Buzzwords: Artificial Intelligence & Financial Services
From industry conferences to the headlines of the trades and in boardrooms around the world, the term “Artificial Intelligence” - or AI - is all the rage in financial services.
As hot as AI might be in the present-day financial services community, AI as a concept has been around for decades, as evidenced by the no. 1 pick on ZDNet’s 36 of the best movies about AI, ranked, 1968 cult classic 2001: A Space Odyssey. It begs the question - why AI, why now?
Here are five reasons why AI has taken on an increasing amount of relevance in financial services:
Evolution of technology
As it turns out, it’s one thing to create a movie based off a theoretical concept of AI. It’s quite another to have the backing technology to make AI a reality. In other words, Space Odyssey’s intelligent computer, HAL 9000, was a bit before it’s time.
In 2018 however, with machine learning, natural language processing and facial recognition all technologies du jour, AI is no longer a nascent technology, rather one that provides its users a distinct competitive advantage.
Millennials & The Convenience Factor
For all the talk of what Millennials want and need out of their financial services, much of it can be boiled down to the ability have what they want, when they want it - in other words, convenience. According to this Millennial data story from Goldman Sachs, Millennials turn to brands that offer maximum convenience at the lowest cost.
These digital natives, who grew up with the internet, are not familiar with a world that doesn’t include a smartphone and all the fast and easy solutions it provides with the tap of a screen. Assuredly, financial service providers that don’t provide the kind of convenience this generation has come to expect and that AI provides will struggle to be competitive in the years to come.
Speaking of Competitive…
In 2011, the top 5 US banks signed to add Mobile Deposit. At the time, Mobile Deposit was a hugely innovative functionality for banking apps. Today - just eight years later - it’s table stakes.
In the same way, AI capabilities are available today, and being used in the form of chatbots for personalized service, to help determine credit risk using different types of data like social media and even computer vision to gauge customer sentiment. It’s incumbent on financial services companies to take advantage of the technology.
Proliferation of Data
For AI to reach its full potential, it needs to become increasingly intelligent. To become intelligent, AI needs large amounts of big data. The more types of data, the better the algorithms can learn and predict. Financial services’ treasure trove of data can be used - with consumer permission - for the benefit of consumers, leveraging data to feed AI capabilities. Fully realized, these capabilities have the potential to serve the customers’ needs by doing things like serving up customized products and services or providing real-time advice on budgeting and saving based on their specific user profile. A good example of this is BBVA’s Turkish unit, Garanti, and its virtual assistant that leverages AI to deepen its customer relationships on multiple fronts.
The sheer volume of data that AI takes in to become more intelligent requires mass computational power. Previously, that power was not available, but with modern advances in technology, computers are now able to digest the data that AI needs to become intelligent. According to The Rise In Computing Power: Why Ubiquitous Artificial Intelligence Is Now A Reality, the latest chips can run over 10 trillion calculations per second. To give an idea of the scale of that figure, the article goes on to say that it is akin to stacking a dollar bill for each calculation on top of one another. The reach of the stack would be to the moon and back, and then halfway back to the moon again. Put simply, these chips are built to feed AI in a way that has not been possible before now.
To read more about the contributions of artificial intelligence in the financial sector, click here.