Artificial intelligence is increasingly being used in corporate financial services. This is at least what the research conducted by The Economist shows. These are the main results of this research.
Strengthening customer relations by offering interesting new services that protect everyone's health and save valuable time is the biggest challenge in financial services. According to the Deloitte Digital report, 60 percent of banks have closed or shortened their branches' operating times, while speeding up new digital opportunities, including automatic account creation (34%), remote identification and verification (23%) and contactless payments (18%).
Fast contactless digital support across all channels generates terabytes of data per day, which is essential for learning controlled machine learning algorithms. Uncontrolled machine learning algorithms rely on terabytes of data to identify previously unknown patterns in financial service data. AI becomes a new growth engine, providing useful information and knowledge in times of uncertainty and anxiety.
Where AI is being introduced in the financial services industry
Increasingly, financial service companies are using artificial intelligence and machine learning to take advantage of data coming from new digital channels. The EIU (Economist Intelligence Unit) research report showed that 86% of financial managers plan to increase their AI-related investments by 2025.
The study The road ahead: Artificial Intelligence and the Future of Financial Services which we offer you to pay closer attention to, analyses the sentiment of 200 executives and top managers of leading investment banks, retail banks and insurance companies in North America, Europe and Asia Pacific. Thus, the main findings of the study, which highlights the status of AI adoption in the financial services sector, are as follows:
- Investment banking firms are major adopters of AI and machine learning technologies in the financial services sector, followed by distribution. Investment banking operations rely on machine learning to refine forecasting algorithms and models to quantify and reduce risk. Retailers rely on predictive analytics to generate new ideas that can help them increase customer loyalty and digitize their customers from physical to digital channels.
- 37% of financial companies around the world are implementing AI to reduce operating costs, followed by predictive analysis to improve decision-making and increase the ability of employees to cope with volume-based tasks. AI projects combine cost savings, revenue and time savings through automation. North America leads all other regions in using AI to improve personalised service and customer satisfaction. The Economist research group found that 36% of large companies also see more effective marketing products and services as a significant advantage, which is shared by only 23% of small retailers.
- 33% of financial services companies in North America expect artificial intelligence to change the way they innovate, putting them well ahead of all other regions. North American companies are also the most optimistic about AI's ability to launch new products and services (31%). Heads of financial services in the Asia-Pacific region and North America see this as an opportunity to enter new markets (30% and 27% respectively). According to The Economist, this reflects higher economic growth in both regions compared to the rest of the world, as well as the level of investment in AI by individual companies to support business growth.
- Customer and stakeholder satisfaction is the most important key indicator of the success of the AI's financial services strategy to date. This year's AI projects in the pilot phase and in production are based on increasing revenue potential by removing cost and time barriers. The launch of new digital channels and improved customer experience for the first time this year puts more emphasis on customer and stakeholder satisfaction.
- The high cost of artificial intelligence technology prevents financial service providers from implementing it in more areas of their organisations. Price restrictions are slowing down the introduction of AI to a greater extent than any other factor to date. Inadequate quality of infrastructure and data is the second and third reason why no decision has been made to implement AI in the organisation in a broader sense. The Economist research group found that 86% of financial managers plan to increase investment in AI-related technologies over the next five years, with the strongest views being in APAC (90%) and North America (89%). Investment in AI technology can help solve problems with existing systems which, along with system upgrades, have proven to be a costly constraint faced by financial service firms over the decades.