Artificial IntelligenceData Science

Glancing at AI-driven product approaches for financial institutions

I wanted to talk briefly about the most typical approaches that financial institutions are using to implement AI within their products. These investments are being made across a broad spectrum, from relatively conservative efforts to improve existing processes to bold bets on new capabilities and business models. Below we briefly run through the spectrum.

Leaner, faster operations

AI allows an ever-expanding set of processes to be streamlined, improving efficiency, decreasing costs and freeing up capacity. This entails using automation to improve the efficiency of business-as-usual processes. Why does this matter? For one, historically dampened returns – sustained periods of low interest rates coupled with pressure from new entrants increases the need for cost cutting to drive bottom-line growth. Increased regulatory burden also puts pressure on operating costs – for example GDPR.

Streamlined operations alone will not be sufficient for most institutions, requiring these techniques to be combined with other AI applications. Key beneficiaries of leaner, faster operations include:

  1. Institutions offering low-margin, highly commoditised products
  2. Institutions with a high volume of accounts and low per-account value
  3. Institutions facing high compliance requirements

Smarter decision making

Using advanced data science to optimise business outcomes (e.g. lower default rates). Another approach is integrating large volumes of data to derive better insights across business units (e.g. better capital allocation).

Tailored products & services

Personalising interactions to more closely meet the unique needs of customers − Providing convenient, high-quality service, while maintaining scalability.

Ubiquitous presence

Making products and available to customers in preferred format and channel. This could also include expanding the reach of institutions’ channels and offerings geographically and across customer segments.

New value propositions

Differentiating offerings through new operating models and ways of working. Namely, building brand new products, services and business models that use AI at the core.