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.
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.
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.
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.