Artificial Intelligence, Partner

How financial institutions can get the most out of artificial intelligence

  • Artificial intelligence is a complex technology with a variety of applications. For best results, financial institutions should implement AI with a specific need, plan, and strategy in mind.
  • AI can help financial institutions move beyond a transactional, generalized digital banking experience, and deliver branch-like banking on digital channels at scale.
close

Email a Friend

How financial institutions can get the most out of artificial intelligence

Mark Ryan, Co-Founder and Chief Analytics Officer, Finalytics.ai

Financial institutions face a unique dilemma whereby large volumes of data are instrumental to their effectiveness as a business, but without the proper tools, the quantity and complexity of this information can overwhelm staff and be difficult to apply in beneficial ways.

When used properly, AI can analyze large amounts of data with speed, accuracy, and scale to produce valuable and actionable insights about a financial institution’s current and prospective customers. Access to such insights provides organizations with a decisive advantage against the rest of the field.

However, it is important not to use new technology just because it’s trendy. Financial institutions may see their competitors try AI and then react tactically rather than plan strategically. This “shiny object” adoption cycle happens with many new, innovative technologies and often delays the application of a technology’s full potential across an industry.

So, how can financial institutions determine what the right AI technology is for them?

There are several areas to address when considering what AI technology is best for a specific financial institution. To start, basic questions must be asked, such as what is the financial institution trying to accomplish by acquiring AI? Is the goal to create internal efficiencies that will free up time for bankers to spend with clients, or to implement a user-friendly tool that will speed up customer service requests, e.g. a chatbot? According to Finalytics.ai internal research, organizations that define goals and ask the right questions see growth rates at 15-25% year-over-year, more than double the ones that don’t.

Utilizing return on investment models created to consider the full scope of the technology’s impact can also help financial institutions determine where they should or shouldn’t implement AI. However, these models shouldn’t be focused just on sales, profit, or income, but also on customer satisfaction. For example, while financial institutions have flocked to chatbots or targeted email marketing due to their lower costs and immediate short-term results, these methods only truly impact 5-10% of customers, according to Finalytics.ai data.

Though perhaps more expensive, an AI model that can analyze large volumes of data quickly, accurately and in real time can add hundreds of millions annually to an institution’s top line. By analyzing insights to predict the needs of consumers at a specific moment in time, this type of AI can help financial institutions deliver segment-of-one digital experiences at scale. This approach brings a relational digital banking experience, rather than a purely transactional one, benefiting all customers, increasing member satisfaction, boosting retention rates, and introducing new opportunities for cross-sale.

Once the goals are set, a strategy can be built for the use of AI. Financial institutions should set an AI budget and undergo a market evaluation of AI vendors to determine what provider best suits their needs, goals, and culture. A good technology partner should be able to support a financial institution throughout every stage of the process, from testing to implementation and the day-to-day operation of the system, while also helping the organization save costs by eliminating the need to invest in data warehouses and an in-house IT department.

With margins constantly under pressure and modern digital capabilities demanded by consumers, AI can help financial institutions deliver what their customers need and want, at a specific moment in time, faster and more precisely than a human or any other technology currently available can. AI can also help organizations save costs; in fact, according to Insider Intelligence, the potential savings banks will get from AI applications this year is an estimated $447 billion. In addition, AI can help eliminate bias in banking, enabling financial institutions to better serve the underbanked, and also support organizations in determining risks and being more prepared to combat financial crime.

AI is everywhere right now, but to be effective, it should be applied in areas where it can have the most impact. By gauging customers’ needs, putting together a plan, setting a budget and analyzing the AI vendor market, financial institutions are more likely to invest in the right technology for them – one that will render the best results, save costs, and increase consumer satisfaction, truly giving these organizations a competitive advantage in the market. 


Mark Ryan is co-founder and Chief Analytics Officer at Finalytics.ai. Throughout his career, Mark has worked with some of the largest community financial institutions in the U.S., helping them through digital transformation, design, development, and data analytics.

0 comments on “How financial institutions can get the most out of artificial intelligence”

Partner, Podcasts

Customer expectations in a digital world with Deloitte’s Jonathan Valenti

  • Join Jonathan Valenti from Deloitte Consulting as we delve into evolving customer expectations and the role of technology in financial services.
  • Discover insights on personalization, equity, inclusion, faster onboarding, and partnerships, all in response to recent market events.
Zachary Miller | September 28, 2023
Partner, Podcasts

‘Getting the model right’: How Regional Finance balances customer-centricity and fraud prevention in digital lending

  • In this episode of the Tearsheet Podcast, Regional Finance explores credit modeling in the digital lending landscape, focusing on the balance between serving customers and preventing fraud.
  • We speak with Chris Martin, head of product management at the $1.5 billion consumer lender, and with Argyle's Matt Gomes, who leads the firm's data and tech efforts in banking and lending.
Zachary Miller | September 21, 2023
Partner, Payments

The opportunities and evolution of the consumerization of B2B payments

  • B2B payments are slowly but surely following in the footsteps of consumer payments, becoming faster and more secure.
  • Visa, with solutions like Visa B2B Connect, is leading the way in streamlining cross-border transactions and improving efficiency, enhancing the business payment experience.
Darren Parslow, Visa | September 18, 2023
Partner, Podcasts

Navigating the future of digital banking: A conversation with Deloitte’s Nick Cowell

  • Join Nick Cowell, Deloitte Partner, as he discusses the digital banking landscape in North America and how traditional banks are adapting to meet evolving consumer demands.
  • Explore the changing dynamics of the banking industry and learn about the rise of digital neobanks, evolving customer expectations, and the critical success factors for incumbent banks in a digital-first world.
Zachary Miller | September 14, 2023
Partner

Empowering people and connecting communities through remittances

  • The remittance industry has evolved, reaching $800 billion in 2022, benefiting immigrants and their families with near real-time, transparent transactions.
  • Digital remittances, supported by Visa Direct, offer cost-efficiency and financial inclusion, but infrastructure challenges in some regions persist, highlighting the need for wider participation in building global digital networks.
Visa | September 13, 2023
More Articles