AI is disrupting financial services the most as the industry leverages it to enhance profits and customer experience
Today, AI is at the forefront of financial services industry disruption, in operations, processes, staffing, and working differently as a human-machine partnership pattern.
According to the PwC’s 2019 AI survey of financial executives in the US, 50% of them want the AI efforts to result in increased profits and revenue while 48% expect better customer experiences and 42% want AI to innovative new products.
From fully automated intelligence to assisted intelligence, AI encompasses a range of technologies. Financial firms have already started deploying relatively simple AI tools like intelligent process automation (IPA) to handle non-routine processes to free the resources for more critical roles.
Banks are leveraging AI to redesign anti-money laundering efforts and detect fraud, while investment firms have started to use AI to manage portfolios, execute trades, and provide personalized service to their clients. Insurance organizations are using ML to enhance products & pricing, predict and prevent fraud while improving customer service and billing.
Experts suggest that before financial services firms can reap the benefits AI promises, it has to meet the challenges of privacy, security, regulatory issues, and bias. According to the PWC survey, the greatest challenge is to win customer trust. Over 40% of executives feel that ensuring that AI systems are trustworthy to the customers is the top challenge of the financial industry. To solve this, 64% of executives plan to create AI models that are transparent, provable, and explainable.
A significant challenge that financial services companies also face is the shortage of employees with relevant expertise and tech skills. One in three executives is worried that it will be challenging to meet the demand for AI skills over the next five years. Over 60% plan to upskill their employees to meet the demand.
Though AI in itself is quite a powerful technology, when it is combined with analytics, IoT, and Blockchain, the power grows exponentially for the financial services industry. A remarkable 60% of the financial services industry executives believe that integrating AI and analytics in order to gain business insights was one of their top priorities in 2019. While 40% mentioned that AI’s convergence with other technologies is a critical effort this year.
The top companies across various industries are seen leveraging AI, but one of the biggest differentiators for financial services that executives believe will be new privacy challenges. Almost half of the finance executives believe that AI will create new privacy challenges, which is second only to healthcare leaders (51%). But these two are also the most concerned industries about managing risk and cybersecurity threats with healthcare at 55% and finance services at 52%.
As businesses across industries embrace AI, the technology will continue offering unique opportunities that will come with challenges and risks. However, financial services remain the leaders when it comes to creating AI solutions that balance can profitability and customer experience and with transparency and trust.