The term artificial intelligence (AI for short) has attained buzzword status, and not in an entirely positive sense. Too often the technology is seen as a way to replace humans with machines. However, as the newest SRM Academy report, "From Artificial Intelligence to Intelligent Automation: A Playbook for Financial Institutions" makes clear, this is a “glass half empty” perception that banks and credit unions cannot allow to slow their adoption of this transformation tool.
Large name-brand financial institutions have already launched numerous AI initiatives with mostly positive results. There are ample opportunities for smaller institutions to follow suit with proof of concept projects that can garner internal support and expertise. Otherwise, as AI is increasingly used to enhance the consumer’s experience, regional and community players risk facing an increasing gap in their competition for the next generation of consumers.
Think of it as Intelligent Automation
Perhaps it would help to think of these initiatives in a different way; i.e., as intelligent automation (IA) rather than AI. Far from being just being a play on words, IA describes the goal of introducing this type of technology. High-touch, personalized service remains a key differentiator for most community banks and credit unions; IA initiatives can and should be designed to preserve that strategic advantage.
To lower the risk associated with consumer-facing services, consider focusing initial efforts on back office opportunities outside the customer or member’s line of sight. For instance, banks and credit unions can use IA to automate KYC/OFAC processes and mortgage underwriting or to monitor and close inactive debit/credit cards. In none of these cases are human experts removed from the process. Instead, IA is employed to serve up more relevant information faster than can be accomplished by subject matter experts using manual processes. This frees up these resources to contribute to these areas of an institution’s operation in the unique way only humans can.
Customer facing applications of IA also offer a compelling value proposition, and most financial institutions will eventually grow comfortable with moving in that direction. Several routine banking activities (think of cash withdrawals, check deposits and balance inquiries) are mundane in nature and most consumers (particularly those in younger cohorts) actually prefer to address them via self-service. Likewise, they don’t present meaningful cross-sell opportunities for the bank or credit union. For these initiatives to be successful, customer satisfaction and perceptions regarding the quality of service must be monitored closely.
There will always be a subset of customers who prefer a fully personal touch for all interactions. These individuals should not be forced into an automated queue, unless of course the institution has made a conscious decision to mandate such routing for cost control, workflow optimization or product segmentation reasons. If this is the case, the institutions making such decisions will need to be prepared for complaints and/or attrition in some segments of the customer or member base.
The Bottom Line: When BB&T and SunTrust announced their merger earlier this year, executives cited the need for greater technology scale as a key rationale for their action. If the 11th and 12th largest banks in the United States feel the need to bulk up in order to compete in the modern tech-heavy environment, what does this imply for the prospects of the thousands of smaller U.S. banks and credit unions?
Fortunately, community banks and credit unions enjoy customer and member intimacy advantages that are likely beyond the reach of Top 50 institutions. Unfortunately, the value of that differentiator is shrinking as Americans become increasingly comfortable with digital self-service and expect similar convenience in their banking relationships. This SRM Academy report offers a playbook outlining how financial institutions can have it both ways, without the multimillion-dollar R&D budget of a Bank of America or Capital One.