Practical Uses of AI in Financial Services

77 percent of bankers think figuring out how to effectively implement AI into their company will be the difference between a bank flourishing or struggling to keep up. Many of the reasons for this belief stem from the different opportunities AI opens up for more automated, optimized, and unique operation strategies. So how are banks and financial institutions using AI and how will this help their business flourish? 

The Basics of AI 

AI, or artificial intelligence, is essentially just technology and software that mimics many of the functions humans can do, only at a much higher level. While businesses shouldn’t completely rely on AI over humans, it does open the door for a better understanding of data, customer audiences, and personalization in marketing. Currently, only around 32 percent of financial service providers are using AI, but this number is expected to grow in the coming years. 

Implementing AI

There are several key aspects of marketing that have been simplified and optimized with the help of AI. Using these strategies, your business can engage with customers in a more personal way, reduce the time needed for certain tasks, and engage with data in a more meaningful way. 

• 24/7 Help: 82 percent of customers care about receiving an instant response from companies, and chat boxes ensure they’ll receive it. Through the use of AI’s natural language processing, chatbox features offer customers in-depth and helpful responses to any questions they may have. Bank of America uses Erica as their AI virtual financial assistant, and there have been many satisfied customers with her personalized financial insight and advice.
• Efficient Data Analysis: There is a massive amount of data being collected by financial institutions, but sorting through that data and analyzing it can be a lengthy and difficult process. AI is able to efficiently sort through data and provide useful insights at a much faster rate. Additionally, with the help of AI, things like fraud risk can be reduced by predictive analysis functions.
• Personalizing Business: 66 percent of customers expect companies to understand their personal needs, so your company needs to be able to specifically target those needs. For example, the things a recent college graduate is looking for from their bank are going to be very different from what a retired grandparent would be looking for. AI helps businesses segment their customers into more specific groups, so marketing can be more personalized and unique for what each customer group is looking for. 

Potential Concerns with AI  

Similar to any other emerging technology, there are some concerns people have with implementing AI at such a high level. Here are some things to keep in mind when implementing your next marketing strategy with AI. 

• Data Governance: AI will help with data analysis, but customers provide financial institutions with very personal information and expect that that information will be securely stored. By ensuring your company has established a secure data governance plan, customers will feel more safe about providing their data. This could include setting clear guidelines for how the data will be secured and what it will be used for. 
• Bias Algorithms: AI algorithms are trained using existing data sets, which sometimes contain certain biases or favor certain groups of people. For instance, if there is a bias in gender or race in the initial input data, the AI output will not be entirely objective. To prevent this from occurring, financial companies should continue to strive to have a diverse and multicultural human workforce, who can double-check the inputs for potential biases. 
• Losing the Human Connection: While it seems like AI could do several different human jobs, for a lot less money, people still care about having a human connection. Nearly half of bank customers still want a human connection as an option. Companies should find a balance between digital, or AI, interactions and human interactions to offer their customers the best experience. Additionally, with AI still growing and changing, having a real person monitor its’ tasks will decrease the likelihood of errors or mistakes occurring later down the road.

Where AI Fits in the Banking Landscape Today

Primarily, banks have been using AI for fraud detection and prevention, since AI is able to detect specific patterns or actions that the human eye might miss. Some examples of this include being able to detect when a customer’s signature varies on a financial document or when an account might be taken over. Mastercard has recently implemented AI into their operations, through the use of Decision Intelligence, which is a fraud detection program. Similarly, American Express incorporated an AI fraud detection program to help better protect their credit card users. The speed and accuracy of AI detection have shown to be tremendously useful in reducing the risk of fraud and increasing the security of financial users. 

There is no denying that AI is on the rise, and bringing many benefits to companies that are implementing it into their operations. Figuring out how to best incorporate AI, while also being cautious of potential concerns to look out for, will help your business analyze data more efficiently, be more available to provide insightful financial information to customers, and target marketing strategies to more precisely targeted audiences. 

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