According to recent PwC research, global GDP could be up to 14% higher in 2030 as a result of new artificial intelligence technologies – the equivalent of an additional $15.7 trillion – making it the biggest commercial opportunity in today’s fast changing economy. The financial services sector could be one of the biggest winners from this, with large scale improvements in the delivery of products and services.
AI has the potential to transform our lives, so much so that Stanford Professor Andrew Ng believes that as these AI innovations penetrate more industries, AI will become like electricity to our civilization in the next 10 to 20 years, involved in all aspects of our existence.
For the financial services industry, competing with new digital entrants requires responsible adoption of machine learning and robotic process automation technology throughout their organizations far more quickly than they traditionally embrace innovation. In order to succeed in this new digital world, the financial services industry must position itself as driving innovation in the distribution of products and services to effectively compete.
Beyond what’s already being applied on the ground, artificial intelligence can help banks, insurance companies, credit and finance firms and asset management companies reimagine and restructure operating models and processes. Large institutions must process huge volumes of data to generate financial reports and satisfy regulatory and compliance requirements. These processes are increasingly standardized and formulaic, but still involve large numbers of people performing low-value-added tasks (often in reconciliation and consolidation), making them ideal candidates for robotic process automation. Such automation could yield massive operational efficiencies that will redound to the consumer.
To realize the opportunity of AI, financial institutions must develop strategies that put people at the center.
Back offices now develop bots that do simple, repeatable work so humans don’t have to. Fraud departments assisted by deep learning technology can quickly discern the difference between true red flags and false positives. Lending decisions are increasingly assisted by some form of artificial intelligence.
We find the most significant, immediate-term AI technology potential in personalized financial planning and algorithmic trading, fraud detection and anti-money laundering pattern detection, customer relationship management chat bots, and process automation both in compliance and back-office functions and customer facing operations.
Institutions now issue customer recommendations based on user data analyzed by AI. Such recommendation engines not only drive revenue growth, but also offer the consumer a personalized and customized experience.
Some say that all we are accomplishing is the automation of repetitive tasks that improve operational efficiency rather than implementing innovations that could perform roughly as a human. AI and machine learning scholars continue research to achieve what they refer to as strong AI with humanlike capabilities and beyond, but those significant breakthroughs could be a little farther away.
This leads us to ponder what is over-hyped and what is real in the AI arena. Will large portions of the workforce be replaced by machines? Is this recent boom in innovation simply augmented automation being passed off as AI?
Regardless of the differing perspectives, each time we see a significant increase in interest in new AI innovations, the yield is planet-altering benefits of major technological advances that improve our lives. Examples include the development of the internet, mobile phones and now blockchain technologies. Each of those technologies arose from a period of increasing interest in AI technological research.
In short, even if we don’t reach human level AI at this current phase of development, consumers will still see enormous returns and perhaps major technological advances.
To realize the opportunity of AI, financial institutions must develop strategies that put people at the center and commit to develop responsible systems that are aligned to moral and ethical values that will drive positive outcomes for consumers. Importantly, FIs should follow trends without getting bamboozled by the “next big thing.”
As a first principle, businesses must clearly identify the problems they are trying to solve, and then determine how AI can be used to solve them.
Financial services firms should prepare for increased consumer interest in AI and plot their course in regards to this emerging technology carefully. Appropriate development and use of AI should improve the customer experience and efficiency of the firm. Companies that embrace this trend are likely to be the winners of the future.
Stephen Ibaraki is Founding Chairman of the FSR Technology Advisory Council
Hari Gopalkrishnan is Managing Director of Client Facing Platforms and Technology at Bank of America
This article originally appeared on the Financial Services Roundtable website.