Rise of the Machines: AI in Financial Services

robot moving down street

Artificial intelligence is on the way and the world of business may never be the same…

Ever since we first started creating machines, we’ve been fascinated about what will happen when they become smart enough to think for themselves: will it herald a new exciting world order in which robots do all the dirty work for us, or will they decide they can run the world better and take over completely?

In other words, is the future of AI heading towards Wall-E or the Terminator?

Alternatively, the impact might be less dramatic – they will simply make it easier to make transactions, assess performance and interact with customers.

Digital assistants

At their most basic, we’re already seeing the use of chatbots – machines which can learn to interact with human beings and respond to relatively straightforward requests.

The clearest example comes with Amazon Alexa and the Echo Dot which was the highest selling device in on the recent Amazon Prime Day sale. People use it to manage their music, ask questions and even to do their shopping for them. Its success shows that we’re already becoming pretty comfortable talking and interacting with machines, even if their attempts at a personality don’t always run smoothly.

Capital One have been one of the most enthusiastic adopters, with their Skill for Echo. You can ask simple questions about your credit card and any loans and also ask that awkward question – ‘how much did I spend?” You might not like the answer, but it’s a good way to track your finances.

They’ve also launched their Capital 1 Eno which allows customers to chat to the bank and pay bills using text based natural language.

Customer engagement

The advantage of digital assistants such as these is that they help improve customer stickiness and maintain a more personalised form of engagement without investing huge amounts of capital in hiring more staff. People are becoming happier talking to machines as long as those machines are agile and ‘intelligent’ enough to respond to their questions effectively.

AI can also be used to automate some of the more mundane tasks freeing up staff for more productive and profitable activities. They can also analyse vast quantities of data presenting it in an accessible way which shows greater depth on a company’s financial position, where it is making money and where losses are occurring. It can help to streamline processes and improve efficiency across the board.

A competitive edge

In an increasingly competitive sector in which institutions operate on fine margins, innovation can be critical, but for all these benefits, institutions are still relatively slow to act. Implementing the technology is a long and complicated process. We’re still in the early stages and it has a long way to go until it fulfils its potential.

The Innovation in Banking report shows institutions are aware of the benefits but still hesitant to act. They are held back by a lack of unified vision, legacy technology, insufficient budgets and technological expertise. Instead they try to build it piecemeal adding those systems they know will work and that they can handle.

Implementing the technology is a long and complicated process. We’re still in the early stages and it has a long way to go until it fulfils its potential. Some organisations are more adept at harnessing new technology than others and those who have bad experiences will be more reluctant to make the leap than others.

That might have something to do with an organisation’s own business culture. For example, if you look back at your past track record of adopting new IT systems, you’ll have an indication about how well this may go for you. Does new IT come in seamlessly or is it often a stuttering nightmare? If it’s the latter you may want to think about how you manage innovation.

The future may be hard to predict, but the rise of the machines is coming. As a wise man once said: ‘you can either profit from this or be destroyed’. It all depends on how quickly and effectively organisations embrace innovation.