One of the most hyped technologies within the Financial Services (FS) sector over the past few years has been artificial intelligence (AI). There have been acres of press articles written about it, hundreds of events and conferences where AI in FS is discussed at length, yet for the most part the industry is yet to move past this discussion phase.
Despite all the hype and press attention, AI is a technology that is yet to truly reach its potential. While there are undoubtedly some early adopters within FS that are already seeing fantastic return on investment (ROI) from AI, but for the most part AI is yet to really deliver for FS firms in any meaningful sense.
What’s behind this slow take-up of AI within FS, and could 2018 be the year that begins to change?
The natural conservatism of FS
Anyone that’s worked in international FS will know that as an industry, it isn’t always the best at adopting progressing and innovative new technologies. On the whole, it’s a sector that is risk averse, and if something is working adequately, then there is little incentive to address that, even if a solution could address the same issue far more effectively.
There is an inherent conservatism in banking that means change can be hard to facilitate. Furthermore, organisations are often tied into their existing infrastructures, making new investment in technology even harder. This has all led to many FS firms trying to do a challenging job without the insight and knowledge to do that job to the best of their ability.
Yet AI is rich in potential, both for retail banking and the corporate FS market. The ability it has to automate certain tasks and crucially, to extract insight from unstructured as well as structured data mean that it is a highly attractive proposition for many FS organisations, despite their inability to get off the mark with AI.
Changing market conditions
But changes in market conditions have meant that FS firms are now beginning to look at AI in a more realistic way. Part of this is that some organisations have seen AI as a ‘one size fits all’ solution, capable of solving any number of enterprise challenges.
This is true in theory, and AI can be applied to address many different issues and improve many different processes within a business. But AI deliver better results when deployed for a particular purpose and applied to specific uses.
But FS is currently arguably in its most competitive state ever. Traditional FS providers are under threat as never before, with faster and more nimble startups all ready to take a slice of the market. There is also enormous uncertainty surrounding Brexit, for UK and international FS providers. How will Brexit impact FS and firms’ ability to operate in certain markets, for example?
No-one really knows, although there is an acknowledgement that there will be further turbulence whatever happens. This has all focused the minds and attention of the bigger FS providers, sharpening the need for innovation in understanding customers and their needs, and delivering to them a better service based on such insight.
A deeper customer insight
The way to extract customer insight is via AI, which has the raw computing power to manage large volumes of data. But most CRM systems only deal with structured data, and the data with true customer insight is unstructured, such as social content, email conversations and service call scripts.
By deploying AI to empower their CRM platform, an organisation can extract fresh and insightful meaning from their unstructured data, which will give much more help when managing and improving the overall customer experience.
Crucially, the right AI solution will provide a true understanding of exactly what is happening in a market, preventing customer churn. The insight gleaned can be used to pre-empt any potential issues a customer might be having, and the right AI technology will even make recommendations as to the best course of action to take, based on analysis of previous incidents and what is most likely to be of benefit to the customer. This understanding deepens customer insight and in turn, customer relationships.
Knowing when to make an offer, what that offer should be and how it should be delivered is vital knowledge for any sales executive or account manager in FS, and AI-driven customer understanding can help drive sales across the enterprise.
Users can search for new insights on competitors, partners, markets, individuals and much more, all of which deepens their knowledge of each customer and allows them to know when and how to up-sell or cross-sell. AI can also help a user understand and be aware of all interactions and engagement with a customer.
The FS sector is highly competitive and one in which data is critical in providing the insight required to stay ahead of the competition and deliver value to clients. The most insight is found within unstructured data and the most effective way of extracting that insight lies with AI.
After a slow start in FS adoption, 2018 is the year when AI should start being deployed much more widely than it has been to date. But key to this deployment is for organisations to apply it to specific issues or processes within their business – the efficiency driven approach of deploying AI. Approached in this way, results (and ROI) will soon follow.