According to a report by Narrative Science, “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.” To put it in other words, the financial services industry is increasingly using Artificial Intelligence (AI) to gain competitive advantages in the industry, and those firms not already doing so, should start formulating a strategy for the same. Among those interviewed in the study, nearly a third of the executives mentioned having adopted AI in some form, such as voice recognition and response, predictive analytics and recommendation engines, which are all used to predict customer behavior, given their journey thus far.
While the application has been in the areas, primarily for productivity and personalizing the customer experience, there have been applications found in making better buying decisions from the customers’ point of view as well. Kim Neuwirth, the director of product management at Narrative Science considers that AI is essentially a technology that emulates human tasks that need intelligence, though actually the definition of AI differs in the community.
Among the findings, it shows that the reason why AI will find itself at home with the Financial Services Industry is because, of the large scale of data that the firms usually. As Neywirth said, “A lot of these technologies have been around, but what makes them useful today has been explosion of data. AI is more actionable and better with larger data sets.” It points out to the fact that the productivity of the enterprise also increases, as certain routine tasks and intensive manual tasks are done through AI.
Wealth Management services could also make do with AI powering their processes, as suggestions from automated systems, along with personalized messaging in something the industry is slowly but surely waking up to. In fact, Neuwirth was of the opinion that firms will see competition among themselves for companies which use AI for similar tasks, and firms who don’t. However, it however drags interest towards reasons as to why AI has not seen a larger scale adoption across the industry. The reason is that the data transfers between firms and internal divisions is not channelized properly, and also that the data analysts are not there in sufficient numbers, for the industry to capitalize on interpret the data that has been collected.
The final challenge, and not totally a roadblock per say, is the regulation approval. With time when regulators are more at ease with the overall security and purpose of AI systems, and can create a framework within which decisions taken by AI-based systems are accepted legally, AI will become much more common in the financial services industry. The adoption rate of the new technology will then increase manifold, thus also prompting greater innovations.