Some of the newest and most interesting opportunities for AI are in financial services. The industry is still in the early days of implementing the technology, with just a third of financial firm executives reporting that their business has adopted some form of AI, according to a research brief by Narrative Science.
However, taking advantage of AI will undoubtedly help forward-thinking firms remain more competitive now and in the future. Here are five ways financial services companies are already putting AI to use:
1. Fighting fraud
Authenticating customers and fighting off fraudulent activity is a serious and costly business for banks and other financial institutions. Artificial intelligence promises to help make these tasks easier through a variety of applications. For instance, MasterCard announced last fall that it was using AI to not only help reduce fraudulent credit card use, but also to decrease occurrences of false declines. The company estimates that the latter occurs a whopping 13 times more than actual fraud, and notes that AI can help minimize risk and improve customer experience.
2. Boosting productivity
The financial services world is full of data-dependent, highly repetitive tasks, which can be automated thanks to AI. 13% of financial services firms are currently using AI to enhance productivity, according to the Narrative Science report. Asset management firms are tapping the technology to produce fund reports for clients, leaving more time for staff to focus on in-depth commentaries. In another example, firms are using AI to answer commonly asked questions from clients—again, giving employees some time back to work on furthering the actual business.
3. Improving investment success
That hedge funds and other institutional investors use computers to help make trades is certainly nothing new. But with the advent of AI, a few savvy hedge funds have figured out how to use the technology to fully automate all of their trading decisions—no humans required. A recent article in Wired reveals how some funds are exploring whether AI can help analyze huge amounts of data quickly, spot market trends earlier, and make proactive investment selections. The paradoxical risk? If it does work, then everyone on Wall Street can put it to use—eliminating its advantage.
4. Increasing compliance
Banks face a mountain of regulations, and they spend billions to ensure that they stay in compliance. The potential that AI possesses to both streamline compliance activity and reduce compliance costs has the industry buzzing. The CEO of one compliance focused AI company estimates that AI could cut big banks’ compliance costs by a third. As of now, banks are using the technology in various ways, including to monitor and identify regulatory changes and analyze documents to determine who and what is affected by them.
5. Enhancing customer service
As with other industries (retail, we’re looking at you), so-called “chatbots” are becoming more common in financial services. AI makes it possible for firms to improve their customer service, respond more quickly to customer requests, and route clients to employees when the issue requires human interaction. Consulting firm PwC also predicts that due to increased pricing pressure on commissions, the industry will rely more on robo-advisors to offer wealth management advice.
All of this is exciting, and yet it’s just the tip of the iceberg when it comes to how AI may transform the financial services industry. In the meantime, learn more about how DOMO’s thought leadership and business intelligence products are giving financial firms an edge in a competitive industry.