Artificial intelligence is employed in financial services more and more often. A 2017 study by Forrester Research found that 69 percent of executives in charge of data and analytics at financial service providers are already using or are planning to use intelligent software solutions. Thus, financial service providers prove to be much more open-minded toward using artificial intelligence compared with decision-makers in some other industries. And they have to: Emergent financial technologies (fintech) companies are on the heels of traditional financial service providers. Their business models are based on innovative financial services — artificial intelligence is virtually always in play.
Fintech Companies: Substantial investment injections for innovative financial services
The German newspaper Handelsblatt recently reported that during this year’s first quarter, German fintech providers were already able to secure record investments on account of innovative financial services. The secured funds add up to 295 million Euro. That’s 44% more than during the first quarter of 2017. These innovators prove: Large investors, such as Allianz, Bertelsmann and Visa, are taking fintech providers seriously and are banking on the success of innovative financial services — among them, intelligent solutions for automated portfolio management, new digital payment methods and intelligent comparison of interest rates.
Traditional financial service providers under pressure
Traditional financial service providers are with their back against the wall. Until now, they have mainly been cooperating with the up-and-coming and technologically well-versed fintech providers. After all, they too offer financial services. And customers are rarely aware of who developed them. Nevertheless, the well-established banks cannot put off digital transformation for much longer. Fintech companies may continue to strengthen and claim a bigger role in the financial markets. Established financial service providers should prepare for this scenario by developing their own digitalization strategies. Which innovative financial services are they going to bring to market? How will they integrate artificial intelligence into their business processes? How are they planning to build intelligent, customer-friendly digital networks?
Finding answers to artificial intelligence
The time for trial and error is over. According to Forrester experts’ prognosis for 2018, CIOs around the world will realize that new technologies like artificial intelligence are much more than new toys. Rather, they mean hard work. Therefore, CIOs will:
- have to consider how artificial intelligence can boost their analytical competence and impact new business models
- need even more data and depend on even better computing power — which brings cloud computing back into the picture
- have to find solutions for amalgamating knowledge acquisition and business competence within the organization.
Forrester projects many companies will aim to accomplish this by hiring data engineers and building centers where they pool customer intel. More and more companies will rely on so-called insights-as-a-service (IaaS) solutions that turn data into relevant, actionable knowledge.
Huge potential for artificial intelligence in financial services
Once again, the Forrester predictions illustrate the impact of using data intelligently — today, and even more so in the future. Organizations must be able to reap (the right) insights from their data. Without this capability, they will have no future. This is true for financial service providers in particular. Intelligent financial services are founded on foresight, personalized consultation and good service. This requires that financial service providers are able to understand, know and appreciate their customers. Their big advantage: They already have much of the information.
Customers have already trustfully provided their data. Artificial intelligence helps financial service providers to analyze that data securely and precisely. Financial service provider can utilize the insights gained from this data in a multitude of ways — to improve their customer experience, to induce customers to additional action and to develop novel, intelligent financial services.
3. Good solutions: Establish a networked back end
Process automation provides important advantages not just to your front office operations. Automating back-end processes helps to create an improved customer experience, too. Let’s take an honest look at the reality of many employees in customer service, sales or marketing: To handle a customer inquiry, they often have to work in multiple systems simultaneously. Media disruptions are the course of nature in many organizations. Automating critical processes enables the breakdown of these data silos. How? Automation software interlinks various processes and updates critical data. It promises the best success if all customer processes converge on one central platform on the back end as well. Your employees get a 360-degree overview of all customers. Everyone is always up to speed on any given case and is empowered to offer the customer the best solution, quickly and easily.
4. Simple processes: Make the customer journey transparent
Sometimes, finding the best solution takes time. Customers usually accept that — if the process is transparent and the steps remain simple. Your customers simply want to know where they stand with you. Who is currently in charge of their inquiry? Where is their product? What’s the path of their claim? Making the customer journey transparent is key to a successful customer experience. Granted, making things transparent at all times can be challenging for your company. While your customers expect the processes to become increasingly simpler, customer service has become quite a bit more complex for you. Automating processes helps you to shield your customers from this complexity and makes your team’s daily work easier.
Creating structured processes across all channels is essential. Define which departments and systems are involved in certain processes. Decide how your departments should be linked together. Standardize procedures! If you accomplish that, internal processes involving multiple departments and systems can be coordinated automatically. This is a bit of work in the beginning — in the long run, however, you are saving many work hours.
Conclusion: Financial services are transforming
The financial industry is changing, and artificial intelligence plays a tremendous part in this transformation. With digitalization and ever more sophisticated possible applications of advanced technologies, financial service newcomers are disrupting the market. They develop novel, innovative and intelligent financial services. In Germany, fintech companies have already achieved record first-quarter earnings this year. The willingness to invest proves: Fintech providers are being recognized as players to be reckoned with in the market. Traditional financial service providers must react. Thus far, they largely relied on cooperation. But when it comes to digitalization, they should take a page from their young competitors’ book. They need digitalization strategies, clear answers to artificial intelligence and their own original financial services.