Your next bank might be Skynet, if IBM has any say in it.
Though many companies offer AI solutions for financial institutions, IBM is championing the use of cognitive computing in banking, publicizing the term as a new paradigm.
What is cognitive computing and how does it apply to banking?
Based on machine learning, natural language processing, and human interface technologies, cognitive computing systems can learn as information changes and requirements evolve, and easily interact with users, other devices and other data sources. In contrast to traditional computing models which tabulate and calculate based on preconfigured rules and programs, cognitive systems can handle situations that are dynamic and information rich.
When applied to banking, cognitive computing can offer a wide set of benefits to both banks and customers.
What does a fully cognitive bank look like?
Imagine banking was as simple as a Google search. Instead of surfing multiple pages on your bank’s app, you type or talk to a single input box: “I lost my card.” A quick chat with a rep you didn’t even realize was not human and the new card is on its way. Compare this to the current frustration of clicking multiple links to find the right phone number, and one can easily see the benefits.
Banks can also leverage machine learning to predict financial needs and proactively suggest to a customer a personalized loan or to transfer money to a saving accounts ahead of a coming purchase. Leveraging a lifetime of customer data, banks will be able to truly personalize the services they offers each client, at scale. A seamless omni-channel experience, often conversational, can turn banks into a trusted advisor who is available when we need it.
Since a cognitive system learns and improves with every iteration, a virtuous cycle of customer satisfaction is formed.
Are banks adopting the new paradigm?
If you banked in the last week, you probably know the answer.
Generally speaking, banks are still testing the waters when it comes to cognitive banking. In a 2016 survey conducted by IBM, just 11 percent of bank executives reported they have adopted cognitive technology. 58 percent named improving operational efficiency as their most important strategic priority right now, which might explain the low adoption rate. Banks are generally focused on cost reducing activities and do not make needed IT investments.
In the same survey, 49 percent cited [the rather superficial outcome of] operational efficiency as the main benefit of cognitive computing, indicating bankers are a bit aloof to the transformative potential of it.