Artificial Intelligence is Transforming the Financial Services Sector

Digital transformation was taking place in fits and starts before the pandemic, but now digital initiatives are accelerating rapidly. Digitalization using new technologies including artificial intelligence and hybrid cloud are at the heart of this acceleration and this has been more rampant in the financial services sector, also driven by rapid technological innovation and quickly shifting customer preferences.

During the COVID-19 global pandemic, the number one business priority was the safety and well-being of employees, businesses also worked overtime to meet the changing needs of clients. Companies turned to AI and machine learning to deliver novel digital customer journeys and eliminate unnecessary interventions in the most routine, repetitive, and paper intensive tasks.

Virtual assistants became a critical tool for large organizations and governments during the pandemic. Nearly 43% of businesses globally accelerated their rollout of AI over the last year, according to IBM’s 2021 Global AI Adoption Index, as organizations looked to virtual assistants to manage swelling call volumes and other similar pathways to automation. According to the same survey, 80% of companies said they had plans to roll out some form of automation software over the next 12 months.

Companies are looking to further fuel digital advantage that can increase competitiveness, drive greater efficiencies, and generate new revenue streams. Infusing AI into automation can drive innovation and efficiencies and help save costs. Business processes can improve by incorporating machine learning and natural language processing into decision making. For example:

• Agent Assist – AI allows more personalized customer care. For example, redirecting contact center calls to self-serve 24×7 virtual assistants across channels including web, messages and voice;
• Personalized Experience – Using authenticated conversational AI to assist clients performing banking transactions including accounts transfer and bill payments;
• 24×7 Customer Care – Using virtual assistant to provide clients with round the clock customer support including checking order status, answering frequently asked questions;
• Fraud Detection – Machine learning algorithms can spot red flags more easily in detecting fraudulent activities. The end goal is personalized client-centric legendary experiences with artificial intelligence;
• AI for IT Operations (AIOps) – Using big data, analytics, and machine learning capabilities to collect and aggregate operations data, identifying significant events and patterns related to performance and availability issues and carry out root cause analysis.
• Cybersecurity – In a 2022 outlook report, IBM found that cybersecurity has again become a burning issue. To protect against data breaches, which on average costs financial institutions USD 5.72 million per breach, industry participants and cloud providers can leverage AI models, augmented with shared data across institutions, to reinforce the industry immune system, revealing criminal patterns before they go viral.

IBM has been working with the financial services industry for decades and helped businesses enhance their use of AI-powered intelligent workflows to drive efficiency and to strengthen customer relationships. A recent example of this is IBM’s work with TD Securities to launch an AI-based virtual assistant using IBM Watson Assistant that can help customers with inquiries on the TD Precious Metals digital store, including frequently asked questions. The new virtual assistant, now available as a feature on the TD Precious Metals digital store, provides visitors with a convenient self-service option, available 24/7, for frequently asked questions about TD Precious Metals.

IBM Watson Assistant uses AI designed to understand customers in context to provide fast, consistent, and accurate answers across applications, devices, or channels. It has been deployed by clients around the world and across a range of industries to deliver powerful customer care experiences such as responding to time sensitive COVID-19 inquiries, helping citizens get more information on voting procedures, helping insurers provide more personalized services, and more.

As digital acceleration continues, it’s going to open a new business model for many industries including financial services. AI powered automation could help financial institutions to keep up with, and exceed, constantly changing customer needs, shifting regulatory requirements, and increasing cybersecurity risks on a much-reduced cost base.

For AI to continue to advance, companies and organizations need to make progress in earning greater consumer trust – from the ability to make AI decisions understandable and explainable to providing consumers with confidence that their personal data is being protected. As companies and governments continue to invest in cybersecurity, AI will play an even more crucial role in helping identify and respond to threats more efficiently.