This document discusses how artificial intelligence is transforming the financial services industry. It begins by describing how AI technologies like chatbots, robotic process automation, and augmented intelligence are automating tasks and creating hybrid digital-human workforces. This reduces costs and processing times. The document also discusses how fintech partnerships are bringing new digitally-based processes and helping traditional financial institutions innovate. Finally, it explains that while AI provides opportunities, financial institutions must invest in integrating technologies and developing new operating models to fully realize the benefits of AI.

1. Artificial Intelligence:
Unlocking Value in Financial
Services
Author: Shamayun Miah

2. 2
Robots. Thinking machines. Trusted exchanges of anything.
Automated everything. This is the new reality of the Financial
Services industry. Today, the global banking industry faces a
rebirth by necessity that is challenging traditional operating,
workforce and leadership models, as well as inviting
tremendous opportunity. PSD2, and its arrival in 2018, will
further fuel the tension between opportunity and disruption, as
fintechs and tech incumbents muscle in on the ownership of
banks’ customer data, and offer broader choices to consumers,
reinventing the financial customer journey.
We have shifted from a coded world where systems were
programmed, to a cognitive world in which systems learn,
analyze, predict and adapt. Financial institutions now need to
build a bold ‘post PSD2’ future, focused on ecosystems, new
engagement models, disruptive digital technologies and
quintessential consumer experiences.
Artificial Intelligence: Unlocking Value in Financial Services

3. 3
Intelligent Systems:
Augmenting Human
Efficiency

4. 4
Today, consumers are greeted with an array of elevated
experiences forged through automation, robotics and artificial
intelligence (AI). What began as a shift in delighting consumers
more than a decade ago with the inception of online and mobile
banking, is now radically transforming into an individualized and
personalized set of experiences. Through a convergence of
digital, physical and artificial intelligence, this shift is
revolutionizing the ‘human-machine engagement’.
One such example: chatbots. Using natural language, visual
recognition and even tone analyzers, chatbots are becoming a
banking norm. Gone are the days when chatbots provided
binary, simple Q&A-based responses, lacking emotional
intelligence, cultural understanding and cognitive responses.
These interactions are now less challenging and deliver
accurate, relevant, quick resolutions for the consumer and
employee queries in half the time. Traditionally, hand-offs
between chatbots and humans most often led to displaced
anger and dissatisfaction. Today’s exchanges are
multidimensional and interactive, progressing to the point where
actions can be taken by chatbots on behalf of humans. As a
result, a new hybrid ‘digital-human’ workforce is being created.
Artificial Intelligence: Unlocking Value in Financial Services

5. 5
This hybrid digital workforce is proving to be incredibly effective.
It’s estimated that about 50 percent of workforce time within
Banking and Insurance is devoted to collecting and processing
data. By automating tasks — associated with things like
mortgage applications, loan fulfillment, and even underwriting —
a huge amount of inconsistencies in processing can be
eliminated. Further, the speed of pre-approvals can be
enhanced, and processing incongruences associated with
human bias that has traditionally plagued underserved
borrowers trying to access affordable capital can be avoided.
To deliver the next wave of benefits of automation and advance
the hybrid workforce, financial institutions (FIs) are starting to
adopt augmented intelligence. FIs are using augmented
intelligence for decision making and advisory services, in the
form of digital advisors. These augmented, digital advisors
provide FI employees and consumers with faster, consistent
and accurate information, using embedded evidence, probability
and real-time risk assessment.
Artificial Intelligence: Unlocking Value in Financial Services
Verification of a customer can now go beyond answering
questions, like: date of birth, mother’s maiden name, or city of
birth. By tapping into multidimensional data and using the power
of quantum computing, higher levels of confidence can be reached
not only in user verification, but in all levels of decision making.
As an example, a leading French bank has deployed augmented
advisors to 5,000 branches and more than 20,000 agents,
ingesting an average of 52,000 documents per second. Another
French FI uses augmented advisors to analyze and sort
approximately 350,000 emails per day, prioritizing them based on
level of urgency and importance. And, then there’s Japan’s
humanoid ‘Pepper robot’ that provides customer service in more
than 140 Softbank Mobile stores across the country. These
changes are being made in highly secure computing environments,
respecting data privacy and consumer preferences.

6. 6
Fintechs: Critical
Partners

7. 7
The constant changes in financial regulation and mandated
compliance reporting, combined with cost pressures, consumer
demands for innovation and heightened competition has led FIs
to partner with fintechs. In many cases, these changes have
even led to the purchases or investments in fintechs
themselves. These new market entrants bring with them
digitally-based processes and business operating models, as
well as AI-led digital platforms.
Add to this the use of Blockchain technologies, and the cost of
serving a customer in the near future will be a fraction of the
cost compared to traditional approaches today. At the same
time, this provides a greater level of visibility, accuracy and
accountability. Such technological advances and deepened
market competition have led the top five major FIs to form
innovative partnerships with startups and fintechs. It is evident
that the increased competition, the opening of borders, fintech
emergence, and integrated digital technologies have given
consumers more choice and power than ever before.
Artificial Intelligence: Unlocking Value in Financial Services

8. 8
Invest in
Frictionless
Innovation

9. 9
It is important to understand that automation, cloud-based
platforms and AI are not packaged applications that operate in a
plug-and-play mode. The integration of these emerging
technologies requires high-level expertise, industry consulting,
security knowledge and technical prowess, in order to build,
integrate, maintain and evolve. Despite the large number of FIs
who have established partnerships with fintechs, as well as
adopted new digital platforms, many have not been able to
realize the real value these technologies can bring,
fundamentally due to three reasons:
Artificial Intelligence: Unlocking Value in Financial Services
Inability to successfully integrate the
various technological components,
architecture, software and cloud services
into desirable consumer experience valued
by end users.
1.
Failure to create new operating models
based on these advanced technologies
where new digital processes are created
using an innovation-centric and not legacy-
based mindset.
2.
Lack on in-house IT capabilities and skills
to successfully adopt and embrace these
technologies, with 80 percent of banks’ IT
personnel typically focused on ‘keeping the
lights on’, maintaining applications and
making incremental changes.
3.

10. 10
Leveling the
Competitive
Landscape

11. 11
Automation, robotics and artificial intelligence are having a
profound impact on the Financial Services industry, competition
and customer expectations. Fintechs must be allowed to
comply and work in partnership with regulatory bodies without
hindering innovation and competitiveness — or driving
heightened costs and limiting consumer choice. Those that take
advantage of innovative business models, emerging
technologies, new skills, and are successful in establishing and
maintaining trust with consumers and partners, will have a
monumental opportunity to capture borderless market share.
Artificial Intelligence: Unlocking Value in Financial Services
of operations executives surveyed
report that increasing automation will
have a positive impact on operational
efficiency.
76%
Of operations executives surveyed say
intelligent machines will meaningfully
impact their business performance in
the next three years.
75%
of operations executives surveyed
expect intelligent machines to lead to
higher value work for employees.
70%

12. Author: Shamayun Miah
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@shamayunm
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