Banking’s battle for customers gets personal with AI
Add bookmarkIn today’s AI-driven financial services market, “adapt or become a dinosaur is truer than ever,” said Pefin’s Ramya Joseph.
Photo by William Iven on Unsplash
Positive attitudes towards AI are helping to mature digital transformation projects and generate competitiveness in UK retail banks, according to a recent industry survey.
With 86 per cent of respondents acknowledging the importance of AI and almost a quarter believing it has strategic significance within their organization, the banking industry is utilizing AI to drive down operational costs, increase revenues and grow customer engagement.
Virtual customer assistants—such as chatbots—rank highly in AI implementation, with 65 per cent of survey respondents employing the solution. This was followed by personalized customer interfaces at 46 per cent, and robotic process automation (RPA) at 35 per cent.
Why AI?
“Implementing AI makes sense from an operational perspective as it cuts cost significantly,” explained Alex Michael, CTO of AI-powered personal finance assistant Plum.
“First-tier customer support can be handled exclusively by a well-trained chatbot and in fraud detection a machine learning system can classify huge amounts of data and spot patterns otherwise impossible for humans.”
Michael also believes AI systems can help banking institutions improve customer experience and attract younger audiences.This is especially the case as changing customer behavior and new advancements in natural language processing (NLP) have boosted both text and chat based interaction.
“Banks have realized that AI tools like chatbots can really automate pieces of their business interactions and increase productivity,” said Rob May, co-founder and CEO of machine learning business insight platform Talla. “Customers benefit from faster answers and more accurate information,” he added.
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Customers demand a personal touch
Artificial intelligence is disrupting the financial services sphere by generating a tailored approach for customers who may not have the means to access a human personal advisor. Mainstream retail banks are very aware of this and are already making progress in the form of initiatives within the organizations themselves or partnerships with FinTech startups, said Ramya Joseph, founder of AI-driven financial advisor Pefin.
“The interesting thing about the role of AI in finance and so many other industries is its potential to be a democratizing force by bringing affordability, personalization and true fiduciary behavior to financial planning and advice,” Joseph added. According to findings of the Accenture Banking Technology Vision 2017 report, banks will also use AI to help understand the intentions and emotions of customers to enable better interactions. This inclusion will increase as the technology develops and becomes more accessible.
“Consumers’ diverse needs and priorities are forcing financial services firms to redefine how they interact with them to determine the best products and services to meet individuals’ needs,” said Alan McIntyre, senior managing director at Accenture and head of the company’s banking practice.
“As AI becomes more mainstream people will start expecting a higher level of personalization.”
Agreeing with the findings, Michael said, “Process automation is key for staying competitive. As AI becomes more and more mainstream, people will start expecting a higher level of personalization.”
Introducing Banking as a Platform
AI adoption is not without its challenges, with GFT’s survey results revealing an industry shift towards Banking as a Platform (BaaP) as a primary approach to developing digital transformation projects. BaaP uses open APIs to allow banks to distribute their own, as well as third party, products and lets customers exchange information with multiple suppliers.
The challenge? “Companies are often unsure where these tools fit into their workflows and who should be responsible for running them,” said Talla CEO, May.
The UK leads the way in BaaP adoption compared to other markets and is likely to grow further with the Competition and Markets Authority (CMA) Open Banking reform measures, the report also found. Despite this, concerns over security issues, complexity of existing legacy systems and high costs posed the greatest challenges to those surveyed.
“Companies are often unsure where these tools fit into their workflows.”
A further challenge for banks is obtaining quality data. “Banks know that they are sitting on a wealth of information, especially unstructured customer data, which is not currently being used to its full capacity. AI solutions such as chatbots, process automation and personalized interfaces, powered by open APIs, are critical to the success of digital transformation projects,” said Christian Ball, head of retail banking at GFT—the financial services consultancy firm that published the report.
Where to from here?
AI now plays a lead role in digital transformation projects and is a tool that will gain greater traction over the coming years.
Despite challenges mobile payments, Robo-Advisors and blockchain have led financial services firms to redefine their views of the future. “The acceptance of these ideas is more about ‘when’—not ‘how’ or ‘if,” said Joseph.
“In today’s financial industry landscape, adapt or become a dinosaur is truer than ever.”
“In our future financial lives, AI will take center stage in the planning process, and we in the financial industry should be striving to develop AI that makes daily life better for everyone.”
This article was orginally published on the Intelligent Automation Network portal.
If you would like to find out how AI and RPA are affecting companies download The State of Robotic Process Automation and Artificial Intelligence in the Enterprise - The PEX Perspective with commentary from Dan Senter, Head of Business Systems & Innovation, National Grid & Columnist for the PEX Network.