Artificial intelligence is now more popular than ever. And it’s not only for specialists. It has crept into our lives and is here to stay, as it is present in many daily-used applications. But, what will this technology bring to a sector like banking -so greatly in need of innovation due to the current crisis- in the future?
everis aims to answer that question on an insightful study entitled “AI in the Financial Sector,” an educational report that explains the history of AI in the financial sector and its applications and advantages, as well as trend forecasts.
Although we are now used to seeing artificial intelligence everywhere and we may believe that the discipline is quite new, the general term was actually coined nearly 70 years ago, kicking off the first AI studies. Regarding the banking sector, the report points out the late yet intense adoption of AI and its growing prominence due to AI’s intrinsic versatility.
For the last several years, banking corporations have been using machine learning techniques to detect credit card fraud, to interact with customers via chatbots, to manage funds and recommendation algorithms, as well as to streamline and focus their work to comply with regulations. Additionally, AI has been implemented to improve transactions as well as asset and risk management. While it is true that people tend to think that the finance sector is one of the most digitally advanced, there is still a long road ahead.
AI as the driver of new emerging business models
The report states that it is fundamental to develop a strategy for the implementation of artificial intelligence. Such strategy should consider business needs, the culture of each financial institution and also the ethical and social impact of adopting AI.
AI strategy and data culture have become core factors for shaping new business models and producing a differential-relationship model which transcends the traditional concept of customer-focus to create a much deeper and encompassing level of connection: AI provides comprehensive service to people, not only to their relations with the brand.
Thus, AI-led strategy can lead to the transformation of financial lines of business in two intertwined ways: internal transformation, by improving operational competitiveness, organizational management -by aligning AI to the existing corporate culture- and open innovation within an ultracompetitive market; and external transformation, by fostering new business models—partly due to a tightened competition within the sector caused by new players (BigTechs and FinTechs)—as well as the creation of differential data-based financial products and services, and hyper-customized interactions and experiences with customers.
AI as the source of a sustainable, coherent and ethical business model
In a context of constantly-emerging technologies, the consultancy’s study reveals that financial institutions need to follow the way defined by AI in order to stimulate and enhance long-term, profitable and sustainable business model. Besides, such model should be consistent with that of the institution and should factor in any ethical challenges because customer trust is everything -today more than ever.
As a result, when the context is known, future banking trends will shift towards a much more collaborative environment, with new machine learning developments and real-time data compilation and processing (without the need of cloud-based data compilation solutions), service strategies based on artificial intelligence, contribution to sustainable development (it can boost the achievement of the UN sustainable development goals to a great extent) and giving attention to ethical problems stemming from AI.
The activity of the financial sector is based on clients’ trust and proximity, hence the importance of ethical challenges. Today, society demands higher transparency and, especially, the coherence and responsibility of financial businesses towards customers. Thus, institutions must use artificial intelligence properly so it is developed by humans under human supervision, technically robust and secure, compliant with privacy and data management standards, transparent, prevents discrimination or lack of respect for diversity, social and environmental well-being, and remains accountable via an audit of both systems and results.
From a social perspective, AI-related challenges should be tackled by institutions within the framework defined by the European Union and its “Ethical Guidelines for Trustworthy AI,” which will help them handle the ethical impact of this technology globally.
Along those lines, everis has developed its own working framework for AI for many years already. Through this process everis has gained a thorough expertise on how AI impacts people and society. This has had an influence on four main action areas: the interconnection between AI systems and algorithms; the need to create ethical governance of AI within the organization; the involvement of senior management, fostering ethical leadership and culture to maximize the exchange of knowledge; and the company’s own commitment and the transfer of these findings to society so that the impact of artificial intelligence promotes inclusion, diversity, justice, sustainability, foresight, and progress.
To summarize, the study states that artificial intelligence is a real asset in today’s financial sector and stands out as a key aid to embed within corporate strategies. Institutions should consider the advantages of adopting AI-based technologies as well as the obligations to prove the benefits of its social and ethical impact.
Click here to request the full report.