Big data, faster processing and cheap storage make it possible to turn the vision of AI in banking, developed over decades, into reality – today. The technology will only improve, and not engaging now would be to run the risk of falling behind never to catch up, finds a new Finextra research paper.
The escalation of interest in AI in financial services during the past 12 months is justified, given that AI represents the next wave of computing and will unleash major change in all industries, bringing benefits in all aspects of our lives. For financial institutions, specifically, AI represents an opportunity to radically improve efficiency, risk management and fraud detection as well as customer service.
These are among the key findings of a new research paper, entitled: The next big wave: How financial institutions can stay ahead of the AI revolution, featuring interview with top banking executives and produced by Finextra in association with Intel.
As Roberto Ferrari, managing director, CheBanca!, puts it in the paper: “AI will become the most defining technology of the new banking and financial services of the future.”
There is no question, banks need to move, the research finds, but to stay ahead of the AI revolution they must navigate a complex array of techniques, possible application areas, cultural challenges and technology decisions, to ensure they lay solid foundations for their AI-driven futures.
Implementing AI solutions is not easy, and is especially demanding of data, as Julia Krauwer, AI expert at ABN AMRO, points out in the paper. “One should keep in mind that AI is not a plug-and-play solution. For most bank-specific purposes, you will need large quantities of data and a great amount of effort to train the models that lead to intelligence.”
Maximising the power of AI requires an end-to-end approach, emphasises Steve Ellis, head of the Innovation Group at Wells Fargo. “If you want to create a really good upfront experience you can’t take existing back end processes and put new front ends on them. You have got to think end to end. Using AI for customer service at the front end will change the way we have to approach the back end.”
There is also the people part of the equation to consider. As Tom Durkin, managing director and head of Global Digital Channels for Global Transaction Services at Bank of America Merrill Lynch, contends, AI will make many employees’ jobs more interesting. “When I think about the role of the dedicated support person who works in corporate client servicing – who knows the customer organisation so well – I see that position moving to a different level with the advent of AI to automate more rudimentary tasks,” he says.
Nonetheless, as the paper explores, firms must also tackle ethical questions related to both employees and customers as they transition more functions to AI, providing a managed development path for staff and ensuring complete transparency for customers.
The research paper brings together the views of 19 AI experts and users from across the financial industry on how to tackle the key challenges and opportunities banks face as they embark on their AI journeys. It addresses a number of important questions including:
- What are the key AI techniques financial institutions should be exploring?
- In which application areas does AI have the most potential now – and in the future?
- What are the technology and cultural considerations banks must address to move forward with AI?
- What are the risks banks face in the AI space, and what risks do they face if they don’t engage?
- What should the leading providers of technology financial institutions be doing to support banks in exploiting AI, and are they delivering so far? and
- To which leading examples of AI success can banks look, and what can the financial industry learn from other industries when it comes to taking advantage of AI?