Using AI in Financial Services: 5 examples across the value chain
Artificial Intelligence (AI) has been a buzzword in Financial Services for a while now. But what tangible opportunities/benefits does it provide or will it be another ‘solution to a problem we don’t have’?
At Sia Partners, we believe AI is an important new tool in the armoury of FS firms and offers many different applications that will benefit firms. In this article, we set out some examples of key applications across the full value chain:grow, replace, protect, comply, and customer service.
1 – Grow
To help firms grow, AI can be a powerful tool in helping acquire new customers by being able to quickly gather and analyse market analytics to understand customer segmentation better.
For example, by understanding customers at a granular level, marketing can be more targeted and effective in securing new customers. Rather than offering your services to the whole world, you can target a specific segment(s) to focus your efforts and therefore improve your marketing outcomes.
2 – Replace
AI can also be a useful tool to support and automate previously manual tasks.
For instance, robo-advisors can provide customers with wealth management services that were previously restricted to high-net worth individuals. This has led to a proliferation of new companies using robo-advisory services to try to capture this expanded market.
3 – Protect
Protecting companies by scanning more information faster than a human can is yet another benefit of AI.
This is illustrated by Risk Departments using AI to help credit risk analysts make quicker and better-informed decisions. With AI’s ability to collect and analyse vast data sets, it can identify whether clients are exposed to potential risks faster than humans can. This can help avoid client losses.
4 – Comply
Regulation has increased significantly since the financial crisis, not to mention the split in many EU regulations due to Brexit, and we find most of our clients are looking for tools to deal with this increase. Here too, AI can lend a helping hand.
For example, AI can provide document analysis related to AML/KYC requirements. AI can quickly scan client information against sanctions lists and list of suspicious transactions more efficiently than humans. AML issues have featured increasingly frequently in the news and we’re sure this will only increase.
5 – Customer Service
Finally, AI can help firms improve the customer service experience.
For instance, AI can sort customer queries, correspond with customers via chatbots, and address basic problems. This helps companies allocate resources more efficiently whilst increasing customer engagement and satisfaction.
Despite these many benefits, there are some key challenges many of our clients face on the road to implementing AI across their value chain. The primary one being the limitations of their legacy systems. As a result, many often struggle to switch to a nimbler and more flexible IT backbone that would ensure they get the most out of AI.
This is where experienced consultancy can make the difference – by understanding not only the target use case but also how to overcome the issues to practical implementation. Sia Partners has supported many clients over the years in implementing AI across their organisation, for both small and large firms.