Artificial Intelligence in the Finance Industry6 min read - Insights
Artificial Intelligence can be described as machines working in an intelligent way. Common uses of the technology include decision-making, problem solving and automation. But where we’ve seen the biggest impact is the integration of artificial intelligence in finance departments and companies. Put simply, AI is changing modern banking and the finance industry. By 2035, it could double annual economic growth rates, increasing your employees’ productivity by up to 40 percent. Because of this potential, a number of banks are already investing in infrastructure for AI solutions and services.
Why should you consider investing in Artificial Intelligence for your business?
Cyber Security & Fraud Detection
Rules are a great first line of defence between your data and security threats but the benefit of AI is that it goes beyond this. To protect yourself against cyber criminals brute-forcing your security systems, you can use machine learning to automatically look for patterns or anomalies in your systems. Security software using AI can monitor the security threat, alerting and updating you as it develops. If necessary, the software can even take action, locking infected files and your local network to prevent the virus from spreading through your systems.
The same technology can be used to detect fraud in your company. Normal user behaviour is chaotic but fraud will often involve a large amount of small-scale transactions. AI recognises this pattern and can automatically block transactions or restrict user accounts. This isn’t just more cost-effective for you but the real-time monitoring also lets you be more responsive, allowing you to react to security threats immediately. Companies like PayPal are already using artificial intelligence to study and track their users. By embracing artificial intelligence, PayPal reduced their fraud rate to just 0.32% (under a quarter of the industry average of 1.32%).
Robo-Advisors & Algorithmic Trading
Robo-advisors use a mixture of artificial intelligence and algorithms to offer financial advice and manage portfolios. They attract customers because they’re cheaper than traditional investment advisors and require no or very low minimum balances. By adding AI to your service offering, you’ll encourage segments like young, first-time investors.
The number of robo-advisors has grown by 70 times since 2013 and it’s estimated that by the end of 2017, robo-advisors will manage up to $285 billion in assets. You can use artificial intelligence to reduce the cost of consultations and increase access for your customers.
AI-controlled investing uses algorithms to spot opportunities, manage risk and make lightning-fast decisions. Al-based trading works much faster than human traders by analysing data from the internet and using this information to trade on instantaneously. It’s been proven that hedge funds taking advantage of AI algorithm-based trading outperform industry averages. Algorithmic trading reduces your transaction costs and removes the chance of human bias or error from your employees. This presents a huge opportunity for your business and can give you a competitive edge in the sector.
A large amount of your company’s resources will be spent on low-priority tasks. For example, underwriting traditionally includes a lot of repetitive, low-value manual work. Decisions made by your employees also have the potential to be biased. JP Morgan Chase calculated their employees spent 360,000 hours each year on such tasks so used machine learning to cut this down just to a few seconds. Their system, COIN, shortens the time it takes to review documents and decreases the number of mistakes made from human error or accidental bias.
AI can also be used to automate your clients’ instructions. UBS & Delloitte use artificial intelligence to scan clients’ emails and automate transactions. This is a task that would usually take a human up to 45 minutes but artificial intelligence does it in just two! A system like this frees up your employees to focus on more complex tasks, improving your company’s productivity and increasing workforce satisfaction.
Chatbots & Customer Service
In a previous article on Enterprise Chatbots, we found that successful chatbots rely on a deep understanding of your customers. Using this understanding, chatbots can answer common questions, collect information and offer personalisation in your customer service. HSBC’s Amy, a commercial banking virtual assistant, provides customers with instant answers 24/7.
Using information, either from data sets you provide or collected through chats over time, AI can also flag common issues your customers are raising. Through conversation with your customers, artificial intelligence can identify patterns or common requests. Using this, AI can suggest potential products, packages or services to increase your offerings and improve customer experience.
Artificial intelligence can serve a useful first point of contact for your customers’ concerns. Live support can then take over if AI interaction is not sufficient. Through this automation, chatbots can help to reduce customer service costs by up to 30%.
Artificial Intelligence has been around for years but it’s only recently become part of our daily lives. The opportunities it presents will not only streamline your internal process but also give you a competitive edge. All thanks to the advances in big data, software and cloud technology. AI won’t replace jobs but it will integrate into your existing processes. It will help your employees to work faster and more efficiently, all while cutting operational costs. To truly make the most of AI, however, you must ensure collaboration between the technology and your employees.
Where should you start with AI? Because artificial intelligence is task-specific, you’ll need an understanding of what it is your employees do on a day-to-day basis. By doing this, you can easily identify the problems your employees are having. Enabling you to strategically implement AI to support them in their daily duties.
Want to know more about Machine Learning & Artificial Intelligence in Finance?
If you’d like to discuss the opportunities of Artificial Intelligence within your business, get in touch today on 01737 45 77 88 or email us using our contact form. Similarly, speak to a member of our team through Livechat on the bottom right hand side of your screen.