Recently, SRM identified the use of artificial intelligence (AI) as a trend that would have a significant impact on the financial services industry in 2019. Narrowly defined AI is the ability for machines to use complex algorithms to interact and learn to do tasks previously performed by humans.
However, often for simplicity, AI is used to describe a broad range of automation technologies including robotics, imaging, voice recognition, and machine learning. To avoid a clutter of acronyms and repetition, this broader definition is the one that will be used in this posting.
No matter the definition preferred, the rise of the machines is already making a favorable impact on productivity, efficiency and the bottom line of many banks and credit unions.
Potential for $1 Trillion in Savings
Banks and credit unions of all sizes are already using elements of AI to gain significant benefits both in customer service interactions and back-office processes. In fact, industry experts estimate that financial institutions will save a trillion dollars over the next few years by leveraging AI to optimize existing tasks, with nearly half of these savings coming from efficiencies established in customer-facing areas of the business.
With the transition from brick-and-mortar to digital banking well underway, financial institutions are turning to AI to offer customer-friendly features like chatbots, Voice Response Units (VRUs) and virtual assistants, making it easier and more convenient for account holders to conduct transactions on-the-go.
This increased level of digital engagement is also being used to respond in real time to customers’ questions and requests, or even to suggest new products, features and services. Bank of America, Wells Fargo, and JP Morgan Chase already have debuted virtual assistant or chatbot technology to communicate more effectively with their customers or employees.
Enlisting the Power of an Intuitive “Empathy Engine”
Diverting basic customer inquiries from call centers to automated channels like chatbots or VRUs is just the beginning to providing exceptional, intuitive customer service through AI. Imagine if a virtual assistant could infer a customer’s mood from his or her tone of voice or could sense frustration based on the person’s choice of words. An automated platform could tailor its responses accordingly, even determining when it’s appropriate to transfer an account holder to a “live” customer service rep.
Equally important is the potential for such a platform to refine its intelligence based on collective experience, eventually improving its ability to respond to verbal and non-verbal cues. Capabilities like these are already being tested by FinTech companies like BOND.AI (in partnership with bank service provider FIS).
Breakthroughs in the Back Office
Additional opportunities for gains from the application of AI reside in the back office, where firms are successfully applying AI to monitor compliance, manage risk and prevent fraud, allowing skilled staff to focus their time on revenue-generating initiatives instead. Card fraud, in particular, is an ongoing challenge complicated by the continuing shift toward e-commerce and remote payments. Through AI, banks are improving their card authentication processes, identifying suspicious patterns of behavior more quickly, and detecting fraudulent activities as they happen.
These are just a few of the ways that financial institutions around the globe are utilizing, and benefiting from, AI. With all of potential applications, it is important to remember that there are thousands of yet unexplored opportunities, and potential downsides, of the technology to consider in the near future.
