Shameek Kundu, Head of Financial Services at TruEra, looks at whether AI's credibility gap could hold back the banking industry. Artificial Intelligence (AI) is widely seen as key to the banking industry's transformation. Industry surveys, including one from the Bank of England, suggest that two in every three financial institutions have adopted AI in some form. In most banks, neither the 2020 budget restrictions nor the failure of some AI systems during COVID-19 appear to have slowed down AI-related recruitment or technology spending. But is the reality of AI adoption in banking living up to the hype?
So far, most applications of blockchain technology have been solutions looking for problems. That's not to say there haven't been some really exciting use cases like Othera or Data Gumbo. It's just that so much garbage has been created alongside these gems of hope. ICOs, NFTs, and speculative cryptocurrencies in general, have created a tremendous amount of noise that serious investors need to peer through in order to find anything of substance. When a $4.2 billion company runs their entire business around monitoring crypto transactions to thwart ransomware attacks, one wonders if the value being created offsets all the collateral damage.
This post is sponsored by NVIDIA. AI is enabling digital transformation across the financial services industry, from fintech and investment firms to commercial and retail banks. With AI, banks can better protect their customers' accounts, secure payments, improve return on investments, and personalize content, investments, and next-action recommendations for their customers. These AI-enabled services were also the top use cases for AI found in the NVIDIA "State of AI in Financial Services" survey of C-suite leaders, managers, developers and IT architects in the global financial industry: fraud detection, portfolio optimization, and sales and marketing enablement. The growing capabilities of AI and increase in available data mean that financial firms need to execute an AI strategy, or risk being left behind their competitors.
Accenture interviewed 100 C-suite executives in wealth management last year and found many are skeptical of artificial intelligence. Eighty-five percent said its impact is "more hype than reality for businesses today." Still, 60% of them are already using AI in their organizations and they're doing it so well that other industries could learn from them, according to a new report. "Understanding the application of AI to business requires an understanding of context -- strategy, customers, company culture, and so forth. One application worthy of study across organizations is wealth management," Babson College professor Tom Davenport and NewVantage Partners founder and CEO Randy Bean, wrote in the MIT Sloan Management Review. Davenport is the President's Distinguished Professor of Information Technology and Management at Babson College, the co-founder of the International Institute for Analytics, a Fellow of the MIT Initiative for the Digital Economy, and a Senior Advisor to Deloitte Analytics.
Financial institutions are using AI-powered solutions to unlock revenue growth opportunities, minimise operating expenses, and automate manually intensive processes. Many in the financial services industry believe strongly in the potential of AI. A recent survey by NVIDIA of financial services professionals showed 83% of respondents agreeing that AI is important to their company's future success. The survey, titled'State of AI in Financial Services', also showed a substantial financial impact of AI for enterprises with 34% of those who replied agreeing that AI will increase their company's annual revenue by at least 20%. The approach to using AI differed based on the type of financial firm.
Innovations within FinTech are causing major changes to the dynamic between clients and wealth management providers. With technology as a driving force behind industry changes, understanding how client perspectives are shifting is crucial. For the wealth management sector, there are three key innovations that institutions need to be paying close attention to. These are artificial intelligence, open banking, and agile distribution. Understanding these will be the foundation for meeting new customer demands in the coming years.
The influence of Artificial Intelligence (AI) and its application in various industries have brought about a positive outlook on how operations are done in many sectors. In direct contrast to traditional methods, AI is making processes more smooth, beneficial to businesses by reducing overhead costs on labor and human error. AI in financial technology (Fintech) has also seen vast applications and not just in banking and financial management but also in catering to the advisory portion of it. With AI in the mix, Fintech companies can now offer customers 24/7 support along with and reduce operational fees levied for their services. Fintech isn't just for financial institutions but also for businesses that employ financial services as part of their operations.
All the sessions from Transform 2021 are available on-demand now. "An underlying issue that most enterprise organizations struggle with is that their data is a disaster," noted Anthony Deighton, chief product officer at AI-powered data unification company Tamr. Deighton was moderating a panel at VentureBeat's Transform 2021 event today, which delved into practical and academic perspectives on how companies -- particularly financial institutions -- can use machine learning (ML) to improve the quality and reliability of their data. Deighton was joined by Tamr cofounder Michael Stonebraker, winner of the 2015 Turing award and a renowned computer scientist who specializes in database research; and Jonathan Holman, head of digital transformation at financial services company Santander U.K., a Tamr customer. So what is the problem that Tamr, ultimately, is setting out to solve?
One of the world's biggest wealth managers doesn't think artificial intelligence can replace the role of financial advisors. Ralph Hamers, the CEO of UBS, said Wednesday that technologies like AI were better suited to handling day-to-day functions like opening an account or executing trades than advising clients. "There is no added value for client advisors to be engaged in a process like that," Hamers told CNBC's Geoff Cutmore at the virtual CNBC Evolve Global Summit. "Our financial advisors actually should be supported by the technology," Hamers said, adding that AI could be used to make sense of the research and other data that advisors don't have time for. "That is what artificial intelligence can do, because even our client advisors can't read all the research that is there," he said.