It’s still less than 70 years since the phrase Artificial Intelligence (AI) was first used but we are increasingly seeing its influence across our every day lives. In the professional world, AI has evolved from pie in the sky to a potentially crucial tool for driving engagement, profit and growth. It is being integrated across multiple sectors, from travel through to law – and the financial services industry is no different.
AI and financial services
There are a number of key ways in which AI is predicted to have an influence in the financial services sector today, including:
- Improving the process of risk management. In financial services risk analysis and management has always involved the use of data. AI significantly increases the volume of data that can by analysed in a short periods to identify and process risks in real time and work with multiple variables. This will make risk management more effective and reduce potential delays.
- Evolving traditional credit scoring systems. The application of AI to the process of assessment of borrowers has the potential to make this more accurate, faster and less biased. Machine learning could make it easier, for example, to distinguish between borrowers who are high risk and those who simply have an unusual credit history e.g. no credit history.
- Better fraud prevention. Fraud detection systems have become more advanced in recent years and the use of AI is about to take this to the next level. The ability to swiftly analyse key data and look for anomalies in customer location, behaviours and habits will make this even more effective. AI will also have a big role to play in preventing money laundering, helping to identify suspicious activity more quickly and reduce investigative workload.
- More effective automation. Robotic process automation provides a wealth of opportunities for financial services sector businesses to improve efficiency and service and reduce cost. Where this is used in combination with AI it will enable businesses to make optimum use of data and minimise time spent on mundane and time consuming tasks.
- The impact on trading. As AI has filtered into the financial sector it has been adopted into the world of investments with data driven algorithmic trading becoming increasingly popular. The advanced ability of AI to process vast volumes of data increases the speed of trading decision making and, as a result, allows transactions to be made more quickly too. Algorithms can be used to test trading systems based on past data and this is an essential tool in more accurate predictions and recommendations. Some financial institutions are already putting the management of large portfolios into the hands of AI.
- Personalised banking. Machine learning has a lot to offer in terms of personal banking, from providing more personalised interaction to supporting individuals in meeting their financial goals. Apps already exist that use AI to help customers manage expenses and income, pay bills and plan more effectively.
AI is set to transform both consumer and business sectors – these are some of the key ways in which the financial services industry is likely to be affected.