Artificial Intelligence (AI) is already transforming the way in which financial service companies are doing business.
More and more of them are using AI to process information on their customers, cut costs, save time, monitor behaviour patterns, assess credit quality, automate client interactions, analyse markets, assess data quality and detect fraud.
A pwc Digital IQ 2017 survey found that 72% of business decision makers believe AI will be the business advantage of the future. About 52% said they’re currently making “substantial investments” in AI, and 66% said they expect to be making substantial investments in three years.
Franck Coison, Industry Solution Director, at international IT services company Atos says the four main types of AI are facial and voice recognition, natural language processing, machine learning, and deep learning. They can be used in chatbots, document analysis, process automation or predictive analysis, he says.
Although robotic process automation (RPA) is increasingly common in financial services, it is usually used for quite simple, repetitive tasks, says Coison. “In contrast, AI can be used to automate more complex tasks that require cognitive, or ‘intelligent’, processes.
“While RPA is appropriate for back-office and accounting processes, when it is combined with AI, any process including customer-facing activities can be automated.”
That means it has great potential in areas such as customer service, sales and customer intelligence, IT services, fraud prevention, and cyber security, he says.
The pwc survey found that adoption of practical machines that think is widespread in the financial services sector. Some banks use AI surveillance tools to prevent financial crime, and others use machine learning for tax planning. Many insurers use automated underwriting tools in their daily decision making and wealth managers offer automated investing advice across multiple channels.
A provider of next-generation investment analytics Kensho Technologies has for example developed a system that allows investment managers to ask investment-related questions in plain English, such as, “What sectors and industries perform best three months before and after a rate hike?”. They receive answers within minutes.
AI is proving popular among banks too. Lloyds Bank, for example, has invested $3billion on its digital transformation initiative, which includes using AI to “simplify and progress modernisation of its IT and data infrastructure, as well as other technology-enabled productivity improvements across the business”.
Terry Cordeiro, Head of Product Management at Lloyds Banking Group says AI has “completely transformed how the finance industry works, with the vision at Lloyds being to use smart machines for extending human capabilities while using data to respond.
“Automating processes means better opportunities to reduce costs for better decision making, and intelligent products mean that our customers are able to do much more,” Corderio says.
Earlier this year, NatWest Bank introduced ‘Cora’, an AI-powered ‘digital human’, which converses with customers in its branches. Cora can answer more than 200 queries, covering everything from mortgage applications to lost bank cards.
The plan is to develop Cora so it can answer hundreds of different questions, as well as detect human emotions and react verbally and physically with facial expressions. As well as being put in branches, Cora could be used by customers at home on their laptop or PC and, in the long run, on smartphones.
Finance departments are also benefiting from AI. The insight into data that it can provide will be a competitive advantage, according to Matthias Thurner of the Corporate Performance Management and Business Intelligence solutions provider, Unit4 Prevero. “For this reason, AI will become integral to finance functions in every industry,” he says.
As technology improves, AI will become faster and smarter at providing analysis, he says. Companies that don’t use it will be at a competitive disadvantage.
“Businesses don’t want to replace their employees, but they do want to make better financial decisions, and AI will allow them to do that faster and cheaper than a whole team of humans.”
It will enable skilled office workers to spend more time on their core competencies rather than maintaining data, he says. This will help organisations to reduce costs and the time spent on manual tasks or the classifying of data.
Likewise, CFOs will benefit from AI data analysis, says Thurner. That’s important since there’s an increasing expectation for CFOs to be a source of business insight. Boards want more frequent reports that contain more context and detail. Fortunately, they will be able to deliver more detailed and more frequent reports thanks to AI, he says.
But it’s unlikely a CFObot will appear in finance departments any time soon. “We can expect machine learning to powerfully augment human expertise and experience in the near future even if that’s not a reality today,” says Thurner. “AI can provide data back-up and make suggestions to help the human decision-maker, but it’s the CFO who ultimately has to decide what to recommend,” says Thurner.
With so much potential in key areas of business, it’s no wonder that AI is being hailed as the Fourth Industrial Revolution.
“AI will have an impact as big as electricity and will transform every single industry,” predicts Cordeiro of Lloyds Banking Group.
To discover how a part-time CFO will help your company, please call the CFO Centre India on 9137251804 or visit our website now.