Tech news these days is dominated by stories on the relentless march of artificial intelligence (AI) and how it will impact our lives in the very near future. The dream is that smart machines will rise to handle all the daily tasks, leaving us free to focus on truly valuable work. Consequently, these stories are diverging from the standard of driverless cars, drones and personal assistant bots like Siri, Alexa and Watson into the realm of personal financial assistants.
The technology to facilitate these tasks is certainly not new, but like all innovation, it has become cheaper, faster, more ubiquitous and simply better. By combining AI bots with big data analysis, financial institutions can formulate powerful, yet personalized, advice and recommendations that promise to open up banking with equitable service levels for all, not just the high net worth clientele. Some welcome such innovations and see the value of a personal assistant to act and function like Iron Man’s Jarvis. On the other side of the spectrum, others find it troublesome and worry that it will displace jobs, or that it is still too primitive to care about.
True Financial Inclusion
We are starting to see the beginning of something special in the synergy between AI and data. Looking beyond some basic Q&A with voice recognition software in order to request bank balances or find the nearest ATM, the finance industry is realizing that sophisticated personal financial management (PFM) services can be offered when combined with the data that institutions have on their customers. Using machine learning techniques, behavioral and pattern analysis can help guide customers to products that better match their life stages, and even assist on fraud prevention. And by learning over time, PFM bots can only get better.
Automated financial assistants make private banking service levels available to everyone, not just high net worth individuals. AI-powered bots in some institutions already gather and analyze customer information for wealth managers in order to help them craft investment advice for clients – why not offer the same expertise to everyone? Every customer now has a personal financial assistant in their pocket, helping them answer questions in seconds and making personalized product recommendations based on intimate knowledge of the customer’s life stage. PFM bots help customers to smoothly navigate the financial waters with better targeted banking products that save them money and help them become more financially literate.
Full Service Automation
Predictions suggest that almost two-thirds of consumers in developed markets will use virtual personal assistant services such as Siri or Alexa on a daily basis by the end of this year. Within two years, requests for customer support through consumer mobile messaging apps will exceed requests for customer support through traditional channels. Banks are increasingly looking toward AI solutions to reduce their reliance on in-house service and support staff. Why tie-up a valuable resource for basic information requests and product advice? Instead, automated response solutions can handle much of the workload. Call center improvements could be quite dramatic with many issues resolved by PFM bots pre-emptively, allowing for improved recommendations more in tune with customers’ life stages.
Increased spending pattern analysis in order to understand underlying customer trends can also be utilized to detect potential fraud. Intelligent bots can spot suspicious transactions or patterns and flag them to both bank and customer. Instead of the customer having to spend hours resolving any issues, the PFM can walk customers through the process of resolution much quicker.
Although the advent of automated advice bots holds great promise in improving efficiency, reducing fraud and cutting costs, many worry that low-level jobs will be irretrievably lost in the process. Unless new roles are found for employees, this concern must not be overlooked; after all, McKinsey predicted in 2013 that AI and robotic banking will displace 110 million full-time workers around the world by 2025.
Many banks have already released virtual assistants on their mobile apps, while others have announced plans to use chat bots and leverage services such as Facebook Messenger (an app with over one billion prospects) to reach customers on their own territory. There is little doubt that this technology will streamline many routine tasks and create a better client experience (and reduce risks and costs to the bank) by simplifying and automating the process.
Despite concerns about job losses and other issues, new developments in this area are happening every day. Across the industry, financial institutions are teaming up with banking solution vendors and AI bot specialists to create compelling use cases. As with any innovation, the kinks are still being ironed out. However, the companies that figure out how to interlace these diverse technologies with the big data analysis to drive better automation, workflow and integration with clients will be the ones that rise ahead.