Use of artificial intelligence technology in financial services to grow: report

Firms are increasing productivity and personalizing the client experience with AI

Dec 19, 2016 @ 1:07 pm

By Liz Skinner

Financial services firms are beginning to deploy artificial intelligence technologies to make themselves more efficient and better than their peers — and those without a strategy should develop one now, according to a new report.

“It is the early days of AI in the financial services industry, but the technology is increasingly going to be more important to organizations to innovate and remain competitive,” said the report by tech firm Narrative Science.

Nearly a third of financial firm executives said their business has adopted some early AI technologies, such as voice recognition and response, predictive analytics, and recommendation engines, which are tools to predict what a user may like among several given items.

Firms are using it to boost customer engagement, improve productivity, accelerate fraud detection and minimize risk, and help consumers improve their spending decisions, it found.

Although the definition of AI varies among experts, the Narrative Science report broadly considers it technology that emulates human tasks that require intelligence, said Kim Neuwirth, the firm's director of product management and a financial services expert.

(More: Tools financial technology companies plan to bring advisers in 2017)

One reason that use of AI is expected to grow within the financial services sector is because of the scale of the data the industry handles.

“A lot of these technologies have been around, but what makes them useful today has been explosion of data,” Ms. Neuwirth said. “AI is more actionable and better with larger data sets.”

Additionally, the use of AI to automate certain routine and manually intensive tasks “can be a game changer for the industry,” she said.

In fact, 13% of firms said increasing worker productivity was the reason they've deployed AI technologies, the report said.

Reasons financial services firms use artificial intelligence
Source: “The Rise of AI in Financial Services,” by Narrative Science, Dec. 2016.

Use of AI to enhance customer engagement should be top of mind in the wealth management sector, where personalized communications and advice are being provided by digital wealth management services, or robo-advisers, Ms. Neuwirth said. Most digital advice platforms leverage AI in some capacity, she said.

(More: Financial advisers must adapt quickly to competition from robos to stay in business: CFP Board)

The wirehouses have been quick to respond with their own efforts to engage clients automatically and at scale, she said.

Two big roadblocks to implementing AI are that data is often siloed between divisions of firms and the lack of data science experts to analyze and explain the data, according to the report.

For AI to work well in the highly regulated financial services business, it also will need a level of transparency to satisfy regulators and allow the user "to audit decisions made by intelligent systems,” the report said.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

Diversity & Inclusion Awards: 2018 nominations are open

Editor Fred Gabriel and special projects editor Liz Skinner discuss the nomination process for InvestmentNews' inaugural Diversity & Inclusion awards.

Latest news & opinion

Cetera reportedly exploring $1.5 billion sale

The company confirmed it's talking to investment bankers to 'explore how to best optimize [its] capital structure at lower costs.'

SEC Chairman Jay Clayton outlines goals for a new fiduciary standard

Rule should provide clarity on role of adviser, enhanced investor protection and regulatory coordination.

Advisers bemoan LPL's technology platform change

Those in a private LinkedIn chat room were sounding off about fears the independent broker-dealer will require a move to ClientWorks before it is fully ready.

Speculation mounts on whether others will follow UBS' latest move to prevent brokers from leaving

UBS brokers must sign a 12-month non-solicit agreement if they want their 2017 bonuses.

Maryland jumps into fiduciary fray with legislation requiring brokers to act in best interests of clients

Legislation requires brokers to act in the best interests of clients.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print