Why 2018 Is the Year of AI for Financial Institutions

by Todd Clark 0

Machine Learning

For most people, the term Artificial Intelligence (AI) conjures up science fiction scenarios as current as HBO’s popular Westworld series.

In the real world, to say the least, it’s not quite like that. In fact, a simpler way to look at modern AI is this: AI applications use learning algorithms to understand a user’s likes or dislikes through volume of usage. AI is already present in our lives, even if it doesn’t look like a Westworld-style robot. For example, Siri is designed to get used to your preferences, your day-to-day schedule and other everyday tasks based on identifying patterns and processing feedback. Even something like Amazon’s primary website features AI, as it learns your purchasing preferences and displays recommendations.

AI technology is making things faster and easier by cultivating data and providing customized output. In 2018, AI will become a bigger part of many industries, including the world of banks and credit unions, as the cost of AI becomes more accessible.

Where AI Will Be Used

As AI gathers large amounts and various types of data, it crunches the numbers to make predictive decisions. This process is really about analysis to help identify and uncover information to help make better and more informed decisions, ranging from consumer behavior to better understanding internal operational resources. From a financial services perspective, 2018 will most likely see four trends regarding AI:

Fraud prevention and detection:

A major part of detecting fraud stems from unusual activity on an account. Currently, there are safeguards in place to determine if a transaction takes place a long physical distance from the cardholder’s residence or a high number of purchases occur in a small window of time. However, fraud can be perpetrated in many more subtle ways. Fraud teams are trained to spot these types of activities. AI can give these teams a tool to process data faster and more efficiently to detect fraud with increasing speed and accuracy. The credit union industry will be making use of AI for exactly this purpose.

Customer service:

AI represents the future of frontline customer service. AI-driven chatbots (computer programs simulating human conversation) can handle a significant number of basic customer service questions, freeing up resources to focus on issues requiring more significant attention. This type of support also allows for shorter wait times on the phone and with in-person chat, and as the AI system earns more about the nuances of situations, it will gradually increase the accuracy and scope of its support capabilities.

Consumer-centric innovations:

What new products and services will potentially entice existing and previous customers? By analyzing a wide range of data, it’s possible for AI technology to determine what offers may grab an individual customer’s attention and motivate them to engage in rewards programs, lending opportunities, and checking and savings accounts. This targeted method offers a more customized approach to sales and marketing, increasing customer trust and satisfaction through the use of precision offerings rather than a shotgun-blast approach. Even cold offers will be less of a nuisance and receive more attention from customers.

Internal operations:

Salesforce’s Einstein AI  is an example of a new way for sales and marketing teams to manage their customer base. The AI system digests and processes analytics to learn and make recommendations for internal usage, such as projecting sales or sorting notifications and messages by importance. This also demonstrates the type of internal ways companies can apply their external AI platforms into their own operations. This can make an impact on many departments beyond Marketing, from Human Resources using AI for internal basic inquiries and resume intake to helping Legal teams verify contract accuracy.

The Future Is Now

Even for small financial institutions, the time is now to start learning about AI possibilities. In fact, “AI is the new UI (User Interface),” as it was termed in a recent survey by Accenture. Your competition and your customers will not wait for you – and neither will fraudsters seeking to exploit weak links.

About the Author

Todd Clark is President/CEO of CO-OP Financial Services, based in Rancho Cucamonga, California (www.co-opfs.org), a provider of payments and financial technology to credit unions.

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