How AI can transform CX in financial services
Artificial intelligence (AI) is “transforming” the financial services sector, according to a new report by Deloitte. It’s presenting industry members with the tools to escape a ‘race-to-the-bottom’ in terms of price, by distinguishing themselves in new and exciting ways to customers.
In its The new physics of financial services report, the management consultancy firm says the implementation of AI in financial services is a “long-haul flight”. Early adopters with the perseverance to push through the challenges of business-wide technological and cultural change, however, “will make front and back office operations look radically different”.
In this reimagination of the finance industry, AI-driven operations will drive new customer value against competitors, as past methods of speed, price, and cost-based price competition erode to become basic expectations among customers. Meanwhile, organizations will start to adapt products, and their own structure, as virtual finance assistant services become both advanced and ubiquitous, while ownership of these products remains, at present, ambiguous.
So, how will these finance organizations of tomorrow look, and how will customers benefit from these new capabilities?
Through the use of predictive and autonomous AI technologies, financial services will be able to recognize patterns, anticipate future events, create rules, make decisions, and communicate directly with customers. This will cater for customized offers made to each customer specific to their financial needs and objectives.
According to Deloitte, this could include offering services beyond financial ones— such as forecasting services to merchants or even booking repairs for auto damage, for example— made possible by the vast amounts of data firms could attain from customers and corporate clients, the interpretation of which would allow for the provision of tailored advice and “one-stop solutions”.
The report dubs this concept— which seeks to disrupt the often generic, subjective and impersonal finance advice on offer— ‘self-driving finance’, whereby a customer interacts with an AI-based agent for guidance on complex and highly-circumstantial decisions such as home buying, retirement planning or corporate financing.
Getting to this stage, however, means incumbents must compete with a new breed of disruptive, financial startups, by adopting new ways of working and resources, including the hiring of skilled AI and data technicians, product development capabilities and datasets, and says Deloitte, “cultivate a bias for innovation and experimentation”.
“Institutions that procrastinate in creating new ways to differentiate their products face an uphill battle at preserving margins, especially once technology normalizes traditional metrics like price and speed.”
But while these changes will transform the financial services industry as a whole, there are already plenty of established companies— not to mention the considerable volley of startups— making ground.
Lloyds Banking Group, for example, has committed US$4.1 billion a year to a digital strategy that will see it pursue API-enabled propositions and a “trusted guardian of data”, while Royal Bank of Canada, meanwhile, is piloting a tool for car dealers to forecast demand for vehicle purchases based on customer data.
Those in the financial services sectors will need to look long-term when weighing up the cost-benefits of the resource-heavy integration of AI but, ultimately, companies should not let short-term priorities impact future implications.
Deloitte suggests industry members should be open to working collaboratively via open forums and take advantage of shared capabilities.
6 June 2023