Three Benefits of AI for Financial Services

March 06, 2019
Jie Wu's picture
Jie
Wu
Director, Solutions Marketing
Jie is the Director, Solutions Marketing at GoodData. As a former analyst and trained mathematician, Jie is passionate about bringing analytic solutions to companies looking to innovate with data. Jie has nearly 10 years of experience in product and solutions marketing, working on solutions such as middleware for Hadoop, Data Quality and Data Governance, real-time analytics platform and NoSQL database management systems. Prior to GoodData, Jie held various marketing roles at IBM, Informatica, and DataStax. Jie holds an MBA from Babson College and MS in Applied Mathematics from the University of Vermont.

It seems that there’s always a new article about the threat that AI represents to various industries, financial services included. However, as I recently explained to Payments Source, AI applications in finance can actually be of enormous benefit. Not only can artificial intelligence in finance help automate manual work, but it can also help detect and prevent fraud, and improve customer experience.

AI can automate manual work

Automating manual work is such a clear-cut benefit for professional financial services. With AI handling mundane, repetitive tasks, financial professionals are free to pursue higher value tasks, such as cultivating deeper relationships with their customers.

Let’s consider the example of processing a credit card application. In this example, a new customer submits an application, which the bank must then enter into its systems, review, and verify. After this is done, a risk score is calculated for each applicant. I don’t think anyone would prefer to spend their day carrying out these kinds of lengthy, repetitive processes.

By relying on AI technology for the data processing entry, review, and verification, financial institutions can reduce the time necessary to approve an application. AI in finance, therefore, accelerates customer onboarding and satisfaction, allowing financial professionals to spend more of their time handling other higher value tasks.

AI can quickly identify and prevent fraud

Today’s fraudsters and fraud rings continue to become more sophisticated, making it harder for fraud protection and detection. Bad actors also often coordinate their efforts and conduct seemingly normal transactions across different regions to minimize the risk of exposure. With all these complexities, humans just aren’t capable of quickly identifying suspicious behavior or transactions that are buried in millions of other legitimate transactions.

This is where AI comes in handy. In the case of fraud detection, an AI model is trained on large amounts of data—both static customer information and dynamic transaction data—to recognize suspicious behaviors and patterns.

The first benefit of using AI for this purpose is that the process becomes much quicker. After an AI system is trained to identify irregular events, it can quickly assess new transactions by comparing them with known patterns and spot the smallest anomalies, so humans don’t need to sink hours into processing and analyzing millions of transactions.

A second major benefit is improved accuracy by significantly reducing false positives and false negatives. A well-designed AI system is constantly refined through ongoing model training with fresh data and new classifications, so it becomes smarter over time. As a result, AI does an exponentially better job of correctly identifying abnormal behavior than any human could, and it therefore helps financial services organizations reduce fraud risk and costs, all while enhancing customer satisfaction.

AI can ultimately drive a better customer experience

Finally, AI can also be used to deliver a more personalized experience to customers. Think about financial advisors scheduling a call to review market conditions and give recommendations on where a customer should invest their money. It’s certainly helpful, but it probably isn’t tailored as closely to a customer’s unique investment needs as it could be.

AI can help financial advisors offer more customized investment recommendations based on the analysis of comprehensive, relevant customer data, including the customer’s personal information and behavioral data in and outside of the financial organization. With AI-driven customized intelligence delivered right at the point of customer interaction, financial advisors can deliver personalized services that drive better financial results for each individual customer. Using artificial intelligence in finance therefore improves customer service and customer lifetime value.

Omnichannel experience is one of the top priorities for all financial firms. In order to deliver a consistent, seamless customer experience across all channels—direct or digital—a financial organization can leverage machine learning to facilitate a holistic approach. For example, for a retail bank that offers its services through both brick & mortar and online channels across various business units, AI can quickly act on the consolidated customer data from the bank’s internal and external systems with personalized service and recommendations, and ensure a seamless customer experience across all business channels.   

There are so many opportunities for AI to enhance the finance industry. It should be embraced, not feared, by financial professionals. After all, AI will never be able to replace the human touch that will always be needed in the finance or insurance industry. But what AI can do is free finance professionals from the time they spend manually processing information, and provide relevant recommendations for business users to better engage with their clients, form deeper customer relationships, and drive tangible business outcome.

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