2019 will see Artificial Intelligence (AI) technologies become even more influential in the success of financial services businesses. 1In the 2018 Innovation in Retail Banking study presented by EFMA and Infosys, 67 percent of respondents named AI and Machine Learning as the technologies with the greatest potential to impact banking in 2019.
The impact will be felt throughout the enterprise, changing even the foundational principle of successful banking from scale of assets to scale of data usage. At some banks, such as Bank of America and Swedbank, for example, smart virtual assistants are improving service efficiency by taking over a substantial chunk of customer support. In 2019, we see AI use cases extending to collections, precision marketing, compliance, and even talent management. Natural Language Processing (the tech underlying chatbots) will gain traction in 2019, with up to forty percent of large businesses across industries implementing it before the year closes. In financial services, a growing number of banks will choose to scale their AI projects by collaborating with AI FinTechs in 2019.
Almost seventy percent of respondents to the Efma Infosys survey expected AI to scale up benefits in customer service and risk/fraud management by 2022.
Customer experience will become even more personalized as banks adopt best practices of digital players such as Amazon to employ AI for customer profiling and then tailor interactions at massive scale, make recommendations, and propose next best offers.
AI will also transform identity management by allowing customers to determine the level and factors of authentication, based on their device and risk tolerance.
Here it is necessary to emphasize that AI will impact almost every aspect of banking operations by amplifying human capabilities, but it will not necessarily replace people in large numbers in the near future. However, there is a strong possibility that the technology will redefine job profiles at banks, for instance, by blurring the distinction between front, middle and back office tasks. Imagine that a customer requests to transfer a large sum of money to a country that is watch-listed. Today, the front
office accepts the transaction; the middle office assesses its risks; and the back office subsequently settles or denies it. Someday in the future, AI will use its accumulated knowledge to determine if a transaction is permitted or not, and instantly process or reject the transaction at the point of contact itself.
In 2019, AI will influence the performance of various lines of business within banks. The bank deposit, popular with customers as a simple and safe way to earn a return on savings, could go out of favor by 2022. AI will be able to come up with superior alternatives to fulfill individual customers’ expectations for the highest returns at the lowest risk and turnaround time with customized products. For instance, it is possible for AI to shift a customer’s money daily between different savings options – from money markets to foreign exchange – to optimize returns without undue risk. AI can impact the lending business similarly by connecting prospective borrowers to an ecosystem of lenders so they can find a loan that best meets their needs.
At a broader level, AI technologies will be instrumental in simplifying traditional lines of business into a set of layers – the first comprising routine financial transactions (such as payments) which would integrate with the daily digital life of consumers to be almost invisible; the second consisting of products and services differentiated by insights and personalization where AI will participate in customer interactions; and the third highly automated layer of business-to-business interactions.
With so much AI-driven change in the offing, banks should gear up for building their AI skills in 2019 and expand their capabilities organically as well as through partnerships. There is no time to lose.
“It’s going to affect virtually every technology that’s out there now and lots of technologies that we haven’t thought of yet. AI is going to be a massive trend for years to come.” – Brian Burke, Chief of Research for Enterprise Architecture and Technology Innovation, Gartner.