What is intelligent automation and what does it mean for the financial services industry? What's the role and application of artificial intelligence (AI) in this context?
Banks currently face a number of specific problems for which intelligent automation - and within this the capability of AI - may provide solutions. Far from becoming our new masters, our prediction is that thinking machines could become our most trusted assistants, enhancing our productivity through providing us deeper and more timely information, and perhaps even automating the business of generating insights and making considered decisions.
We believe that intelligent automation will, above all, allow us to free people from routine work and so empower them to concentrate on more creative, value-added services. The overall benefits to the economy from such enhancements could be large, as could the benefits in terms of enjoyment of work and quality of life.
The current (re)emergence of AI, which is contributing to the broader intelligent automation trend, seems to be driven by several key factors. The availability of unprecedented amounts of data (much of it unstructured), the exponential increase in computer processing power, the declining price and growing convenience of data storage solutions, and recent advances in machine learning algorithms, all provide a powerful toolset for making significant strides in intelligent automation.
We strongly believe that financial services organizations - like firms in other industries - need to harness the potential benefits on offer. Our world is becoming so inherently data-driven that only AI's more capable, dynamic tools will be able to harness this information and to put it to useful work.
AI will likely help banks create better client experiences through ever more personalized, on-demand services. Although they offer personalized services today, AI can help bankers better understand clients and their needs, as well as aggregate and evaluate more real-time information relevant to their clients' specific situations. We think that AI will help banks better execute on their promises of service excellence. And in our view, AI will also allow banks to put better and more powerful financial and wealth management tools into their clients' hands.
AI can also help make banks safer, significantly improving the means for combatting cyberattacks. And it has the potential to make banks smarter, too. By learning how markets behave, and providing improved market intelligence, more profound market insight and better assessments of risk, AI can help banks offer deeper, broader and altogether smarter investment advice.
Furthermore, AI offers the potential to reduce costs. Banks already spend a significant share of their development budgets on projects to automate routine processes. This is happening first in the 'back office', where we see intelligent software agents executing manual, easily defined administrative processes. As machines become more 'intelligent', they will be able to undertake more complex tasks, like credit scoring or automated report writing. Although it may seem expensive now, by helping to usher in truly intelligent automation, AI can help banks achieve significant economies of scale.
While we think AI will play a significant role in financial services, the path for intelligent automation will not be straightforward; all organizations can expect to face hurdles on the way. To succeed, AI will have to be robust and compliant. Financial services organizations and regulators will need to work together to agree on prudent rules that protect consumers and society without stifling innovation. Issues of liability will also have to be addressed so that banks, their partners and other stakeholders have clarity on risks and responsibilities.
Banks should also not underestimate issues around the acceptance of AI by their workforces and clients. AI promises great benefits, but it also causes anxiety. To gain acceptance for AI banks need to clearly communicate its benefits, while being honest about the risks. We think one way to do so is through papers like this.
It is difficult if not impossible to say how the AI future will play out. The history of AI is full of predictions that turned out to be off the mark, and perhaps only in retrospect will we be able to clearly see the path we have taken.
No matter how long the journey takes, we believe it should be made, and are confident that the impact will be significant and ultimately beneficial.