Blog: Is AI a fad or reality for financial services today?

Artificial intelligence (AI) is starting to impact our lives faster than we can imagine. From Amazon’s digital assistant Alexa, which is now in over five million homes, to online shopping recommendations and image recognition, AI technologies have found no shortages of real world applications that are quickly becoming a familiar part of our daily lives.

Financial institutions are increasingly putting faith in AI to improve consumer personalization and automate processes in real time—but is artificial intelligence just a fad or will it play a meaningful role for today’s financial institutions?

Banks are only just starting to explore the use cases for robotics and integrated biometrics (which can often be seen as gimmicks rather than long-term solutions) but it’s in the less visible areas where AI can have the biggest impact on customer satisfaction. And whether we realize it or not, we are already seeing the benefits of AI as part of the banking transformation journey.

Appetite for adoption

IDC predicts that worldwide revenues from the adoption of cognitive systems across industries will experience a near six-fold increase from $8 billion in 2016 to over $47 billion in 2020, with retail and banking leading the charge. Certainly, the research consistently points to demand for such technologies being present among both industry players and consumers alike.

The Accenture Banking Technology Vision 2017 report concluded that in the next stage of artificial intelligence adoption, banks will use AI to help understand the intentions and emotions of customers to enable better interactions. The survey of over 600 bankers found that 76% think that in the next three years, the majority of banking organizations will deploy AI interfaces as their primary point for interacting with customers, highlighting the long-term integration of AI into banking services.

This also corresponds with Diebold Nixdorf’s own research which shows that a large majority of consumers (79%) agree that technology will play an increasingly important role in bank branches in the future. Most consumers are positive about the potential impact of new technologies, with 57% saying improved technology in banks means they’ll spend less time queuing than they currently do. With new technological advancements and artificial intelligence going hand in hand, this creates a positive basis for future adoption.

Real world applications

With the ability to find, gather, and analyses large amounts of ‘big data’ instantaneously and use that data to make smart decisions—continually learning and evolving—AI has the potential to shift the customer experience to an entirely new level.

In fact we are already seeing the benefits of AI as part of the consumer journey, helping to evolve the way banks interact with customers. Certain use cases, such as the use of robotics in the branch environment (for example ING’s humanoid robot Ginger), may be gimmicky on the surface but will have long-term value for new generations of customers. Others based around fraud prevention and detection or chatbots that are being used to simulate human conversation—collecting a massive amount of data on user behavior in the process—are also hugely valuable. AI technologies are already enabling banks to provide more personalized customer communication, with tailored recommendations and advice.

By leveraging AI, banks will realize significant long-term cost savings, while delivering enhanced functionality and customer service. Today we are only exploring the tip of the iceberg—but the opportunities are there to further reach into back office operations, compliance, customer experience, security and marketing, among other areas.

Artificial intelligence is no longer just the stuff of sci-fi movies and financial institutions need to embrace the power it offers. The adoption of AI is still largely untapped within the financial services industry, but with machine learning and faster algorithms only set to become even smarter, banks that invest in automation and analytics will be at the forefront of the AI revolution. If used correctly, AI will become the cornerstone of understanding data better to provide new customer journeys and an enhanced end-user experience.

This article originally appeared on Finextra.com.

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