bank of America.
Wanting to seek a competitive edge by implementing more technology to achieve improvements in speed, cost, accuracy and efficiency banks and financial companies are adopting chat bots – so much so that chat bots are now considered an industry standard. Chat bots appear to be the beginning of AI for companies, using it mainly for customer service purposes through mobile apps and the web as virtual assistants. Bank of America’s assistant, Erica, has made a path for the company to continue record-breaking growth.
“We want to be there for customers in the moments that matter most. Incorporating artificial intelligence into our mobile banking offering will help customers manager their simple banking need more efficiently and consistently, which then allows our specialists in our financial centre to spend more time with customers to understand their more complex needs and help them improve their financial lives,”
-Thong Nguyen, President of Retail Banking for Bank of America
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The bots increase customer engagement in various ways. Customers are more likely to ask for help to a bot than a human because of fear of judgement and embarrassment. Recommendations don’t seem as forced when reading it across the screen, opposed to listening to a sales pitch on the phone. It’s also a big money saver – it’s cheaper to develop and maintain.
Implementing chat bots also puts the focus on the customer and their needs. It allows customers to choose if they want to physically visit a branch for assistance or get all of the help they need via their mobile device or on the internet.
“AI technology allows us to take an experience that would have required our customers to navigate through several pages on our website and turn it into a simple conversation in a chat environment. That’s a huge time-saving convenience for busy customers who are already frequent users of messenger,”
-Steve Ellis, head of Wells Fargo Innovation Groups, on communicating with consumers via Facebook messenger.
According to the Autonomous Next Report, millennial consumers are more comfortable using AI to contact their bank or credit union without having a conversation with an actual human than are the later generations. Only 12 percent of millennials prefer using a phone and all others turn to chat, social media or text channels.
When it comes to investing in bots, or robot-advisors, they are said to be better when advising someone on a decision to make. Robo-advisors collect information about investor’s financial goals and level of risk they’re willing to incur, then the data is put into algorithms. Results are used to offer advice to an individual without human error or any conflicts of interest. Robo-advisors ensure regulatory compliance as well as significantly lower the cost of the asset manager.
Chat bots are said to outsmart the competition – but if the competition is also adopting AI, are you really outsmarting them?
AI and security
AI is helping banks in a big way – it’ s being used for security measures since laundering is a persistent problem in the global banking industry. It’ s being used for detecting fraud and manage risk.
Artificial intelligence can detect fraud before it happens, alerting banks to be on watch and giving them a percentage that depict s the likelihood of a card ever becoming compromised. Banks and card providers now only have to replace cards that are likely to experience fraudulent activity and not every card that’ s involved in each breach. In turn it saves money on card reissuance fees and prevents customers from abandoning or closing accounts, as it’ s strongly correlated with the number of times customers’ cards are replaced.
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It’ s been reported that consumers are only comfortable with AI in the banking sector when it has to do with monitoring threat s of fraud, according to the Autonomous Next Report. AI is least popular when it’s used for analysing a customer’s credit history.
Another way that AI helps banks with security is how it can perform with regulatory compliance.
Artificial intelligence can learn, remember and comply with all applicable laws, eliminated human error and can easily detect patterns used to spot illegal activity.
AI and Organization of Banks Inner Structure
Banking and lending will see the biggest trans formation with $450 billion in savings and 1.2 million jobs at risk because of AI, according to the Autonomous Next Report.
This will cause a major shift in the banks inner structure.
Bank tellers with repetitive tasks may be the first to go as machine learning becomes more advanced, followed by jobs in the middle office but with less jobs to be replaced in the back office. One trillion-dollar s can be saved across banking, investment management and insurance when levelling out jobs with automation in the front, middle and back offices.
Insurance companies will save $400 billion and have 865,000 jobs at risk. Out of both banking and insurance, it was reported that 70 percent of those jobs will be front office to be replaced by chatbots, automated authentication and biometric technology.
On the contrary, data also suggests that proliferation of AI will be accompanied by a rise in banking jobs by 14 percent. Companies will be recruiting people who know how to work with AI.
Accenture sees AI as being a way for liberating humans to be able to work on more interesting and complex jobs.
Wells Fargo announced last year the establishment of a new AI Enterprise Solutions team, where the group aims to help increase connectivity for the company’s payments efforts, accelerate opportunities with AI and advance application programming interfaces to corporate banking customers.
In the United States 2.5 million financial services employees are exposed to AI technologies and 79 percent of bankers believe that within the next two years AI will work next to humans in their organizations as a co-worker, collaborator and trusted advisor.
As reported from Accenture’s survey from 1,300 of their bank employees, 67 percent expect AI to improve their own work-life balance, while 57 percent expect the rise of machines to actually help their own career prospects.
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Other technological trends
- With extending reality companies can look at creating competitive differentiation by overlaying the real world with digital enhancement s to extend human reality. “Extended reality includes virtual and augmented reality along with mixed reality, are narrowing the distance between customer and experiences,” as reported by entrepreneur.com. According to Gartner, almost 20 percent of the large- sized companies will adopt extended reality by 2019.
- If a bank fails to verify the authenticity of the data, then they are vulnerable to draw business insights or make decisions that can get them into various unwanted messes by using data veracity. The problem with data veracity is with the emergence of the open data policy and new accessibility data generation growing but not being verified.
- Frictionless business is all too common, especially with fintech companies partnering with banks. Too many partner ships can cause outdated systems that cannot keep pace and are becoming a barrier to growth and future readiness. Accenture believes that there is a solution to this universal problem by looking to microservices to break down all of your big applications.
- In order for banks to collaborate with telecom service providers and analyse data share with your consent in real time is by using IoT. But banks bust managing the complexity of unpredictable, external and physical world problems with this. Businesses would have to shift analysis and decision-making processes to even get close to doing this.
