AI Will Change the Nature of Customer Service for Banks
Banks and other financial institutions have already been implementing AI-driven customer communication technology, from call centers to chatbots and more advanced banking apps.
As Adam Weiss, vice president of vertical markets for CDW, notes in a recent column, “practically all of the meetings I have these days with businesses focus at least partly, if not primarily, on how to best capitalize on generative AI’s potential to drive business outcomes.” Weiss adds that organizations in the financial services industry “are targeting customer service as their highest-priority use case for leveraging generative AI solutions.”
That’s because customer service is perhaps the biggest brand differentiator in the industry. Generative AI makes it relatively simple for a company to communicate effectively in real time with customers with little human oversight, all while generating data that can be used to their benefit.
“Generative AI allows you to go much further in customer communication, with higher added value without much technical knowledge,” Patrice Latinne, a data and analytics partner at EY, explains in a recent article. “You can formulate varied and multimedia answers — text, image, sound, video — in any language, in a personalized communication style.”
The potential AI offers for personalization represents another customer service opportunity for financial institutions.
The opportunity has long existed for organizations to build more powerful, personalized recommendation engines for customers, given the data they already have on what individuals buy and where they shop. The problem has always been figuring out how to harness that data and turn it into actionable insights that both customers and institutions can benefit from. AI may solve that, allowing institutions to offer more deeply personalized financial products, budgeting tools, investment guidance and even lifestyle advice.
AI allows banks to “automatically perform customer segmentation, which allows for targeted marketing and improved customer experience and interaction,” Deloitte notes in a recent primer.
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AI Will Improve Financial Services’ Risk Management
AI will have a profound impact on how institutions manage two kinds of risk: cybersecurity and financial. For the first, the industry will benefit from the same kinds of AI-infused cybersecurity solutions as many other industries.
For obvious reasons, financial services companies are among the most highly targeted by cybercriminals. “During the past 12 months, 34.5% of polled executives report that their organizations' accounting and financial data were targeted by cyber adversaries. Within that group, 22% experienced at least one such cyber event and 12.5% experienced more than one,” according to a Deloitte Center for Controllership poll.
Unsurprisingly, then, AI-based advances in cybersecurity will be of keen interest to banks. Those advances include threat monitoring that can distinguish between attacks that require human attention and those that don’t.
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Generative AI “will be used to help simplify the management of security systems,” Jeetu Patel, executive vice president and general manager of security and collaboration for Cisco, told BizTech in an interview last year. “It will play a really big role in detecting breaches and responding, remediating and recovering from breaches.”
At the same time, banks will increase their use of AI to detect financial fraud such as the use of stolen credit card numbers, money laundering and other crimes. The technology is allowing banks to enhance their traditional methods of fraud detection, which is rules-based and prone to high numbers of false positives.
“Enhanced AI components are being added to the existing systems to enable the identification of previously undetected transactional patterns, data anomalies and suspicious relationships between individuals and entities,” Deloitte explains. “This allows for a more proactive approach, where AI is used to prevent fraud before it happens as opposed to the traditional reactive approach to fraud detection.
AI also has the potential to help institutions reduce other kinds of risk endemic to the industry, especially around lending and insurance coverage.
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AI Will Improve Financial Services’ Investment Choices
Finally, AI can be a boon to capital markets companies’ efforts to find and invest in the right opportunities. AI-powered trading algorithms can execute trades at speeds that are impossible for humans to achieve. These algorithms can react to market conditions and execute trades automatically based on predefined rules or real-time data analysis.
In addition, AI can assist portfolio managers in optimizing asset allocation, making real-time adjustments based on market conditions and client preferences. It can also help with rebalancing portfolios to align with investment goals and risk tolerance. In fact, traditional financial advisory firms already find themselves competing against AI-driven “robo-advisers” that automate investment decisions for clients based on such criteria.
Phil Moyer, global vice president for AI and business solutions for Google Cloud, notes in a recent blog post that today’s money managers “must be able to understand risk and supply chains at the global level. That means sifting through information from an array of company filings, transcripts and reports, as well as data on interest rate changes and different types of risk in all different formats.”
For such professionals, generative AI can become “a natural language research assistant that can be relied on to synthesize and search millions of earnings call transcripts, 10Ks and 10Qs, consensus estimates, macroeconomic reports, regulatory filings, and other sources,” Moyer adds.
